Esco Corporation & Anor v Pac Mining Pty Ltd & Anor

[2009] HCATrans 176

[2009] HCATrans 176

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S77 of 2009

B e t w e e n -

ESCO CORPORATION

First Applicant

BRADKEN RESOURCES PTY LTD

Second Applicant

and

PAC MINING PTY LTD

First Respondent

CENTRAL QUEENSLAND MINING SUPPLIES PTY LTD

Second Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 31 JULY 2009, AT 9.50 AM

Copyright in the High Court of Australia

MR R.C. MACAW, QC:   May it please the Court, I appear with my learned friend, MR S.C.G. BURLEY, SC, for the applicants.  (instructed by Mallesons Stephen Jacques)

MR J.V. NICHOLAS, SC:   May it please the Court, I appear with my learned friend, MR H.P.T. BEVAN, for the respondents.  (instructed by DLA Phillips Fox)

GUMMOW J:   Yes, Mr Macaw.

MR MACAW:   If the Court please, the claim as your Honours will see is at page 143 of the application book and the short way to put the point of construction, which is at issue, is whether the bearing surfaces to which the surfaces of the lock are opposed must face towards each other or may, on the other hand, face towards or away from each other.  The words of the claim do not support the limited construction which the Full Court found because the relevant words your Honours will see at line 10 in the claim that:

the first and second bearing surfaces face in opposite directions when the first and second shoulders are engaged -

The function and purpose of the lock do not support the limited construction because, as one sees from line 12, the function of the lock with the characteristics that it has is:

to prevent disconnection of the first and second shoulders from each other and thereby retain the wear member on the mount –

And that function or purpose may be achieved, whether or not the bearing faces face towards each other.  It could equally be achieved, as his Honour found, if the bearing face away from each other.  Further, the lock has:

an adjustment assembly selectively movable to vary the relative positions of the first and second bearing surfaces to thereby apply forces to the wear member and the mount that tend to tighten the mounting of the wear member on the mount.

So that one could have relative movement of the bearing surfaces by them being pushed apart or pulled together.  Again, therefore, the function to be performed by the lock in this claim does not require that the limited construction should be placed upon it.

His Honour Justice Tamberlin approached the matter in what we would submit was an orthodox fashion, in contrast to the way the Full Court dealt with the matter.  Your Honours will see at application book 13 at paragraph 36 his Honour identified the “issues of construction”.  At line 17 on that page his Honour identified the one issue of construction in relation to claim 1 of Jones III as being the meaning of “a lock received into the opening” and observed that:

the resolution of these three issues of construction will also resolve the question of infringement because the three issues reflect the only points of distinction which the respondents say exist between the patents and the respondents’ products.

At paragraph 50 of his Honour’s judgment he turned to the issue relevant to claim 1 of Jones III.  In paragraph 51 he sets out the contentions of the respondents, which were that:

The lock in its products must (i) have a body; (ii) act as a shear member; (iii) be received into the axial opening in the wear member; and (iv) sit between the rear end of the boss and the rear wall of the axial opening.

Those propositions self‑evidently do not derive from the terms of the claim, they derive, however, from the evidence of Professor Wightley and they carry the consequence, if they were accepted, that the bearing surfaces must face each other.  His Honour dealt with the ‑ ‑ ‑

GUMMOW J:   Is Professor Wightley to be treated as a relevantly skilled addressee?

MR MACAW:   According to the findings of the court, yes, your Honour.  In paragraph 58 his Honour deals with that question of construction.  His Honour says:

In my view, the expression “received into the opening” does not mandate that the whole of the lock must be so received.  The normal meaning of “received into” can include receiving part of a lock, and the example of a door lock (in which the lock is received into an opening notwithstanding that its latches, handle and shaft may project outside that opening) given by the applicants demonstrates this point.  Neither the language of the claims in suit, nor the functions of the lock in the relevant wear assemblies support the restrictive interpretation of the term proposed by the respondents.  There is no reference in the claim to the “whole” or the “entirety” or the “essential parts” of the lock being so received, and in my view, the use of the word “between” does not require that the whole lock should be contained within the opening defined by the first and second bearing surfaces.  Moreover, the operation of the lock does not call for a restrictive interpretation because its purpose, which is to prevent detachment of the wear member as a result of the movement of the wear assembly, does not depend on the lock being entirely encased within the first and second bearing surfaces.  Professor Wightley accepted this point in cross‑examination.

