Datadot Technology Ltd v Alpha Microtech Pty Ltd

[2003] FCA 962

FEDERAL COURT OF AUSTRALIA

Datadot Technology Ltd v Alpha Microtech Pty Ltd [2003] FCA 962

PATENTS – innovation patent entitled ‘Identifier Label Application System’ – infringement – where no appearance by respondent – where evidence of infringement

PATENTS – innovation patent entitled ‘Identifier Label Application System’ – revocation – where no evidence to support claim for revocation

PRACTICE & PROCEDURE – certificate under Patents Act 1990 (Cth), s 19 – conferral of discretion – where no contested issue concerning the validity of the patent

Patents Act 1990 (Cth) ss 7(4), 7(5), 18(1A), 19(1), 19(2), 52(1), 52(2), 101A, 101B, 101E, 117(1), 117(2)(c), 143A

DATADOT TECHNOLOGY LTD v ALPHA MICROTECH PTY LTD

N799 OF 2002

EMMETT J
5 AUGUST 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N799 OF 2002

BETWEEN:	DATADOT TECHNOLOGY LTD APPLICANT
AND:	ALPHA MICROTECH PTY LTD RESPONDENT
BETWEEN:	ALPHA MICROTECH PTY LTD CROSS-CLAIMANT
AND:	DATADOT TECHNOLOGY LTD CROSS-RESPONDENT

JUDGE:	EMMETT J
DATE:	5 AUGUST 2003
PLACE:	SYDNEY

THE COURT DECLARES:

1.that the supply, sale, distribution or use by the respondent of application equipment comprising the system known as SmartDOT, of which Exhibits MKM-1, MKM-2 and MKM-3 constitute an example, constitutes an infringement of Innovation Patent No. 2001100633.

THE COURT ORDERS:

2.that the respondent be permanently restrained from supplying, selling, distributing or using the application equipment comprising the system known as SmartDOT, of which Exhibits MKM-1, MKM-2 and MKM-3 constitute an example;

3.        that the cross-claim be dismissed;

4.that the proceeding be stood over to 5 September 2003 for directions in relation to the assessment of quantum of pecuniary relief;

5.that the respondent pay the applicant’s costs, including costs of the proceeding (including the cross-claim) to date, and costs of the hearing of 5 August 2003;

6.that the applicant notify the respondent in writing as soon as practicable of the terms of these orders and the provisions of O 35 r 7(2)(a) and of any intention on the part of the applicant to apply for an order under O 62 r 3(2).

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N799 OF 2002

BETWEEN:	DATADOT TECHNOLOGY LTD APPLICANT
AND:	ALPHA MICROTECH PTY LTD RESPONDENT
BETWEEN:	ALPHA MICROTECH PTY LTD CROSS-CLAIMANT
AND:	DATADOT TECHNOLOGY LTD CROSS-RESPONDENT

JUDGE:	EMMETT J
DATE:	5 AUGUST 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The applicant, Datadot Technology Ltd (‘Datadot’), is the registered proprietor of Australian Innovation Patent No 2001100633 (‘the Innovation Patent’).  The Innovation Patent is entitled ‘Identifier Label Application System’.  It describes a method of applying, by way of a spray mechanism, identity labels, referred to as microdots, to various articles which may include motor vehicles, for the purposes of identification.  Datadot has commenced a proceeding in the Court against the respondent, Alpha Microtech Pty Ltd, alleging infringement of the Innovation Patent. 

2. The proceeding was commenced on 5 August 2002 and an amended application and an amended statement of claim were subsequently filed on 6 September 2002.  On 9 August 2003, the solicitors for Datadot wrote to the Australian Patent Office (‘the Patent Office’) , pursuant to O 58 r 11(1)(b) of the Federal Court Rules, notifying the Patent Office of the commencement of the proceeding.  The Patent Office has indicated that it does not wish to participate in the proceeding.  The respondent filed a defence and cross-claim on 10 October 2002.  The cross-claim challenged the validity of the Innovation Patent.

