Dale Victor Mackay & Paul Taylor McKay v Dale Victor Mackay
[2004] APO 29
•5 November 2004
OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 71586/00 in the name of DALE VICTOR MACKAY and PAUL TAYLOR MCKAY
Title: Electrosurgical Apparatus
Action: Request under section 32 of the Patents Act by DALE VICTOR MACKAY
Decision: Issued.
Abstract
The invention relates to an electrosurgical instrument which from the evidence had essentially evolved, firstly, from the combination of a known tungsten needle electrode and argon beam into a single instrument (the “initial concept”) and, secondly, the provision of a shroud at least partially encasing the tungsten needle and having openings in its sidewall to dissipate gas when the instrument is in direct contact with tissue at the surgical site to thereby eliminate the risk of gas embolism (the “venting system”).
Found on the evidence:
· The initial concept and the venting system had been arrived at by D alone without the assistance of P, or P’s father, W. The contributions made by P may have led to a preferred workable embodiment of the initial concept, but they were of no material benefit. Further, D’s original venting idea was not put into practical effect or otherwise contributed to by W.
· The invention was not made by D during the course and scope of his employment at any material time. Consequently, his original entitlement as sole inventor under section 15(1)(a) had not passed to his employer by reason of an employer-employee relationship.
· P is jointly entitled under section 15(1)(b) by virtue of the collaborative relationship between P and D. The fact that the parties had or were intending to file joint applications in accordance with their common intention to share future rights was clear evidence of a relationship amounting to a co-partnership in respect of developments arising from or incidental to the relationship, whereby any rights to inventions from individual developments rested with the partnership rather than the individual party responsible for such inventions.
Two months allowed from the date of the decision for D and P to request amendment of the patent request and file a notice of entitlement to reflect the decision or, alternatively, to file submissions on how the delegate should proceed.
No award of costs due to the manner in which the case for P had been conducted.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 71586/00 in the name of Dale Victor MacKay and Paul Taylor McKay and a request under section 32 by Dale Victor MacKay
BACKGROUND
Patent application 71586/00 (the present application) was filed by Dale Victor MacKay (Dale) and Paul Taylor McKay (Paul) for an invention entitled "Electrosurgical Apparatus" on 15 November 2000. The patent request names both applicants as joint inventors. On 1 November 2002 Dale filed a request under section 32 claiming that he is the sole inventor and therefore the present application should proceed to grant in his name alone.
The parties were given an opportunity to file evidence in support of their respective claims to entitlement. Once each party had filed supporting evidence, the evidence was exchanged and the parties completed filing evidence in response on 29 July 2003.
Meanwhile, at the request of Dale, the Commissioner issued notices under section 210 for the production of documents to Paul and Taylor Surgical Instruments Pty Ltd (TSI) of which Paul is a director and owner. Certain documents were produced on 4 August 2003 but it was claimed that the documents identified in paragraphs 1(a) and (b) and the schedule to the notices were not in the possession or control of Paul or TSI. Dale did not dispute the validity of these reasons for non-compliance with the notices.
On 29 December 2003 Dale filed additional evidence which was admitted as further evidence under regulation 22.24 without objection. Dale also requested the Commissioner to summon Paul, Frank Gogal and William John McKay under section 210 to appear at the hearing for cross-examination. On 2 February 2004 Paul made a similar request in respect of Dale. All summonses were issued as requested.
The matter was heard in Melbourne on 12 and 13 February 2004. Paul was represented by Mr B Fitzpatrick of counsel, assisted by Mr R Clark of Davies Collison Cave. Dale was represented by Mr L Glick and Ms H Rofe of counsel. Dale’s solicitor, Mr J Appel, was also in attendance.
THE SPECIFICATION
The specification relates to an instrument for performing electrosurgical procedures and, more specifically, to monopolar electrosurgical instruments.
Electrosurgery is a procedure used by surgeons to cut or dissect human tissue and coagulate bleeding vessels through the delivery of a high frequency electrical current to the surgical site. In a monopolar mode, an electric circuit is formed between a high energy electron source known as an electrosurgical generator (ESU) and the patient via an active electrode and a dispersive grounding electrode. The grounding electrode is attached to the patient. The active electrode is used to deliver alternating current to the surgical site. The impedance to the current by human tissue creates intense heat which vapourises the cells in the subject tissue to effect an electrosurgical cut which is accompanied by hemostatis (coagulation) in the surgical wound.
The quality of the wound produced by electrosurgical instruments, and thus the ease of healing, can be controlled by regulating the electrosurgical discharge. In gas enhanced electrosurgery, an inert gas which is easily ionised, such as argon or helium, is introduced into the surgical site. The gas is used both to moderate the electrical discharge, making for a more uniform arc to the surgical site, and to "blanket" the surgical site such that charring (burning) of the tissue is suppressed.
However, in a gas enhanced mode accidental contact of the electrosurgical instrument with the tissues in the surgical site can lead to the formation of a gas embolism in the patient, which can result in surgical complication or death.
The invention seeks to address this problem by providing an inert gas delivery system that incorporates a means of managing gas pressure during direct tissue/instrument contact so as to avoid accidental inducement of embolism in tissue within the surgical site.
The specification describes an embodiment of the invention which comprises a hand-piece used by the surgeon to manipulate the electrosurgical instrument. A nozzle is secured to the hand-piece and has an electrode and a perforated disk or plenum supported within it. The electrode is connected to a source of radio frequency energy. A flexible conduit is connected to the hand-piece to conduct gas through the nozzle to blanket the electrode when the instrument is in use.
A shroud is pressed onto the nozzle so that the tip of the electrode is either recessed within or protrudes from the shroud. A series of gas pressure relief openings are formed about the circumference of the shroud. These openings may be in the form of
“holes of any shape completely penetrating the walls of shroud 402 which extend from the open end of installed shroud 402 to a point any distance along the sidewall of the shroud 402.”
or
“slots milled longitudinally (parallel to the bore axis) in the inside wall of shroud 402 extending the entire length of the shroud.”
The specification states that gas pressure generated when the end of the shroud is pressed against tissue is relieved by gas flow through the openings in the shroud. In this way the build up of gas pressure within the shroud is insufficient to cause a gas embolism in the contacted tissue.
The specification ends with five claims which are in the following terms:
"1. In an instrument for carrying out an electrosurgical procedure on tissue, said instrument comprising a handle, a gas source, a nozzle for directing the gas source, an electrode connected to an electrosurgical generator, and a shield at least partially shielding said electrode, the improvement comprising:
a shroud isolating a portion of the active end of an electrode; and
openings in the side wall of the shroud to dissipate gas upon flesh contact when said electrode active end and said shroud are buried in tissue.2. The improved electro-surgical instrument of claim 1, wherein said shroud side wall openings comprise a series of slots fashioned about the inside diameter of the shroud internal wall and running longitudinally the length [sic] of said shroud.
3. The improved electro-surgical instrument of claim 1, wherein said shroud side wall openings comprise a series of holes fashioned about the diameter of the shroud and completely penetrating the wall of said shroud.
4. The improved electro-surgical instrument of claim 1 wherein said shroud is slidably mounted on said electrosurgical apparatus.
5. The improved electro-surgical instrument of claim 1, wherein the portion of the active end of the electrode not isolated by said shroud is between about 7 mm and about 20 mm."
THE EVIDENCE
Evidence in support
The supporting evidence filed by Paul consists of:
· a statutory declaration made by Paul on 5 February 2003; and
· a statutory declaration made by Paul on 7 April 2003 together with exhibits PM01 to PM014
The supporting evidence filed by Dale consists of a statutory declaration made by him on 28 February 2003, together with exhibits DVT-1 to DVT-6.
Evidence in response
The evidence in response filed by Paul consists of:
· a statutory declaration made by Paul on 9 July 2003;
· a statutory declaration made by William John McKay on 9 July 2003; and
· a statutory declaration made by Frank Gogol on 17 July 2003, together with exhibits FG01 and FG02
The evidence in response filed by Dale consists of a statutory declaration made by him on 29 July 2003, together with exhibit DVM-7 which contains a bundle of documents numbered 1 through to 199.
