Fina Research SA v Halliburton Energy Services Inc

[2002] FCA 1281

FEDERAL COURT OF AUSTRALIA

Fina Research SA v Halliburton Energy Services Inc [2002] FCA 1281

PRACTICE & PROCEDURE – Rejoinder of party to proceedings – where party had been removed by consent – where rejoinder of party concerns costs – whether potential issues concerning costs are matters in dispute in the proceeding.

PRACTICE & PROCEDURE – Leave to use exhibit to affidavit in overseas proceedings – where affidavit has been filed –where affidavit is intended to be used at a later date.

WORDS & PHRASES – “all matters in dispute in the proceeding”

Federal Court Rules O 6 r 8, O 15 r 18

Qantas Airways Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34 applied
Fried v National Australia Bank Ltd [1999] FCA 737 applied
King v GIO Australia Holdings Ltd [2001] FCA 1773 referred to
Crest Homes Plc v Marks [1987] AC 829 referred to
Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 referred to
SmithKline Beecham Biologicals SA v Connaught Laboratories Inc [1999] 4 All ER 498 referred to
Barristers' Board of Western Australia v Tranter Corporation Pty Ltd [1976] WAR 65 cited
Chapmans Ltd v Australian Stock Exchange Ltd (Tamberlin J, 25 August 1995, Unreported) cited
In the Marriage of Crowe (1988) 12 Fam L R 696 cited
GIO Personal Investment Services Ltd v Liverpool and London Steamship Protection and Indemnity Association Ltd [1999] 1 WLR 984 cited

Emmett J, Practical litigation in the Federal Court of Australia: Affidavits (2000) 20(1) AustBarRev 28

FINA RESEARCH SA v HALLIBURTON ENERGY SERVICES INC & COGNIS DEUTSCHLAND GmbH

N 552 OF 2000

MOORE J
21 OCTOBER 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 552 OF 2000

BETWEEN:

FINA RESEARCH SA
APPLICANT

AND:

HALLIBURTON ENERGY SERVICES INC
FIRST RESPONDENT

COGNIS DEUTSCHLAND GmbH
SECOND RESPONDENT

JUDGE:

MOORE J

DATE OF ORDER:

21 OCTOBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.   Leave to use the exhibit TGS-11 to the affidavit of Tom Shumate sought by the respondents, be refused.

2.   Henkel Kommanditgesellschaft auf Aktien, Baroid Drilling Fluids Inc and Cognis Deutschland GmbH & Co KG be joined as respondents.

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	N552 OF 2000

BETWEEN:

FINA RESEARCH SA
APPLICANT

AND:

HALLIBURTON ENERGY SERVICES INC
FIRST RESPONDENT

COGNIS DEUTSCHLAND GmbH
SECOND RESPONDENT

JUDGE:	MOORE J
DATE:	21 OCTOBER 2002
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This judgment deals with two interlocutory issues which have arisen in a proceeding under the Patents Act1990 (Cth) ("the Act"). The proceeding is an appeal under s 60 against the dismissal of an opposition to the grant of a patent. The opponent was Fina Research SA which is the applicant in this appeal. The original respondents were Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien. The present respondents are Cognis Deutschland GmbH and Halliburton Energy Services, Inc. The first issue is whether the original respondents should be rejoined as respondents. The second is whether the present respondents should have leave to use a document in an appeal in Norway.

2. The issue of rejoinder arises in the following way.  The patent in question concerns drilling mud.  The original applicants for the patent were Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien.  This proceeding was commenced on 26 May 2000 and those companies were named as respondents.  They remained respondents until 17 July 2001 when an order was made, by consent, removing Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien as respondents and adding Cognis Deutschland GmbH and Halliburton Energy Services, Inc as respondents.  That was done because on 16 February 2001 Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien assigned their interests in the patent application to Cognis Deutschland GmbH and Halliburton Energy Services, Inc.  At the time the order was made concerning the appropriate respondents, no issue arose about costs.

3. The rejoinder of Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien was sought to ensure that if Fina Research SA was unsuccessful in this proceeding and ordered to pay the respondents' costs, Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien would be parties to the proceeding and could take the benefit of any costs order made in relation to costs incurred by them before 17 July 2001.  The rejoinder was opposed by Fina Research SA and, while it was not put precisely in these terms, the opposition was to avoid this result.  That is, to avoid a situation where it might be required to pay the costs of Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien.  The opposition was, as I understood the submissions, on the basis that I had no power to order the joinder of Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien and, if I did, no order should be made, as a matter of discretion, because the removal of both companies was by consent.