3. There have been several interlocutory hearings before me.  Until 2 May 2003, the respondent was legally represented.  Since then, there has been no legal representation of the respondent.  On several other interlocutory hearings, the respondent was represented by the sole officer of the respondent without any objection from Datadot. 

4. On 1 August 2003, I listed the proceeding for final hearing today.  There was no appearance for the respondent on 1 August 2003, and there has been no appearance today.  However, I am satisfied that the respondent was informed of, and knew of, the hearing today.  On 2 December 2002, I ordered that all issues of pecuniary relief and quantum be determined separately from and after all other issues.  The hearing today, therefore, relates to issues other than those that had been deferred pursuant to O 29.  In the circumstances, I embarked on a hearing of the issues listed for hearing today, not withstanding the absence of the respondent.

5. Under s 29(1) of the Patents Act 1990 (Cth) (‘the Act’) a person may apply for a patent by filing a patent request. If the application is a complete application it must be accompanied by a complete specification. Section 52(1) provides that, if a complete application for an innovation patent is made, the Commissioner must undertake a formalities check in respect of the application. Under s 52(2), the Commissioner, if satisfied that the application passes the formalities check, must accept the patent requests and complete specification.

6. Section 18(1A) of the Act provides that an invention is a patentable invention for the purposes of an innovation patent, if the invention, so far as claimed in any claim:

   (a)       is a manner of manufacture;
   (b)       when compared with the prior art base as it existed before the priority of the claim, is novel and involves an innovative step;
   (c)       is useful; and
   (d)      was not secretly used in the patent area before the priority date of the claim by, or on behalf of, or with the authority of, the patentee.

7. Under s 7(4), an invention is to be taken to involve an innovative step when compared with the prior art base unless the invention would, to a person skilled in the relevant art, in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, only vary from the kinds of information set out in s 7(5) in ways that make no substantial contribution to the working of the invention. The information referred to in s 7(5) is:

   (a)prior art information made publicly available in a single document or through doing a single act;

   (b)prior art information made publicly available in two or more related documents.

8. The Innovation Patent was sealed on 30 January 2002. However, s 120(1A) provides that infringement proceedings in respect of an innovation patent cannot be started unless the patent has been certified. Certification is dealt with in Ch 9A of the Act, which contains s 101A to s 101P.

9. Section 101A provides that, after the grant of an innovation patent, the Commissioner may, if the Commissioner decides to do so, and must, if asked to do so by the patentee, examine the complete specification relating to the innovation patent. Section 101B deals with the examination of an innovation patent by the Commissioner.

10. Section 101E provides that, if, after examining a patent, the Commissioner decides:

    ·that the invention complies with s 18(1A)(b) (that it is to say, it is novel and that it involves an innovative step); and

    ·           that a ground for the revocation of the patent has not been made out; and

    · that the patent has not ceased under s 143A;

    the Commissioner must, amongst other things, issue a certificate of examination to the patentee and register the issue of the certificate.  Once that process has been completed, the innovation patent is taken to have been certified.  The Innovation Patent was certified by the Commissioner on 27 June 2002.  

11. Claim 1 of the Innovation Patent, as certified, is in the following terms:

    ‘A method of applying microdots as identifier labels to an article, said method providing a container having a body containing a plurality of predetermined microdots therein and a viscous base fluid into which the microdots are mixed to form a mixture, said container also having a discharge part coupled to the body, said discharge part having a passage with an inlet portion and a discharge portion, the inlet portion being releasably coupled to means for supplying a dynamic fluid and the passage being in communication with the mixture, and feeding dynamic fluid through the passage so that the dynamic fluid flowing through the passage draws the mixture into the passage for discharge to the discharge portion for application to the article.’