And then his Honour goes on to point out that “the preferred embodiment”, in fact, does not show the whole lock contained within the two specified surface areas.

GUMMOW J:   Is his Honour saying that the claim is relevantly unambiguous?

MR MACAW:   Yes.  He does not say so in terms, but it is evident from the way in which he has dealt with the matter that there is no need to look beyond the words of the claim.

GUMMOW J:   That is what I was getting to, yes.

MR MACAW:   And the conclusion then is in 59:

it is not necessary for the whole of the lock to be received into the opening between the first and second bearing surfaces.  In addition, having regard to the language used in the claim and the preferred embodiment, I am not persuaded that every critical part of the lock must be received into the opening.  No support for this alternative construction can be derived from the terms of the claims in suit, nor is there sufficient evidentiary basis to support such an interpretation.

Now, by contrast their Honours, in the Full Court, at application book 83, having recited, I should say in unexceptional fashion, the relevant principles of construction proceed to approach the matter of construction in a fashion differently from those principles.  At paragraph 41, application book 83 there is a recitation of the criticism at line 30:

that his Honour’s analysis did not “reflect a commonsense and practical approach to the interpretation of the claim” and was “based upon an over‑meticulous and fragmentary analysis of language used in the claim”.  In our respectful view, there is some justification in these criticisms.

At 42 their Honours say:

As appears from what we have set out in pars 17‑18 above –

which is a reference back to his Honour Justice Tamberlin’s approach –

the primary Judge dealt with these aspects of the appellants’ case as though they involved pure questions of construction, and even then his Honour appears not to have dealt with so much of that case as characterised the lock as one which acted as a shear member or, in the case of Jones III, as involved the requirement that the lock be set between the two bearing faces referred to.

In our submission, Justice Tamberlin correctly looked at the language of the claims and the function of the lock and, in our submission, it is inappropriate to criticise him for dealing with the fashion by the use of a pejorative expression “pure question of construction”.

GUMMOW J:   Now, looking at paragraphs 41 and 42 where you say the Full Court fell into error what is the correct principle from which they departed and did they set out the correct principle earlier?

MR MACAW:   Well, they set out a number of the cases, your Honour, at paragraph 27 and following, including the list of matters in Dart v Decor and more recent authorities.  And, as I say, we do not take exception with the recitation of principle, but when it comes to either their understanding of the principle or their application of it they have departed because ultimately what they have done is not to look at the terms of the claim, but rather to seek to discern the essence of the claim, the essence of the invention to look what was in the mind of the inventors and to approach the matter informed, as they say, by the practical understanding of the experts, notwithstanding that what the experts did was to deduce matters, not from the terms of the claim, but from the manner in which the preferred embodiment worked.  So that ultimately a substitution of an approach informed by the practical understandings of the experts will erode the fundamental principle that unambiguous words of the claim should be given.

GUMMOW J:   It is really paragraph 28, is it not?  You would accept that?

MR MACAW:   Yes, we would, indeed.

GUMMOW J:   But you say that was departed from?

MR MACAW:   Indeed, it was and I will seek to make good that there are a number of respects in which it is departed from, they are all related, to some extent subtly different, but ultimately one can discern about five or six respects, we would submit, in which that was departed from.  Their Honours say later on in 42 at line 19:

that his Honour did not come to grips with a central aspect of the appellants’ case that required an identification of the basic mechanical principles involved in Jones II namely, the means of operation of the lock, and specifically the fact that the claim, properly understood in a practical and not merely a grammatical sense, is concerned with a lock which is set between slightly offset faces which would otherwise move towards each other, thereby operating as a shear member.

That is true that observation of the preferred embodiment, but to say so is to invite attention away from the words of the claim.

GUMMOW J:   Now, is there any argument that if your construction of the claim is correct that imperils its validity?

MR MACAW:   Well, my learned friend suggests so.  We would say it is a clear case where the body of the specification does provide support for the adjustment assembly being selectively variable so as to cause relative movement of the bearing surfaces.  If we are right about that there is an end, we would say, of any fair basis complaint because the consequence will be that something within the claim is described and something within the claim is described which includes an adjustment assembly and a lock, which provides for relative movement of those bearing surfaces.  The preferred embodiment exemplifies one form of relative movement, but the specification provides support for the broader principle of relative movement.  In paragraph 43 their Honours say that, at line 3 on page 85 of the application book:

Use of the word “lock” in the claim, therefore, reveals little about the essence of the invention, and invites further inquiry . . . It is really the further characteristics of the lock, and how they operate in co‑operation with the boss and the wear member to achieve locking, that illuminate what it is the inventors had in mind and thus the true scope of the claim in relevant respects.