On 2 February 2004 Dale filed additional documents numbered 200 through to 304.
However, these additional documents have not been relied on and, consequently, I take no further note of them.Further evidence
The further evidence filed by Dale consists of:
· a statutory declaration made by Rodger Davies on 2 October 2003;
· a statutory declaration made by Keith Mutimer on 7 October 2003; and
· a statutory declaration made by Silvio Tambasco on 11 November 2003
Other filed material
A transcript of proceedings prepared by a transcription service which had apparently been arranged by the solicitors for Dale was filed on 16 March 2004. Both parties provided me with written submissions at the hearing, and filed closing submissions on 2 April 2004. I will refer to this and the other material before me where appropriate in this decision.
BACKGROUND TO THE DISPUTE
Dale has been involved in the marketing of electrosurgical instruments since 1977. In 1985 he commenced employment with Valleylab Australia Pty Ltd (Valleylab) as a sales representative and was subsequently promoted to regional manager for New Zealand and Victoria. He held this position until 1999 when he joined Device Technologies Australia Pty Limited (DTA) as a national product manager. Since December 2002 he has been the national product manager for a subsidiary of the US company ConMed Corporation (ConMed).
Dale states that due to his personal interest in electrosurgery he has become familiar with electrosurgical techniques and equipment, and the practical problems associated with electrosurgery, “over and above that required to carry out my employment duties.” He has attended and observed many electrosurgery operations, and is a regular attendee at electrosurgery conferences and training sessions, sometimes as a lecturer.
Dale explains that one form of active electrode used in electrosurgical instruments is a “Colorado” or tungsten needle. The Colorado needle is connected to a hand-piece and, while enabling simultaneous dissection and coagulation, is inefficient in that the surgeon is often compelled to perform repeated coagulation procedures due to floating eschar.
In another form of electrosurgical instrument known as an argon beam coagulator (ABC), argon gas is changed to its plasma state by the passage of high frequency current and in this state is visible to the eye as a beam of light. The argon beam can be used following dissection with a Colorado needle to perform surface coagulation in a manner similar to a blow torch. The argon gas is supplied to the ABC by a device which monitors the pressure of the gas and activates an “occlusion” alarm when the pressure reaches a level that could cause a gas embolism.
Roger Davies is an ocupoplastic surgeon, specialising in facial plastic surgery. He states that during the period prior to December 1998 there were a number of eyebrow burning incidents at the Bellbird Private Hospital in Blackburn, Victoria, involving patients undergoing electrosurgery in which a Valleylab ESU was used in conjunction with a Colorado needle.
Dale states that in or around early December 1998 he was advised of these incidents by the operating theatre manager of the Bellbird Private Hospital. Dale thought it unlikely that the eyebrow burning incidents were due to the Valleylab equipment because its use in a normal air environment could not cause hair to combust and that, accordingly, the incidents had resulted from the introduction of a combustion agent. An experiment conducted by Dale on or about 9 December 1998 in the laboratory of Mr Tambasco, a biomedical engineer, confirmed that the Valleylab ESU was not at fault.
On 10 December 1998 Dale attended two procedures performed by Mr Davies at the Freemasons Day Procedure Centre in East Melbourne, Victoria. During the procedures Mr Davies and the anaesthetist were extensively questioned by Dale who in turn concluded that oxygen had leaked from the anaesthetic circuit and come into contact with the arcing current emitted from the Colorado needle, thus causing hair combustion.
Dale continues as follows:
“I reinforced my conclusions by relating to them the experiment I had conducted with Mr Tambasco in his laboratory.
Based on my knowledge that argon gas is inert and that it would, therefore, displace any concentration of oxygen escaping from the anaesthetic circuit, I said to Mr Davies words to the effect, "have you thought of using argon technology?" Mr Davies replied that he preferred to use the Colorado needle electrode, which I knew was not available with argon technology.
As a result of these events and conversations and specifically as a result of Mr Davies' comments that he preferred to use the Colorado needle, the idea of combining the Colorado needle and argon technology suddenly occurred to me. At that particular time I realised that, if I combined the two technologies into one single instrument I could resolve the hair combustion problem because, in essence the argon gas would flow through the handpiece coaxially with the tungsten needle thereby shrouding the electrode and displacing any concentrations of oxygen, and this would neutralise any potential danger."
Shortly after Dale telephoned Paul to ascertain whether he could manufacture "something similar" to the Colorado needle for Valleylab. Dale explains that his association with Paul “was based on … our shared involvement with electrosurgical products, he as a manufacturer and I as a marketing executive.” As Paul was unfamiliar with the Colorado needle he requested and was provided with a sample which Dale had borrowed from the Epworth Hospital in Victoria. However, the matter was not taken any further by either Dale or Paul, and the sample needle was returned.
Dale states that in January 1999 he sketched "a possible way in which the tungsten needle could be combined with the argon beam." A copy of this sketch is shown in exhibit DVM-4. He contends that he was at that time “distracted by other things from pursuing my idea further and thought nothing more on the matter until December 1999.”
On 8 December 1999 Dale attended the Brighton Private Hospital in Victoria where he demonstrated an ABC to Keith Mutimer, a plastic, reconstruction and cosmetic surgeon. Mr Mutimer “performed dissection with conventional electrosurgery and followed with using the argon beam of the ABC for achieving hemostatis”, and commented to Dale
“that the ABC was too slow to utilise for the purpose of hemostatis as it required the changing of instrumentation and by which time it had allowed blood to stain the tissue planes."
According to Dale, Mr Mutimer’s criticism of the ABC
"immediately rekindled my idea, and I realised that, in addition to resolving the eyebrow combustion problem, the product of my idea could, and would, also reduce procedural time on the basis that my invention which combined the tungsten needle and argon beam into the one instrument eliminated the time wasting factor of changing instrumentation and also reduced the need for re-coagulation."
In early to mid February 2000 Dale asked Paul to meet him at DTA to discuss the manufacture of two prototypes for testing in a clinical setting. During the meeting Dale explained
“how my invention functioned. I explained how it differed from conventional electrosurgery and that the argon beam coagulator did not have dissecting capability. I set up an argon beam coagulator and demonstrated to [Paul] the beaming effect on an orange. I then explained how I wanted to modify the nozzle of the argon beam coagulator with a tungsten (Colorado type) needle to achieve a dissecting effect … I instructed [Paul] how to position a tungsten needle within the nozzle, including the distance the needle should protrude from the nozzle. I further instructed [Paul] to use a support structure of the kind found in the ends of the reusable argon handpiece, to hold the needle in place to prevent lateral movement of the electrode during surgery. I explained to [Paul] the function and purpose of coaxial gas flow …”
Paul provided Dale with the two prototypes on 9 June 2000. Dale tested the prototypes on “lumps of fatty steak” and obtained “excellent results”. He consequently asked Mr Mutimer to clinically test the prototype instrument which he did on 23 June 2000 and found that he was able to simultaneously dissect and provide hemostatis to the tissue. Following the success of the clinical trial Dale and Paul agreed to manufacture and distribute a commercial version of the prototype instrument under a joint venture. A new company known as Surgical Innovations Pty Ltd (Surgical Innovations) was formed for the purposes of the proposed business venture.
Dale decided to seek patent protection in the US which is the major world market for electrosurgery instruments. On 30 October 2000 Dale hand-delivered an invention disclosure form to his US patent agent which included informal drawings prepared by him (see pages 63-74 of exhibit DVM-7). While in the US Dale obtained information that confirmed his previous knowledge regarding the potential hazard of gas embolism during surgery and, based on this and his experience with argon technology and electrosurgical instruments, felt that the instrument he was working on could be further improved by the incorporation of a venting system. The venting system was to operate independently from the ABC occlusion alarm, or in concert with argon gas delivery systems devoid of such a safety mechanism.