12. The body of the specification for the Innovation Patent says that the term ‘base fluid’ is used to mean:

    ‘any substance or material that is mixed with or contains the identifier labels, … and which may be discharged with the identifier labels. … The base fluid may … be solid or semi solid prior to use, and additives or heat may be added to allow it to be discharged as desired. This may require heating, adding a solvent or some other means to cause it to go to a fluid state. … Examples of base fluids, without limitation, [include] adhesives, paints, polymers, foam, undercoatings for application to vehicles ….’

    In essence, the Innovation Patent describes a device similar to a spray gun whereby a base fluid containing microdots, which themselves contain unique numerals and letters, is applied to objects intended to be identified.

13. The respondent has assembled, supplied, distributed and sold in Australia a system for the application of identifiers to vehicles described as the ‘SmartDOT System’.  An example of the SmartDOT System is in evidence in the form of exhibits MKM1, MKM2 and MKM3.  Exhibit MKM1 is an application kit which consists of the following:

    (a)       one large plastic case with a SmartDOT sticker on the front;
    (b)       one VHS video tape;
    (c)       one spray gun;
    (d)      one silver nozzle fitting;
    (e)       two brass nozzle fittings;
    (f)       one laminated SmartDOT Security System installation guide;

    (g)       one SmartDOT light.

14. Exhibit MKM2 consists of a white plastic bottle of liquid.  The liquid is a SmartDOT product.  Exhibit MKM3 is a plastic nozzle to be used with the bottle that is MKM2 to enable its contents to be sprayed.  The VHS video tape that is part of Exhibit MKM1 describes the intended use of the SmartDOT system as the spraying of unique SmartDOTs or microdots onto motor vehicles to enable parts of the vehicle to be identified.

15. The installation guide contained in Exhibit MKM1 describes the SmartDOT process as follows:

    ‘The SmartDOT Security Marking System uses many thousands of uniquely coated microdots to mark a vehicle.  This system is supplied in a dispenser which suspends the SmartDOT markers in a special adhesive to provide rapid and secure installation.  The dots are sprayed throughout the vehicle and each SmartDOT is printed with information which will identify the owner, the vehicle and all major components.  The Thieves will always be at risk of prosecution because they will never be able to find and remove all the SmartDOTs.’

16. A website operated by the respondent contains the following further information:

    ‘The Application Microdots are applied by using a specially developed spray system.  The dots are suspended in a specially developed adhesive lacquer … which is clear when dry. … Each microdot is about the size of pinhead or a tiny grain of sand measuring .91 mm in diameter.  Depending on the size of the item hundreds or thousands of the dots are applied.  Every individual dot is encrypted with a unique Personal Identification Number (PIN), or Vehicle Identification Number (VIN).’

17. I am satisfied that each of the integers of Claim 1 of the Innovation Patent is present in the SmartDOT system.  The SmartDOT system is a system for applying microdots, described as SmartDOTs, being dots of less than one millimetre in diameter, which are read with the aid of magnification.  The microdots are labels printed with identifying information for application to objects such as motor vehicles.  One of the components of the system is a container.  The container has a body.  The container contains microdots encrypted with unique PINs or VINs.  The fluid in which the microdots are suspended is viscous.  The cap on the container is removed and replaced with a nozzle which screws on to the body of the container.  The nozzle has openings at either end, one larger opening being an inlet component and the other smaller opening being a discharge component.  The larger opening of the nozzle is screwed on to a spray gun which is in turn attached to an air line.  The tube from the nozzle extends into the mixture in the container.  The spray gun is used to push air through the nozzle which causes the mixture in the container to be drawn up through the nozzle by the venturi effect and to be expelled, with the air, from the discharge component of the nozzle.

18. Section 117(1) of the Act provides that, if the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier, unless the supplier is the patentee or licensee of the patent. Under s 117(2)(c), the reference in s 117(1) to the use of a product by a person is a reference to the use of a product in accordance with any instructions for the use of the product given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.

19. The video tape and installation guide are instructions for the use of the SmartDOT system.  Use of the SmartDOT system in accordance with those instructions would infringe the Innovation Patent.  Since the respondent is not the patentee or a licensee of the Innovation Patent, the supply of the SmartDOT system to any person is an infringement of the Innovation Patent. 