We would say, with respect, that this appeal to a practical understanding of the engineers has invited and caused a slide from the true inquiry about what the words of the claim would mean to a practical addressee to an inquiry about what is the essence, and an inquiry about what the inventors had in mind.  Neither of those approach ‑ ‑ ‑

GUMMOW J:   In paragraph 44 it says:

each of Mr Alden and Prof Wightley expressed his understanding of what was conveyed by the claims –

Is that sort of evidence let into the Full Court these days?

MR MACAW:   I am sorry, your Honour?

GUMMOW J:   Is that sort of evidence customarily received in the Full Court these days?

MR MACAW:   Well, unfortunately, it is sometimes difficult to draw the distinction between what is there by way of explanation of scientific matters and conclusions expressed upon un‑stated premises on the one hand, and things which are bare attempts to usurp the function of the Court by way of construction on the other.  I regret to say that the answer to your Honour’s question is, yes.

GUMMOW J:   It went in anyway.

MR MACAW:   What they did though, your Honour, what is significant about this paragraph is that there was a debate caused by Professor Wightley’s insistence that the terms of the claim require that the lock should be a shear member, which is to say that the bearing faces should face each other and the lock should sit between them.  Mr Alden took issue with that and by reference to the preferred embodiment attempted to demonstrate that forces, other merely than shear forces, applied even in the case of the preferred embodiment.  Their Honours in the Full Court appeared, however, to think that the whole of the debate between the experts, notwithstanding that it was limited in that fashion to what the forces were in the preferred embodiment, informed it in its ability to approach what was the essence of the invention claim.

Your Honours will see in paragraph 46 Professor Wightley’s approach to the matter, which was to look at Jones I, which had been referred to in the body of the specification.  He referred to “the lock in Jones I as a “key”.”  He said it acted as a shear member and then in paragraph 47 he says he thought that:

the “lock” referred to in claim 1 of Jones III perform the same function as the key –

and is also a shear member.  So his approach was to say, in substance, the lock claimed in Jones III is the Jones I key, namely a shear member, to which there has been added – although it is not part of the lock – an adjustment assembly.

Your Honours will see that at the end of paragraph 47 on page 87 of the application book.  Professor Wightley referred to Mr Alden’s affidavit and made four points in opposition.

First, he said that the claims required the lock to be “a single member and not a collection of component parts”.

There is not textual foundation for that in the claim –

Secondly, he said that the lock described in the claims was “in the nature of a rigid block which functions as a shear member” –

No reference to that in the text of the claims –

Thirdly, he said that the forces applied (in the appellants’ assemblies) when those components were assembled and tightened were “tensile forces, rather than shear forces”, as required by the claims.

Again, no reference to shear forces in the claims –

Fourthly, he said that the adjustment assembly described in the claims was “an addition to the lock”, not part of the lock itself.

I remind the Court that the text of the claim at 143 of the application book is that the lock should have an adjustment assembly, plainly as part of the ‑ ‑ ‑

GUMMOW J:   Mr Macaw, I think we come to this perhaps.  Accepting the statement of principle at paragraph 28, for example, is correct and accepting that you could show that there had been departure from the application of the principles to this particular claim why should that attract a grant of special leave in this sense?  Is there a question of general public importance, or would it rather be a visitation case?

MR MACAW:   No, it is important, not only because they, in our submission, got the result in this case plainly wrong, but because the approach that they have taken is apt to mislead other courts.  The recitation of principles, for example, in Dart v Decor is easier to state than to apply.

GUMMOW J:   Yes, they are stated at a great level of generality ‑ ‑ ‑

MR MACAW:   For example, the purpose of construction principle is apt to be misused in the sense that it can lead people, not to inquire what in the particular context would be understood to be meant by an expression, e.g. vertical to a mathematician in a mathematical text where it meant one thing, vertical to a practical builder it might mean something else.  Rather it can lead to an inquiry into the underlying essence and that seems to be in part what has happened here.  Secondly, if you adopt the kind of approach that what is relevant is the practical understanding of experts you will divert attention from attention to the wording of the claims.  And, in fact, the Court does not even look at the wording of the claims comprehensively.  It says that there are some similarities and some differences and does not identify the differences, nor see what their significance is.