On 29 November 2000 Dale emailed his US patent agent with an attached file of a drawing showing venting slots or holes "which reflected my very first thoughts of my conception of the venting system I later refined and developed." Shortly after Dale asked Paul to assist him to test his “venting concept”. Dale states that he
“first asked [Paul] to drill four holes distally in the narrow part of an argon electrode nozzle that I had in my possession. My first test failed as a result of unintended arcing through the venting holes of the nozzle … I then covered the holes in the narrow part of the nozzle with masking tape and asked [Paul] to drill more holes in the body of the nozzle … The second test also failed for similar reasons.”
Pages 161-163 of exhibit DVM-7 are copies of photographs of the electrode used in these tests.
During the period December 2000 to mid February 2001, Dale continued to work on improving the venting system and says he achieved the desired results by "including vents in the wall of the outer sleeve of the nozzle." On 8 February 2001 Dale faxed drawings of the final form of the venting system to his US attorney (see pages 172-174 of exhibit DVM-7).
Paul acknowledges his business association with Dale which he says began in 1987 when TSI signed an agreement to manufacture and supply electrosurgical instruments to Valleylab where Dale was at the time employed as a sales manager. This association continued even when Dale left Valleylab to take up employment with DTA.
According to Paul, he met with Dale on a number of occasions to discuss problems with existing electrosurgical instruments and possible solutions that could be implemented. One of these meetings was held towards the end of 1999 to discuss the problems identified by Mr Mutimer. Paul says that
"On or around this time, Dale and I agreed that a suitable solution might be to combine a Colorado Needle type device with and [sic] ABC. It was my idea to take a Tungsten electrode, of the type presently being manufactured by TSI for TSI Colorado Needles, and extend the electrode through and beyond the "beaming nozzle" of an ABC, where the "beaming nozzle" is the area of an ABC that contacts tissue during use. Such a device could function in an analogous manner to a Colorado Needle to cut tissue. The idea occurred to me because Tungsten electrodes were being manufactured by TSI at that time and because these electrodes … would fit without modification into an ABC … Further, I was aware that the Tungsten electrodes manufactured by TSI were not susceptible to melting during use at high temperatures and that Tungsten electrodes reduced the amount of tissue sticking to the electrode during use."
Paul and Dale also allegedly discussed the possibility of fitting a shroud over the protruding tungsten electrode to isolate it from tissue contact thus enabling the instrument to be used in an analogous manner to an ABC.
However, further testing of the prototype instruments by other surgeons revealed that, when used as an ABC, the occlusion alarm of the gas supply device was activated when a portion of the beaming nozzle became inadvertently buried in tissue which Paul and Dale agreed necessitated the provision of some form of gas venting means.
William John McKay (hereafter William) is Paul's father. He says he was present at the meeting held between Paul and Dale towards the end of 1999. William was also in attendance when Dale informed Paul of the “occlusion alarm” problem. He states that when discussing several methods of venting gas from the instrument as a possible solution to this problem"Paul initially suggested that drilling holes around the periphery of the tip end of the shroud might overcome the problem. However, Paul subsequently realised that these holes would be positioned too close to an inner plenum of the device to function adequately. Dale suggested that the problem might be overcome by forming notches around the tip end of the shroud. Once again, Paul suggested that plenum [sic] may be too close to the notches to function adequately. Paul also suggested that the problem may be overcome by drilling holes in the body of the device."
After further discussion of the problem with Paul on or around mid 2000, William suggested the inclusion of channels that extended from an inner portion of the tip end of the shroud to an outer portion of the distal end of the shroud. He confirms that exhibit PM01 is a true copy of the sketch he drew of an example of his suggestion for Paul to consider.
Nevertheless, as a result of TSI's limited manufacturing infrastructure, Paul committed to making a prototype with holes drilled in the body of the instrument for venting gas. The prototype was tested on or around September 2000 at DTA in the presence of Dale. Although successfully preventing argon gas from building up to a level that would activate the occlusion alarm of the gas supply device, it was noticed that sparking occurred when the drilled holes were near to tissue. Paul and Dale were unable to devise a cost-effective solution to this problem. Consequently, on or about mid 2000, Paul contacted Frank Gogol for a possible solution, and to this end sent him a copy of a drawing prepared by Paul showing an example of the sparking problem (see exhibit PM02).
Mr Gogol is the director of Hargo Engineering which manufactured electrosurgical instruments for TSI for a number of years. Mr Gogol confirms that on or about mid 2000 Paul contacted him for advice on a cost effective way of venting gas from an electrosurgical instrument “that he was developing”.
According to Mr Gogol
"Paul mentioned that he had drilled holes in the side of a prototype in an attempt to vent gas from the device. I recall that Paul mentioned that the prototype was effective in venting gas from the device, however, he mentioned that, in use, the prototype had a sparking problem.
Paul explained the nature of the sparking problem to me and illustrated the problem on paper. Paul sent a copy of this illustration to me by facsimile so that I might better understand the nature of the sparking problem. Exhibit FG02 is a copy of the illustration that Paul sent to me."
which I note is identical to exhibit PM02. Mr Gogol states that he did not make any suggestions “that Paul thought would be useful in overcoming the sparking problem.”
Paul states that he later met with Dale to discuss different ways of improving the gas venting function and agreed that the venting holes could be channelled through the shroud in a manner similar to that shown in exhibit PM01. A drawing subsequently prepared by Paul and his father (see exhibit PM11) indicates that the venting channels comprise longitudinally extending slots fashioned about the inside diameter of the internal wall of the shroud.
According to Dale, the meeting he arranged with Paul in early to mid February 2000 was the first and only discussion they held concerning the idea conceived by him of modifying an ABC so as to effect a cutting function in an analogous manner to a Colorado needle. He denies that the use of a shroud was discussed at the meeting, or that the prototypes produced by TSI included this feature. He makes the point that the present application “as filed on 15 November 2000 did not include a venting system simply because, as at that date, it had not been invented.”
BASIS OF THE DISPUTE
Section 32 provides as follows:
"If a dispute arises between any 2 or more interested parties in relation to a patent application whether, or in what manner, the application should proceed, the Commissioner may, on a request made in accordance with the regulations by any of those parties, make any determinations the Commissioner thinks fit for enabling the application to proceed in the name of one or more of the parties alone, or for regulating the manner in which it is to proceed, or both, as the case requires."
The term "interested party" is defined in Schedule 1:
"interested party, in relation to a patent application, means the applicant or a joint applicant, or a person who claims to be entitled to the grant of a patent on the application, either alone or jointly with another person”.
It is clear that Dale is an interested party, as he is a joint applicant and claims sole entitlement to the grant of a patent on the grounds that the invention described and claimed by the present application (the invention) originated with him.
The entitlement of a person to the grant of a patent is provided for in section 15, which states:
“(1) Subject to this Act, a patent for an invention may only be granted to a person who:
(a)is the inventor; or
(b)would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
(c)derives title to the invention from the inventor or a person mentioned in paragraph (b); or
(d)is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).
(2) A patent may be granted to a person whether or not he or she is an Australian citizen.”
Section 15 sets out the categories of persons who may be granted a patent. It makes a distinction, so far as is relevant, between the inventor in paragraph (a) and a person who derives title to the invention from the inventor under paragraph (b).
There is no dispute that the invention has essentially evolved, firstly, from the combination of a tungsten needle and an argon beam into a single electrosurgical instrument and, secondly, the provision of a shroud at least partially encasing the tungsten needle and having openings in its sidewall to dissipate gas when the instrument is in direct contact with tissue to thereby eliminate the risk of gas embolism. For convenience I will hereafter refer to these elements of the invention as the “initial concept” and the “venting system”, respectively.
Dale asserts that he is the source of both the initial concept and the venting system and, consequently, is entitled to the grant of a patent under section 15(1)(a) to the exclusion of Paul who he says made no contribution to the invention beyond the manufacture of the prototypes in February 2000 under his instruction.