20. In its defence, the respondent admitted that, since its incorporation, it has supplied in Australia the security identification system known as SmartDOT.  There is also evidence before me of the supply of exhibits MKM1, MKM2 and MKM3 by the respondent.  In the circumstances, I am satisfied that the respondent has infringed the Innovation Patent. 

21. In its cross-claim, the respondent asserted that the Innovation Patent is, and at all material times, has been invalid and is liable to be revoked.  The grounds of invalidity may be summarised as follows:

    ·     First, the Innovation Patent claims matter not in substance disclosed in the specification as filed.  That refers to amendments made prior to certification.

    ·     Secondly, the alleged invention was not a patentable invention in that it was not novel.

    ·     Thirdly, the alleged invention was not a patentable invention in that it did not involve an innovative step.

    ·     Fourthly, the invention was not a patentable invention in that it was secretly used in the patent area before the earliest priority date of all of the claims. 

    ·     Fifthly, the invention was not a patentable invention in that it was not useful.

    · Finally, the applicant is not entitled to the patent, the innovation patent was obtained by a fraud false suggestion or misrepresentation and the specification of the innovation patent does not comply with s 40(3) of the Act.

22. No evidence has been adduced on behalf of the respondent/cross-claimant in support of the cross-claim and no submissions have been made at any stage in support of the cross-claim.  It follows that the cross-claim must fail. 

23. In the circumstances, I am prepared to make a declaration that the supply, manufacture, sale, distribution or use by the respondent of the application equipment comprising the system known as SmartDOT, of which exhibits MKM1, MKM2 and MKM3 constitute an example, constitutes an infringement of the Innovation Patent.  I am also prepared to grant an injunction restraining the respondent permanently from supplying, manufacturing, selling, distributing or using the application equipment comprising the system known as SmartDOT, of which exhibits MKM1, MKM2 and MKM3 constitute an example. 

24. Datadot also seeks an injunction restraining the respondent from supplying, manufacturing, selling, distributing or using any other system or product that infringes the Innovation Patent. Because there has been no appearance for the respondent, there has been no contested issue concerning the construction of the Innovation Patent. An order such as that sought is no more than an order that the respondent comply with the Act. In the circumstances, I do not consider it is appropriate to make an order along those lines.

25. Datadot also seeks a certificate under s 19 of the Act. Section 19(1) provides that, in any proceedings in a court in which the validity of a patent is disputed, the court may certify that the validity of a specified claim was questioned. Under s 19(2), if a court issues a certificate, then in any subsequent proceedings for infringement of the claim concerned or for the revocation of the patent, so far as it relates to that claim, the patentee, or any other person supporting the validity of the claim is, on obtaining a final order or judgment in his or her favour, entitled to full costs, charges and expenses as between solicitor and client so far as that claim is concerned.

26. Section 19 in my view confers a discretion on the Court. A party is not entitled, as of right, to a certificate under s 19(1). In circumstances where there has been no contested issue concerning the validity of a patent, albeit where a cross-claim seeking its revocation was filed, I do not consider that it is appropriate to issue a certificate. Accordingly, I decline to do so.

27. The matter has not yet been finally disposed of because of the reservation of issues concerning pecuniary relief and quantum.  I shall fix the proceedings for further directions in relation to those matters, if they are to be pursued by Datadot.  It is appropriate that the respondent pay Datadot’s costs to date, including the costs of the hearing today.  I will direct Datadot to notify the respondent in writing as soon as practicable of the terms of these orders and the provisions of O 35 r 7(2)(a) and of any intention on the part of Datadot to apply for an order under O 62 r 3(2).

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:            15 September 2003

Counsel for the Applicant:	D K Catterns QC
Solicitor for the Applicant:	Gilbert + Tobin
Counsel for the Respondent:	No appearance
Date of Hearing:	5 August 2003
Date of Judgment:	5 August 2003