You will have a case, in other words, where one can recite the principles, but go off on a tangent apparently in conformity with some of them.  And we would say in this case that what has happened is that the Court has not looked at the claim language.  Instead it carries its construction of claim, the claims of Jones II into a conclusion on Jones III, without identifying the differences in the language.  It criticises the trial judge for looking at the relevant claim language and the function that the claimed lock is to perform.  Instead, it seeks to find the essence of the invention and what the inventors had in mind. 

It does so, informed by the practical understandings of experts, notwithstanding that they are based on the preferred embodiment.  Notwithstanding that, in Professor Wightley’s case, they are based upon an assumption that the Jones I key is the lock of the claims and has no adjustment mechanism as part of it, and notwithstanding that he did not attempt to provide any explanation of the words used by claim 1 of Jones III.  So, we would say it is a bit like a case where you recite all the right principles in a case of contract, but then you go off and you accept the evidence of a witness who tells you what the words mean, as it turns out by reference to some understanding outside the objective surrounding circumstances and objective of the purpose and object.

So, that the reason why, in our submission, the Court should intervene is because there is too much scope in the way the principles are currently identified for misapplication, and this is a perfect example.  If the Court pleases.

GUMMOW J:   Thank you.  Yes, Mr Nicholas.

MR NICHOLAS:   May it please the Court.  In our respectful submission, none of the criticisms that are made of the Full Court’s decision are valid.  May I respectfully indicate that the paragraphs that my learned friend has referred to in the Full Court judgment, paragraph 41 and 42, do identify criticisms made by the appellant in the Full Court, that my side, of the primary judge’s reasons, which were accepted by the Full Court.  The Full Court’s analysis of the relevant claim begins at paragraph 64 at page 96 of the application book.  It is preceded on the preceding page in paragraph 63 by a fairly thorough recitation of the way in which our learned friends put their case.

The crux of the Full Court’s reasoning on infringement appears in 64 to 67 and as appears from paragraph 70, for the reasons stated in paragraphs 63 to 67, the appeal on infringement was upheld.  Now, when one looks at those critical paragraphs in the judgment there is no reference at all to the expert evidence.  The references are entirely, in the first instance, to the language of the relevant claim, coupled with after – if I can call it - a preliminary conclusion is arrived at on the basis of the claim language, to a reference to the specification in paragraph 65 which in effect reaffirms that preliminary conclusion.

GUMMOW J:   Where do we see that?

MR NICHOLAS:   Further, our learned friend suggested that that reference is a reference to preferred embodiments only.  With respect to him that is not so.  It includes a reference, a key reference, to the summary of the invention, which appears in the specification that I will come back to shortly, which is not preferred embodiment, but more in the nature of a consistory clause ‑ ‑ ‑

GUMMOW J:   Yes.  Where is the consistory clause?

MR NICHOLAS:   Your Honour, it is at page 134 of the application book.  It begins at page 133.

GUMMOW J:   Which page of the specification?

MR NICHOLAS:   It is page 3 of the specification, under the heading “Summary of the Invention”.

GUMMOW J:   Thank you.

MR NICHOLAS:   Relevantly it is at page 4 of the specification at line 14, where there is an identification of “an opening for receiving a lock”.  This was quite material to the issue of construction about four lines down from there:

The body of the lock sets between the rear end of the boss and the rear wall of the cross portion in order to prevent removal of the wear member from the boss.

Referring to the body of a lock set in between two surfaces.  In the claims the two surfaces that that locks sets between are referred to as “bearing surfaces”.  The walls of the lock are referred to in the claim as “locking surfaces”.  The language of the claim clearly requires that the lock be received between the two bearing surfaces, with a consequence that the lock surfaces, that is ‑ ‑ ‑

GUMMOW J:   This is line 12?

MR NICHOLAS:   Yes, your Honour, it is.

GUMMOW J:   Claim 1?

MR NICHOLAS:   Yes, line 12 and my learned friend did not go to this he focused on line 10 and 11, but a lock is then “received into the opening” in the wear member:

“between the first and second bearing surfaces” . . . “the lock having a first lock surface to oppose the second bearing surface [and] a second lock surface –

Now it is those lock surfaces that define the body of the lock and that must be received between the two bearing surfaces.

HAYNE J:   And is that conveyed by first lock surface to oppose the first bearing surface, et cetera?

MR NICHOLAS:   Yes, your Honour.

HAYNE J:   Fifteen and 16 of the lock.