For his part Paul claims that as co-inventor of the initial concept and the venting system, he is entitled under section 15(1)(a) to the grant of a patent jointly. In the alternative, Paul says that even if no inventive contribution can be ascribed to him, he is still jointly entitled under section 15(1)(b) by virtue of his relationship with Dale.
The authorities have established that I can only make the determination sought under section 32 if I am satisfied that sole entitlement rests with Dale and in this he has the onus of proof. However, in deciding the matter I am entitled to act on any material that is "logically probative" and in reaching a conclusion the standard of proof required is the civil standard, that is, on the balance of probabilities (Dunlop Holding Ltd's Application (1979) RPC 469).
ENTITLEMENT UNDER SECTION 15(1)(A)
The principle issue that arises here is whether the initial concept and the venting system were arrived at by Dale alone or with the assistance of Paul.
In determining whether a person has an entitlement to all or part of an invention the test that is often applied is whether that person's contribution, either solely or in conjunction with others, had a material effect on the invention. This is apparent from Row Weeder Pty Ltd v Nielsen 39 IPR 400 and is an approach approved of by the Administrative Appeals Tribunal in Upham v Commissioner ofPatents [1998] AATA 852. Also potentially relevant in the present circumstances is the principle discussed in Falkenhagen et al v Polemate Pty Ltd [1995] APO 32 where it was said:
"… it seems to be the case that a second person, engaged because of that person's expertise to construct a device … based on instructions from or given the concept of a first person, is not normally regarded as an inventor of the device, and this holds true even if the second person suggests ways to aid its design or operation. However if the second person's suggestions give a result or advantage not contemplated by the original concept then the second person may qualify as a joint inventor of the improved device. In this context I think the result or advantage would need to be a material one so that the resulting device is overall an improved one not merely a preferred workable embodiment of the original concept."
The origin of the initial concept
The sequence of events that allegedly led Dale to the initial concept is in summary:
· In early December 1998 Dale was alerted to several incidents of eyebrow burning injuries to patients which Mr Davies had encountered when performing electrosurgery using a Colorado tungsten needle and a Valleylab ESU.
· On 9 December 1998 Dale and Mr Tambasco conducted an experiment which confirmed Dale’s belief that the Valleylab ESU was not the cause of the eyebrow burning incidents.
· After observing two procedures performed by Mr Davies on 10 December 1998, Dale concluded that the eyebrow burning incidents had been catalysed by oxygen escaping from the anaesthetic circuit and contacting the arcing current emitted from the tungsten needle.
· Dale realised that the risk of hair combustion could be eliminated by combining a tungsten needle and an argon beam into the one instrument whereby the argon gas would shield the needle and displace any potentially dangerous concentrations of oxygen from its active end.
· In January 1999, Dale prepared a sketch of how a tungsten needle could be combined with an argon beam (exhibit DVM-4).
· For various reasons Dale did not pursue the initial concept until 8 December 1999 when he demonstrated an ABC to Mr Mutimer. Mr Mutimer noted that the ABC was “good, but too slow” which renewed Dale’s interest in the initial concept since he recognised that in addition to resolving the hair combustion problem, a single instrument that combined a tungsten needle and an argon beam would reduce procedural time.
· In early to mid February 2000 Dale gave detailed instructions to Paul regarding the manufacture of two prototypes in which the initial concept was incorporated by modifying the nozzle of an ABC “with a tungsten (Colorado type) needle to achieve a dissecting effect.” The prototype instruments were presented to Dale on 9 June 2000 and on 23 June 2000 he observed Mr Mutimer successfully test one of them in a clinical setting.
Paul’s claim to entitlement as a co-inventor of the initial concept allegedly arises from the following events:
· Sometime after 8 December 1999, Dale contacted Paul to discuss the problems with ABCs identified by Mr Mutimer. They considered the possibility of developing an electrosurgical instrument “that could function in an analogous manner to both an ABC and a Colorado needle.”
· On or around this time Paul had the idea to take a tungsten electrode “of the type presently being manufactured by TSI … and extend the electrode through and beyond the “beaming nozzle” of an ABC.”
· Paul designed and manufactured the two prototype instruments unaided by Dale.
The written evidence for Dale sets out a logical line of inquiry which he says he pursued in developing the initial concept. None of this evidence is contradicted by Mr Davies, Mr Mutimer or Mr Tambasco. For example, Mr Davies confirms that on or around 10 December 1998 Dale watched him perform two electrosurgical procedures and suggested the “previous eyebrow incidents” were caused by leaked concentrations of oxygen. Dale has also provided verified details as to relevant dates. Most notably, his version of events was not challenged in cross-examination, and nor was the credibility of his evidence otherwise brought into question.
Paul’s written evidence, on the other hand, tends to be vague and is wholly unsubstantiated so far as the role of inventor he asserts in the development of the initial concept. Furthermore, it became apparent during cross-examination that Paul did not have a clear recollection of events at all and was prepared to tailor his answers to suit his case. As an illustration, Paul states in his evidence in support that when considering the problems with ABC’s identified by Mr Mutimer, he and Dale “discussed the possibility of developing an electro-surgical device that could function in an analogous manner to both an ABC and a Colorado needle.” However, in cross-examination Paul departed from his written evidence and maintained that a Colorado needle was not specifically mentioned during these discussions (Transcript T2A at page 61, lines 23-30) from which he sought to draw the inference that the suggestion of a tungsten needle had been made by him independently of Dale. I will have more to say on this later.
The discrepancies in Paul’s evidence first came to light when he was questioned on the true extent of his technical capability.
Paul states that TSI had manufactured and sold electrosurgical instruments for many years before the initial concept was devised. He also says that starting in 1987 he met with Dale on a number of occasions to discuss possible solutions to problems that surgeons were experiencing with existing devices. Against this background he expresses the belief that Dale contacted him to discuss the problems with ABC’s identified by Mr Mutimer
“because he knew that I had experience in designing and developing electro-surgical devices and that he knew that I would make a valuable contribution to the development of such a product.”
and asserts that the initial concept “occurred to me because tungsten electrodes were being manufactured by TSI at that time [ie. December 1999].”
However, Paul was unable to produce any documentary support for his assertion as to the manufacture and sale of Colorado needles by TSI in 1999, despite being requested to do so by Dale pursuant to section 210. When pressed on the matter in cross-examination, Paul attempted to justify his original statement on the basis that TSI had made some sample Colorado needles (Transcript T2A at page 43, lines 16-19), but admitted there was no record or other evidence of these samples (Transcript T3B at page 4, lines 24-31) and that TSI did not start selling Colorado needles until 2000 (Transcript T1 at page 19, lines 19-24).
Paul further admitted that he possessed “a very, very basic knowledge of electrosurgery” and that most of what he had learned “came from Dale” (Transcript T2A at page 26, lines 4-6). In contrast, the evidence plainly establishes that Dale had acquired a high level of expertise in the area of electrosurgical instruments and techniques, as well as the practical problems associated with electrosurgery. He is the only witness to discuss the technical considerations that underpinned the evolution of the initial concept, whereas Paul’s statement that the test performed by Mr Mutimer “proved that the invention could be successfully used as either an ABC or a Colorado needle” leads me to question his understanding of the synergistic effect produced by combining a tungsten needle and an ABC into the one instrument.
In my view, this state of affairs does not reflect well on Paul’s capacity to make the inventive contribution he alleges and, as the evidence unfolded during the course of cross-examination, he eventually admitted that the initial concept had not come from him:
“… I’m not saying that I came up with the idea to grab a Colorado needle and combine it with the argon beam nozzle, what I’m saying is that I looked at it from a totally different view, I was thinking about it from a material point of view which I had and we also had to put a very fine tip on it. I’ve made those micro-needles before out of stainless steel and they bend very, very easily and they heat up very, very quickly. Tungsten, you’ve got the luxury of being able to generate a lot of heat and it’s very strong and that’s why I mentioned it about [sic] using that particular material.” (Transcript T2A at page 41, line 24 – page 42, line 3)
and later:
Mr Glick: “Well, it’s not your idea to take the tungsten electrode and extend the electrode through and beyond the beaming nozzle of the ABC?” Paul: “I would say that it was not my idea to protrude an electrode through the nozzle, but it was my idea to use the tungsten rod as the electrode itself.”