MR NICHOLAS:   There may be room for debate about it, but it is a question of construction that was decided against the applicants here.  If one accepts that, yes it is open to interpret the claim as requiring the lock, including its locking surfaces to be received between the bearing surfaces, then our learned friends could not succeed.  And, of course, that appears in paragraph 66 of the Full Court’s judgment and it is explained why that must be right.  When one is considering whether or not that is a reasonable interpretation of the claim if one goes to the summary of the invention in the passage I have just identified, that puts it beyond doubt.  If one wants to go beyond the – we will call it the consistory clause – to preferred embodiments there is not a single embodiment described that operates in a different fashion.

So, it was the applicant below, my learned friend’s client, who called expert evidence, that is Mr Alden, to prove infringement, and Professor Wightley was called in response to that evidence.  Professor Wightley’s evidence, a practical engineer, read the specification and the claim and explained to the trial judge in the Full Court through the transcript the way in which an apparatus of this kind works, from a practical and engineering perspective.  But that was a perfectly legitimate use of expert evidence and when one looks at the key paragraphs in the Full Court’s judgment there is not the slightest suggestion that they have succumbed to any temptation to prefer a construction that has been advanced by an expert witness, as opposed to one that is otherwise supported by the claim.

So, we respectfully submit, that there is no real doubt here that this decision is correct.  There is certainly no indication anywhere on the face of the judgment that any principle has been misstated or misapplied.  The consequence of accepting the applicant’s construction is that this claim must be bad for lack of fair basis, and the reason for that is that there is no – there is a starting point, unlike Doric.  There is no consistory clause that mirrors that language of claim 1.  So even on the textual comparison there is no fair basis to be found in the specification.  In terms of the substance of the disclosure, looking beyond the text, there is no disclosure anywhere of any embodiment that operates in the way that an apparatus would have to operate, if it fell within this claim on our learned friend’s construction.

It is totally unsupported, both textually and as a matter of substance.  The Full Court did not need to deal with the fair basis issue and, of course, we said it was only put forward by us in the alternative in any event.  It is relevant on construction, of course, as well because one would not likely be drawn into a construction that inevitably spells invalidity and we say that is what would occur here.  We respectfully submit the application should be refused.

GUMMOW J:   Yes, thank you, Mr Nicholas.  Mr Macaw.

MR MACAW:   It is at paragraph 53 that the court recites that its approach to the matter was:

Informed by the practical understandings of Mr Alden and Prof Wightley –

The passages at 64 and 65 self‑evidently involve avoiding looking at the terms of the claim.  What is said is that:

Claim 1 of Jones III differs from claim 1 of Jones II in a number of respects, but there are important similarities.

There is not an attempt to identify and assess the significance of the differences.  What is claimed is a different combination, in effect, and the approaches involved saying, well, if the essence is sufficient to require a certain conclusion in the case of one combination, then likewise it should in the case of the other.

At 56 their Honours have set out what were critical passages in claim 1 of Jones II, which were said to support the conclusion that they came to.  Those critical passages do not occur in claim 1 of Jones III, so that one has a very curious result and we have a construction of a claim, apparently without reference to the words of the claim.  My learned friend says that the consistory clause is set out at page 134 of the application book.  In truth it might be thought not to be a consistory clause because it does not correspond with – none of those paragraphs corresponds with the terms of any of the claims, they relate only to aspects of the invention. 

But, in any event, one does not get to any part of the body of the specification unless one can identify ambiguity and, in our submission, plainly there is none.  Finally as to fair basis, the description of the adjustment assembly is at 140 of the application book and plainly indicates that the adjustment assembly operates to vary the relative positions of the bearing surfaces, such as would support the claim.  His Honour the trial judge dealt with the matter in the way it was put, namely, that if the claim was not limited to a lock being a shear member, then it was invalid for lack of fair basis. 

His Honour said the proper test applying Doric was to ask whether the features of the claim were supported in the text and found that they were because the text includes all the features of the claim.  It includes the bearing surfaces facing in opposite directions and it includes an adjustment assembly selectively able to vary the relative positions of the bearing surfaces, so that in our submission, the position of our learned friends on fair basis is untenable.  May it please the Court.

GUMMOW J:   Thank you.

An appeal to this Court would turn upon the construction of clause 1 of the patent in suit.  We are not satisfied that there are sufficient prospects of success on the issue of construction to warrant a grant of special leave. 

Special leave is refused with costs.

AT 10.24 AM THE MATTER WAS CONCLUDED