Mr Glick: “I see, so what you’re saying is the idea of protruding the electrode through and beyond the beaming nozzle was Dale’s?” Paul: “Yes.”
(Transcript T2A at page 42, line 31 to page 43, line 7)
However, the inference by Paul that the utilisation of a tungsten electrode was not contemplated by Dale’s idea, and was instead an inventive contribution made by him, is unconvincing.
It has become overwhelmingly clear from the evidence that the idea of combining a Colorado needle with an ABC had remained at the forefront of Dale’s research activities which began with his investigation of the eyebrow burning incidents experienced by Mr Davies in 1998. Shortly after, Dale provided Paul with a sample Colorado needle he had borrowed to ascertain whether a similar product could be manufactured for Valleylab with that aim in mind (Transcript T5A-B at page 43, lines 8-15). Dale renewed his line of inquiry some 12 months later after demonstrating an ABC to Mr Mutimer. The evidence has also revealed that the term “Colorado needle” is the name commonly given to an active electrode in the form of a tungsten needle, so-called because it was first made by Colorado Inc. Indeed, the key figures in this dispute appear to have used the terms “Colorado needle” and “tungsten needle” interchangeably throughout their written evidence, and Paul agreed in cross-examination that what distinguishes a Colorado needle is its use of tungsten (Transcript T2A at page 25, lines 26-27). The weight of the evidence therefore leaves me in no doubt that the research activities undertaken by Dale were at all times focussed on a tungsten electrode, and it is quite ingenuous of Paul to suggest that the ideal of “protruding [a tungsten] electrode through and beyond the beaming nozzle” (my emphasis) would not have occurred to Dale without his input.
In a final attempt to establish a contribution to the initial concept, Paul claimed responsibility for the electrode support “wheel” which was incorporated in the hand-piece of the prototype instruments. Aside from the fact that it was Mr Gogol, and not Paul, who manufactured the prototypes (Transcript T2A at page 35, lines 10-11 and page 68, lines 5-11, and Transcript T4A at page 48, lines 1-2), it appears that the support wheel may have been already known from existing ConMed hand-pieces (cf. exhibits DVM-5 and DVM-6) which were shown to Paul by Dale before the prototypes were made. However, what does clearly emerge from the evidence is that the support wheel merely formed part of a preferred working embodiment of the initial concept. In terms of the Falkenhagen case, the support wheel consequently does not constitute a material contribution to the initial concept.
I accordingly conclude that Dale alone arrived at the initial concept and, indeed, Mr Fitzpatrick himself openly accepted that the “original concept was [Dale’s]” (Transcript T5A-B, page 35, line 9).
The present application as originally filed on 15 November 2000 was confined to the initial concept. It did not disclose the venting system.
The origin of the venting system
The case put forward by Dale is essentially this:
· Dale was concerned to ensure that the initial concept was protected in the US market. He consequently engaged the services of a US patent agent, and at some point after late August or early September 2000 prepared an invention disclosure form which included informal drawings (exhibit DVM-7 at pages 63-74).
· On 30 October 2000 Dale hand-delivered the invention disclosure form to his US patent agent. While in the US Dale obtained information that confirmed his previous knowledge regarding the risk of gas embolism during surgery.
· Dale felt that this risk could be eliminated by including a venting system in the electrosurgical instrument in which his initial concept was embodied. Specifically, the venting system consisted of a series of holes in the body of the beaming (ABC) nozzle, or slots in the distal end of the nozzle.
· On 29 November 2000 Dale sent his US patent agent a drawing illustrating the venting holes or slots (exhibit DVM-7 at pages 84-87 and page 127) which Dale says “reflected my very first thoughts of my conception of the venting system”
· Shortly after Dale asked Paul to assist him to test the venting system. A number of holes were drilled at Dale’s request initially in the end of the nozzle, and next in the body of the nozzle, and the venting system tested on both occasions using a piece of steak to simulate “the surgical technique of use.” The tests failed due to arcing through the holes to adjacent parts of the steak.
· From December 2000 to mid February 2001 Dale worked towards refining the venting system. The final form of the venting system subsequently developed by him comprised an outer sleeve or “shroud’ that in use was positioned over the nozzle. The outer sleeve included vents which provided a gas escape route in the event that the nozzle was inadvertently buried in tissue within the surgical site.
· On 8 February 2001 Dale faxed drawings showing the final form of the venting system to his US patent agent (exhibit DVM-7 at pages 165 et al).
By comparison, Paul’s case is as follows:
· Paul and Dale discussed the possibility of fitting a shroud over the tungsten electrode of the prototype instruments to isolate the electrode from tissue contact and thereby enable the tip of the shroud to function as an extended beaming nozzle.
· On Paul’s understanding, Dale was advised subsequent to the clinical trial conducted by Mr Mutimer that a gas occlusion alarm of the argon gas supply was activated when a portion of the beaming nozzle was buried in tissue. It seemed to Paul that the argon gas was not being vented at a rate sufficient to prevent tripping of the occlusion alarm.
· Paul and Dale discussed possible solutions to “the problem”. Paul initially suggested drilling holes around the distal end of the shroud, but subsequently realised that the holes were too close to the inner plenum of the instrument to function successfully. Dale’s suggestion to form slots in the end of the shroud was discounted for the same reason.
· On or around mid 2000, Paul met with William to discuss “the above-mentioned venting problem.” William suggested the inclusion of channels that extended proximally from an inner portion of the distal end of the shroud to an outer portion of the shroud. William drew a sketch to help explain his suggestion (exhibit PM1).
· TSI did not, however, have the infrastructure to manufacture a shroud having channels as suggested by William, and Paul consequently decided to make a prototype “with holes in the body for venting gas.”
· On or around September 2000, Paul tested the prototype in the presence of Dale. The prototype prevented tripping of the occlusion alarm, but it was noticed that arcing occurred when the venting holes were brought in the vicinity of tissue. Paul and Dale were unable to find an economical solution to this “sparking” problem.
· On or about mid 2000, Paul contacted Mr Gogol and explained the nature of the “occlusion problem” to him. He also sent Mr Gogol a drawing he had prepared of the prototype “showing an example of the sparking problem” (exhibit PM2). Mr Gogol “did not make any useful suggestions for overcoming the venting problem.”
· Dale and Paul agreed in late 2000 that the venting holes could be “channelled” through the shroud in a manner analogous to that shown in exhibit PM01.
· Paul and William subsequently prepared a drawing showing venting channels in the shroud (exhibit PM11) which Dale forwarded to his US patent agent.
Dale explained in cross-examination that the venting system was conceived by him for the specific purpose of preventing the occurrence of gas embolism when using an electrosurgical instrument that does not have an inbuilt occlusion alarm for warning the surgeon that the argon gas back-pressure had reached a potentially dangerous level (Transcript T6A at page 50, lines 2-12 and page 69, lines 24-27). I shall return to this aspect of his evidence later. For the present it is sufficient to note that Paul confirmed that it was Dale who alerted him to the “need to somehow vent the gas out so that we don’t cause an embolism in the patient” (Transcript T1 at page 28, lines 24-28).
On the other hand, Paul was unable to give a coherent explanation as to the circumstances in which the venting system had arisen. As before, this not only casts serious doubt on his understanding of the rationale for the venting system, but on his entire account of the contribution he allegedly made to its development. The credibility of his evidence suffered in particular when he was questioned on the first sentence of paragraph 4.9 of this evidence in support, which reads:
“Dale and I had several discussions over possible solutions to the problem.” (my emphasis)
On the natural reading of the above sentence, the impetus for the venting system was the so-called “occlusion alarm” problem outlined in paragraph 4.8 of Paul’s evidence in support. However, Paul sought to import a number of different meanings into his use of the word “problem” during cross-examination. The following exchanges are illuminating:
Mr Glick: “I have suggested to you, I’m obliged to and I’ll put to you, that on the plain meaning of this declaration, on its plain meaning in what lawyers call the natural and ordinary meaning of words, it’s as plain as a pike staff that what you’re there saying is you discussed the possible solutions to the problem which is the alarm, you’ve said, no, you meant by that word “problem” something else entirely different, being sparking?” Paul: “Yes.”
Mr Glick: “I’m suggesting to you that that can’t be right for this reason; your solution to the problem was drilling holes, it was the drilling of the holes which caused the sparking?” Paul: “Yes.”
Mr Glick: “So drilling the holes couldn’t have been there to cure the sparking because it caused the sparking, I put that clumsily but if you don’t follow …?” Paul: “When I say Dale and I had several discussions over a possible solution to the problem I’m talking about the sparking problem, I’m not talking about the occlusion, I’m talking about the sparking.”
Mr Glick: “Right, “we discussed several methods for venting gas from the device, I suggested drilling holes around the periphery”, this causes sparking, doesn’t it, the drilling of the holes?” Paul: “Yes, that’s right.”
Mr Glick: “So the problem there is not sparking, it’s the occlusion alarm?” Paul: “No, it’s not the occlusion alarm.”
Mr Glick: “Well, can you explain, please, as a matter of plain English, we’ll start with plain English, the matter of the plain construction of the ordinary words of the English language, how you derive from 4.9 anything to do with sparking?” Paul: “I know it’s to do with the sparking problem because the only time that I ever decided to drill holes in that electrode was in connection with the sparking.”
Mr Glick: “Didn’t the drilling of the holes cause the sparking?” Paul: “Yes.”
Mr Glick: “Then it wasn’t in connection with the sparking, it was the prelude to the sparking?” Paul: “Sorry, I see what you mean, yes, I see what you mean, sorry.”
(Transcript T2A at page 12, line 11 to page 13, line 15)Mr Glick: “I want to suggest to you that your evidence has been entirely unsatisfactory as sworn evidence for this reason; you’ve stated the problem on the plain ordinary meaning is the occlusion alarm; you then maintained against my suggestion to you that that was the ordinary meaning, it was without doubt the spark, when it was put to you that it couldn’t have been because the solution caused the problem you say, no, it was embolism?” Paul: “Yes, I misunderstood what you had been trying to …”
Mr Glick: “No, but you didn’t misunderstand the question what was the problem in the first sentence of 4.9, did you, that had been put fairly and squarely to you on a number of occasions?” Paul: “I misunderstood that.”
(Transcript T2A at page 14, lines 8-20)
Paul finally agreed that the “problem” referred to in paragraph 4.9 of his evidence in support was the “occlusion alarm” problem (Transcript T2A at page 15, lines 26-30). However, he is clearly misguided in suggesting that this problem was caused by surgeons disabling the occlusion alarm because of its intrusive nature (Transcript T1 at page 41, lines 21-25). As indicated by Dale, the problem arose when the electrosurgical instrument in use did not have a gas occlusion alarm for warning the surgeon of the risk of gas embolism. Moreover, it is common ground that as a possible solution to the “occlusion alarm” problem, holes were drilled in the body of the beaming nozzle to vent gas away from the surgical site and thereby avert the build up of gas pressure that could lead to a gas embolism. This proposal was rejected when sparking was found to occur through the vent holes. I therefore have difficulty in accepting Paul’s contention that he “misunderstood” the question repeatedly put to him in cross-examination regarding paragraph 4.9 of his evidence in support, especially as the “sparking” problem could not, as a matter of logic, have preceded the “occlusion alarm” problem.
It further transpired during cross-examination that Paul had contacted Mr Gogol to discuss the sparking problem, but these discussions went no further than considering the possibility of repositioning the drill holes in the body of the beaming nozzle (Transcript T1 at page 2, lines 23-26 and page 26 lines 9-18).
The contradictions in Paul’s evidence resurfaced when he was questioned about the provenance of exhibit PM01. For example, this exhibit according to Paul’s evidence in support includes a copy of a drawing prepared by his father, William, which depicts “a shroud coupled to a body portion of the invention and, in particular, indicates channels showing gas being vented”. From an overall reading of paragraphs 4.12 to 4.15 of Paul’s evidence in support (and see also Transcript T1 at page 48, lines 9-10), the drawing of exhibit PM01 was prepared before the sparking problem had emerged.
However, William explained in cross-examination that the drawing was designed to “address getting rid of the [drill] holes” (Transcript T4A at page 28, lines 29-31), and later affirmed that it was intended to “overcome sparking mainly” which clearly indicates that the drawing of exhibit PM01 was prepared after the sparking problem had emerged. Furthermore, Paul and William both agreed in cross-examination that the sparking problem emerged in at least September or October 2000, and thus Paul could not have approached Mr Gogol about the sparking problem in “mid 2000” as alleged in his written evidence. These inconsistencies add to the misgivings I have already expressed regarding Paul’s evidence.
Nevertheless, although surprisingly not pressed by Mr Fitzpatrick, the drawing of exhibit PM01 in my opinion warrants close scrutiny. It was not disputed by Dale that the drawing was prepared by William and illustrates a shroud having venting channels formed in it. As amplified by William during cross-examination:
“Mr Glick: What is it you say that you came – what idea do you say you came up with? William: Just using the shroud. Do away with the holes and use the shroud and drill the holes in the shroud and drill out to have channels and lock it onto the nozzle with that groove up there, then we’d do away with the holes and hopefully it would vent up through the channels. It shouldn’t be blocked.”
(Transcript T4A at page 27, line 30 to page 28, line 4)
It seems from Dale’s evidence in response that the shroud referred to by William formed part of an existing ConMed beaming nozzle, which is consistent with the oral evidence given by Paul that William’s idea was “not so much the shroud but incorporating the safety feature [viz. the venting channels] into the shroud” (Transcript T2A at page 58, lines 6-8). Importantly, William’s idea of forming venting channels in the shroud bears obvious similarities to the venting system which raises the suspicion that the venting system may have come from William, and not Dale.
William stated in cross-examination that exhibit PM01 was designed to overcome the sparking problem and “gas back-pressure”. When challenged, he admitted that he did not know the exact cause of the build up in gas pressure which I do not find surprising given my clear impression that this aspect of his evidence was based on what Paul had told him. However, it appears his belief was that the build up in gas pressure was in some way related to the occlusion alarm problem. Paul thought that the gas may have been backing up at the inner plenum, but the problem persisted even after the inner plenum was enlarged (Transcript T4A at page 40, lines 22-23). William finally conceded that exhibit PM01 did not provide “a solution to the blockage of the gas at the plenum”. On the evidence before me, I take this concession to mean that William’s idea did not prevent the build up of gas pressure which, it will be recalled, was central to the concept of venting first suggested by Dale as a solution to the problem of gas embolism. As events occurred, Paul quickly rejected William’s idea who in turn “shelved it” (Transcript T4A at page 18, lines 30-31). There is no evidence that William’s idea was at any stage communicated to Dale or further pursued by Paul.
For these reasons I find that Dale’s original venting concept was not put into practical effect or otherwise contributed to by William. Accordingly, I am unable to accord William the status of inventor in respect of the venting system, and in fact he went so far as stating in cross-examination that he was “not an inventor of any part of this device” (Transcript T5A-B at page 1, line 16).
Furthermore, and having regard to the totality of the evidence, I am left in no doubt that the venting system was arrived at by Dale alone. In addition to the evidence demonstrating that the idea of a venting system was conceived by Dale and then developed by him to the point of including venting holes or slots (see exhibit DVM-7 at page 127), it is most telling to my mind that Paul and William both agreed in cross-examination that the drawing of exhibit PM11 was Dale’s. On 3 January 2001 Dale sent an email to his US patent agent which relevantly stated:
“The area I am still working on a little more is, refining the venting aspect … I feel I’ve developed a more functional and refined way of venting … I will include a better drawings [sic] of this part of the invention.”
The drawings were forwarded to the US patent agent by facsimile transmission on 4 February 2001, and included the drawing of exhibit PM11 (see exhibit DVM-7 at pages 164-174). This drawing clearly embodies the final form of the venting system.
It is equally clear in my opinion that the evidence falls well short of establishing that Paul materially contributed to the venting system. His only direct involvement with the development of Dale’s original venting concept seems to have been at the time holes were drilled in the body of the beaming nozzle which led to the emergence of the sparking problem. However, as indicated above, the weight of the evidence is fully supportive of the view that the idea of drilling holes came from Dale. Moreover, Paul did not even provide input into William’s idea, other than to suggest enlarging the inner plenum where he thought the gas was backing up, and there is certainly no suggestion that he took steps to independently progress the idea of providing venting channels in a shroud as a possible way of countering the formation of a gas embolism. To the contrary, the evidence shows that his interest remained with the idea of drilling holes in the body of the beaming nozzle which did not involve the use of a shroud.
The present application was amended in February 2001 to include a disclosure of the venting system.
Summary
I have found that the initial concept and the venting system were arrived at by Dale without the assistance of Paul and, accordingly, I also find that prima facie Dale alone is entitled to the grant of a patent under section 15(1)(a).
However, as already indicated, Paul has alleged that in the event he is not found to have entitlement as co-inventor, he is nonetheless jointly entitled under section 15(1)(b).
ENTITLEMENT UNDER SECTION 15(1)(B)
As stated in Vrubel and Another v Upham [1997] APO 51, the categories of persons specified by section 15 to whom a patent may be granted include the actual inventor as well as persons deriving title from the inventor by assignment, an employer-employee relationship, or a collaborative relationship. This statement concerning the operation of section 15 was not disturbed by the AAT on appeal (Upham v Commissioner of Patents).
In the present case there is no evidence that Dale had assigned his interest in the invention to Paul. There is also no evidence of an employer-employee relationship, although in cross-examination Mr Fitzpatrick sought to establish that Dale had made at least the initial concept within the course and scope of his employment by Valleylab or DTA. I will return to this issue later.
The principle submission put by Mr Fitzpatrick is that Paul is jointly entitled by way of the collaboration between Paul and Dale. I think it is unfortunate that Paul’s reliance on this basis for entitlement was not made apparent until the final day of the hearing, but I have no reason to believe that Dale’s interests have as a result been unfairly compromised since the written submissions filed on his behalf subsequent to the hearing addressed this issue in full.
The CSIRO v Gilbert and Hazlewood decision (1995) AIPC 91-171 at pages 39,556-7 provides guidance where entitlement to all or part of an invention arises out of collaboration:
“The terms of the collaboration were never put in writing. But this is not a reason to deny its existence – the correspondence between the parties clearly recognises a real and ongoing collaboration. Dr Emmerson sought to distinguish a “scientific” collaboration from a “commercial” collaboration. I think that is an artificial distinction absent a clear indication that such a distinction was present in the mind of the collaborators. Indeed, it seems to me irreconcilable that a person could have a right to recognition as a joint author of collaborative research paper [sic], yet have no entitlement to any proprietary rights to commercial matters that arise from the paper ...
In my view the collaboration between the present parties was based on a sharing of all “advantages” arising from their collaboration. The respective contributions to the collaboration were the clones … provided by Orpin and Xue, and the investigation of those clones by Gilbert and Hazlewood. All the correspondence up until the dispute evolved is consistent with this understanding as between the parties.
I conclude that a consequence of the collaboration is that entitlement to any inventions associated with the collaboration are shared between the parties of the collaboration; that is, if an individual is not considered to be an actual inventor, they derive title by way of the collaboration. Thus, the entitlement to any invention associated with the provision of the clones by Orpin and Xue is shared by reason of the collaboration; and the entitlement to any invention associated with the end results of the collaboration are also shared by reason of the association.”
As it turns out, this case involved a scientific collaboration in which attempts to commercialise the results of the collaboration led to a breakdown of the relationship between the parties. Notably, it seems that the “advantages” shared between the parties were technical developments that had some material effect on the final conception of the subject matter for which protection was sought.
Paul and Dale first met in 1987 when Dale was employed with Valleylab, and their ensuing relationship continued after Dale commenced employment with DTA in 1999. Paul was at all relevant times the owner and director of TSI. However, the evidence does not in my view establish that their relationship was ever based on an exchange of “advantages” as in the Gilbert and Hazlewood case. As already stated, Paul did not have the background in electrosurgery which Dale had gained over many years. His attempts to establish this background have not proven convincing. Furthermore, in his written evidence Paul claims that in the period leading up to the development of the invention, he and Dale met regularly and “identified problems with existing electro-surgical devices and discussed possible improvements or modifications that could be made.” The devices under discussion were apparently basic electrosurgical instruments manufactured by TSI predominantly for Valleylab. Whatever the case may be, I do not consider that Paul contributed significantly to these discussions since the conclusion most consistent with the evidence is that it was Dale who reported problems experienced in the field with TSI products, and made suggestions for product improvement or modification. The evidence further indicates to me that Paul’s role was limited to the implementation of such product change under instruction from Dale.
Nevertheless, Dale readily admitted in cross-examination that he approached Paul with the initial concept because of his expertise as a surgical instrument maker (Transcript T5A-B at page 6, lines 20-24). However, as I have said, this is not a case where Dale had the general idea of what was required to solve the problem arising from the eyebrow burning incidents encountered by Mr Davies in 1998, but required the manufacturing skills of Paul to give effect to his idea. For the reasons already set out, I do not believe that the initial concept materially benefited from Paul’s input. It may have led to a preferred workable embodiment of the initial concept, but it did not change the result already contemplated by Dale. In fact, it seems from the evidence that in some respects Paul simply acted as a conduit between Dale and Mr Gogol.
However, this does not dispose of the question of whether Paul has derived joint entitlement through his relationship with Dale. The effect of a collaborative arrangement on entitlement was approached in this way in the Vrubel v Upham case:
“… there is nothing which establishes that the relationship was of such nature that it amounted to a co-partnership in respect of on-going developments arising from or incidental to the relationship, whereby any rights to inventions from individual developments rested with the partnership rather than the individual party responsible for such inventions. It is evident that the Vrubels did seek to have their input into that working relationship recognised by way of inclusion in Upham’s patent applications for the injection system, but as that was rejected by Upham, this points to Upham viewing the relationship as other than any co-partnership of the form I have mentioned.”
On 23 June 2000, following the success of the clinical trial conducted by Mr Mutimer, Dale and Paul agreed to set up Surgical Innovations which was to be a corporate body separate to TSI with rights to commercially exploit the initial concept. The terms of the agreement were not put in writing, but it seems well settled that the future company would not hold patent rights to the initial concept which would instead be jointly owned by Paul and Dale (Transcript T5A-B at page 27, lines 27-29). Although Surgical Innovations was formed in February 2001 with Paul and Dale as co-directors and equal shareholders, the proposed joint venture did not eventuate due to a deterioration in the relationship between them.
On 26 December 2000 the US patent agent engaged by Dale advised him that the “declaration/power of attorney that I sent to you erroneously listed only you as the invention [sic] and after rereading you [sic] disclosure I see that Paul Mackay [sic] should also have been named. I will prepare a new document and get it to you …” (exhibit DVM-7 at page 92). A replacement declaration and power of attorney was sent to Dale on 28 December which named Paul as co-inventor. Dale was asked by the US patent agent to “[c]heck for correct data, corrections can be made with a pen and initialled if necessary.” No corrections were made by Dale to the replacement document. As noted at the outset of this decision, Paul is also listed as a co-inventor by the present application.
In Encoret Limited v Dexterity Inc [2001] APO 12, it was considered that the filing of joint applications in accordance with a “gentleman’s agreement” was clear evidence of a co-partnership of the type referred to in Vrubel v Upham. In my opinion, these circumstances apply by direct analogy to the present situation since it is abundantly clear from the evidence that it was agreed between Dale and Paul that they would share any future patent rights. As claimed by Paul in cross-examination:
“I understood that Dale had come to me with an idea, he asked us if we could make it, there was a certain amount of design that we had to do as part of that, producing a working prototype and I was going to bear the costs of patent [sic], all the material costs, everything associated with that, and he gave me his word, he said, “Look, I will put you on the patent”, he gave me his word. He said, “I give you my word I’ll put you on the patent.
Mr Glick: Because of your contribution to the joint venture. Paul: Yes.”
(Transcript T2A at page 56, lines 16-24)
Dale confirms his express assurance of joint ownership in his evidence in response where he states that on 23 June 2000 he telephoned Paul “and offered to share my invention with him on the basis that we would establish a separate business, clearly delineated from TSI, to manufacture and distribute the product of my invention. [Paul] accepted my proposal.” Dale further stated in cross-examination that he forwarded Paul’s details to the US patent agent for inclusion in the replacement declaration and power of attorney as a co-inventor “for him to share in the patent rights as a result of our agreement of 23 June 2000” (Transcript T6A at page 58, lines 15-22), and that Paul was similarly named as an inventor in the present application “[a]s per our agreement” (Transcript 6A at page 64, lines 13-14). Consequently, there can be no doubt that it was commonly understood by Paul and Dale that the effect of the agreement of 23 June 2000 was that any rights to inventions arising from, or incidental to, their relationship would rest with them jointly.
In possibly attempting to downplay the significance of their relationship, Dale stressed in cross-examination that he never regarded Paul as a co-inventor. However, this line of argument relates to inventorship under section 15(1)(a) rather than entitlement under section 15(1)(b). More relevantly, the fact remains that Dale not only knowingly took steps to include Paul as a joint inventor, but also formally acknowledged him as such for example by signing the patent request form filed with the present application (exhibit PM06). Mr Fitzpatrick submitted that Dale was as a result estopped from asserting that he is the sole inventor, but as this accession was on the evidence clearly given as “an act of goodwill” there is no suggestion that Dale has resiled from his claim to sole inventorship (cf. Encoret v Dexterity, and Costa v GR & IE Daking Pty Ltd 29 IPR 241).
It is also worth noting that when corresponding with the US patent agent Dale consistently referred to Paul as his “business partner” (see eg. exhibit DVM-7 at page 164), and in cross-examination said that he “shared everything with Paul” who he treated as a “fifty-fifty partner” (Transcript T6A at page 53, lines 7-9). Although Dale took responsibility for pursuing the protection of rights in the United States, the evidence shows that he kept Paul informed of developments and indeed actively sought his input before instructing the US patent agent (see eg. exhibit DVM-7 at pages 55 and 88). I take these as examples of the constant cooperation between Dale and Paul, at that time, in fulfilling their agreement of 23 June 2000. This close business relationship is also evidenced by the fact that Dale and Paul both contributed to the preparation of the draft specification that was to form the basis of joint applications in Australia and the United States, and “made contributions together” in meeting the costs this incurred (Transcript T6A at page 75, line 17).
Accordingly, I find on the evidence that Paul has derived entitlement from the collaborative arrangement or “co-partnership” that existed with Dale. The fact that the parties are now in dispute is irrelevant since it is clear from the evidence that the dispute occurred after the invention was developed, and after the present application was both filed and amended (see eg. exhibit DVM-7 at page 178).Mr Fitzpatrick has further submitted that the entitlement of Dale as inventor has been displaced by the rights of Valleylab or DTA as his employer.
Mr Glick argued that it was not open to Paul to make out an entitlement in Valleylab or DTA when neither company had itself challenged Dale’s entitlement to the grant of a patent. However, as stated in Stack v Brisbane City Council [1999] FCA 1279 at [78]:
“The policy of the Act is to ensure that monopoly rights given by s 13 are only available to persons who are properly entitled to them. Thus, where the patentee seeks to exclude others from the patent area to take action for infringement of the claims of the patent, the Act allows persons interested in challenging the entitlement of the patentee to the patent to do so … It is sufficient that … the person alleging no entitlement make out such a case on the balance of probabilities. This it may do by proving up to the requisite standard the existence of the entitlement in a person who, for whatever reasons, does not wish to come forward and assert that entitlement in proceedings against the patentee.”
Employer’s rights in the inventions of employees are not governed by statute but by common law and equitable principles which clearly show that in the absence of any express contractual obligation there is no rule that an invention made by an employee is inevitably the property of the employer. It is instead necessary to determine whether the employment relationship suggests that the invention concerned was made in the course of employment or, in other words, whether it is something it was the employee’s job to invent (Spencer Industries Pty Limited v Collins [2003] FCA 542).
In the present situation no contract of employment has been brought to my attention which regulates the ownership of any invention made during the ordinary course of Dale’s employment with Valleylab or DTA. I therefore need to examine the nature of the duties he was engaged by them to perform.
As noted earlier, the evidence makes it plain that the position Dale held with Valleylab and, later, DTA, was principally a marketing and sales position. He consequently became aware of problems experienced in the field with products it was his responsibility to sell. Dale stated in cross-examination that he endeavoured to resolve these problems, and later accepted this was because he was employed to develop product change (Transcript 5A-B at page 4, line 1 and page 5, lines 18-23).
However, there is simply no evidence of a pattern of innovative product development by Dale, or that his endeavours to resolve problems were prompted by an obligation to undertake any inventive activities on behalf of his employer at the time. Rather, the available evidence leaves me with the definite sense that it was not in the nature of Dale’s employment to develop solutions to problems that went beyond the area of his technical knowledge of electrosurgical instruments, and were incompatible with his principle responsibility for advancing the sales of Valleylab or DTA.
I therefore find that the invention was made by Dale outside the course and scope of his duties as an employee of Valleylab and DTA who as a result do not derive entitlement under section 15(1)(b). As already stated, there was no intention on the part of Dale and Paul that rights to the invention would vest in Surgical Innovations.
Summary
I have found that Dale’s original entitlement as sole inventor has not passed to Valleylab or DTA by reason of an employer-employee relationship, and that Paul is jointly entitled along with Dale.
CONCLUSION
I have found that the initial concept and the venting system were arrived at by Dale without the assistance of Paul. However, I have also found that Paul has derived joint entitlement to the grant of a patent by reason of the collaborative relationship he shared with Dale.
The patent request filed with the present application names Paul and Dale as co-applicants and co-inventors. No notice of entitlement has been filed.
Consistent with the approach taken in Encoret v Dexterity, and subject to any appeal, I allow a period of two (2) months from the date of this decision for Dale and Paul to request amendment of the patent request to remove Paul as a co-inventor and to file a notice of entitlement to reflect my decision, or, alternatively, for the parties to file submissions (with copies to the other party) on how I should proceed.
If no submissions or amendments are filed within two months of this decision, I will make a determination that the present application is to proceed jointly in the names of Dale Victor Mackay and Paul Taylor McKay.
COSTS
In actions before the Commissioner, costs usually follow the event. In the present case I have found in favour of Dale’s claim to sole inventorship, but his leading claim to sole entitlement has proven unsuccessful. However, I do not believe that Paul is entitled to costs since his ultimate reliance on entitlement under section 15(1)(b), and not inventorship under section 15(1)(a), was not made known until the final stages of the hearing.
I therefore make no award of costs.
O L Haggar
Delegate of the Commissioner of PatentsSolicitors for Dale Victor MacKay: Schetzer Brott & Appel, Melbourne
Patent attorneys for Paul Taylor McKay: Davies Collison Cave, Melbourne
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