4. The addition of parties is governed by O 6 r 8 of the Federal Court Rules and provides:

   (1)Where a person who is not a party-

   (a)…

   (b)is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon,

   the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceeding.
   (Emphasis added)

5. The expression "all matters in dispute" is of wide import and should not be narrowly construed: see Qantas Airways Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34 and Fried v National Australia Bank Ltd [1999] FCA 737 and comprehends, in my opinion, matters ancillary to the principal matter or matters in dispute. Such ancillary matters would include issues concerning costs. Accordingly, I am satisfied this rule would permit joinder of Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien. It is true they were removed as parties by consent and, at the time, no arrangements were apparently made concerning costs. Nonetheless, I see no reason why they should not be joined again as respondents. It will avoid what might otherwise be, in the context of these proceedings, a potentially barren debate about whether costs can be awarded for the benefit of an non-party: see King v GIO Australia Holdings Ltd [2001] FCA 1773 at [8] to [17] particularly having regard to s 160 of the Act.

6. I should note that the respondents also sought the joinder of Cognis Deutschland GmbH & Co KG because, so it was contended, Cognis Deutschland GmbH assigned to that company its interest in the patent application on 2 October 2001.  That there had been such an assignment, was not necessarily accepted by Fina Research SA.  However it was prepared to consent to the joinder of Cognis Deutschland GmbH & Co KG on the footing that if a point is reached where the question of whether there had been an assignment became relevant, for example, when issues of costs arose, it could be explored further.  This was accepted by the respondents.

7. The second issue concerns the use by the respondents of a document produced by Fina Research SA pursuant to a notice to produce dated 2 October 2001.  The document ("the experimentation document") is, I apprehend, the translated English version and the original French version of notes concerning tests concerning the stability of formulations of drilling mud.  The tests were undertaken at the direction of a patent attorney acting for Fina Research SA in proceedings involving the European Patent Office.  I should note, parenthetically, that the parties (using that expression somewhat loosely) have been and are involved in litigation concerning patents relating to drilling muds in several jurisdictions.  This includes the United States of America, Denmark and Brazil.  Another such contest is taking place in Norway.  It is in relation to proceedings in that country that the experimentation document is sought to be used by the respondents.

8. The nature of the Norwegian proceedings should be briefly explained.  They commenced with applications by Baroid Drilling Fluids Inc and Henkel Kommanditgesellschaft auf Aktien to the Examining Division of the Norwegian Patent Office for the grant of patents.  The applications were unsuccessfully opposed by Fina Research SA and Norsk Hydro AS who appealed to the Appeals Division of the Norwegian Patent Office.  Their appeals were successful.  The patent was granted in January 1995 and the decision of the Appeals Division was made in June 1995 (though not, it seems, communicated to the patent applicants until June 1997).  Apparently in the proceedings before the Appeals Division, a submission was made by Fina Research SA (dated 30 May 1995) containing evidence concerning rheological tests of drilling mud formulations of ester oil based muds.  In those tests, rheology was tested (before and after ageing of the muds) as the lime component was increased.  There is evidence which indicates that the experimentation document concerns similar tests.

9. After the rejection of the patents by the Appeals Division, proceedings were commenced in the Oslo City Court by Cognis Deutschland GmbH (which by then was the assignee of the patent application rights of Henkel Kommanditgesellschaft auf Aktien) and Baroid Drilling Fluids Inc.  The defendant in those proceedings was the Norwegian Government represented by the Ministry of Industry and Trade.

10. In evidence is a translation of the judgment of the Oslo City Court which gave judgment on 8 March 2001.  Ultimately the proceedings in that Court were limited to one of the patents.  Having regard to the reasons of the Court and its summary of the submissions, the appeal appears to have been a merits review of the decision of the Appeals Division of the Norwegian Patent Office.  The Oslo City Court agreed with the conclusion of the Appeals Division that the patent applicant had not, relevantly, demonstrated a sufficient inventive step over the prior art to satisfy the requirements of Norwegian patent law.

11. The matter, however, did not rest there.  An appeal has been brought by Cognis Deutschland GmbH and Baroid Drilling Fluids Inc against the judgment of the Oslo City Court.  The notice of appeal is dated 9 April 2001.  That appeal will commence hearing on 28 October 2002 in what has been variously described in the notice of appeal as the Borgarting Court of Appeals and elsewhere in the affidavits as the Norwegian Appeal Court.  Having regard to the notice of appeal, which is in evidence, the grounds of appeal allege errors of law and errors in "the assessment of evidence".  Again the respondent to the appeal is the Norwegian Government represented by the Ministry of Trade and Industry.  It is in this appeal that use is sought to be made of the experimentation document.  It will demonstrate, so it is said in an affidavit sworn by a solicitor acting for the respondents in this proceeding, that Fina Research SA's own tests show that components in the drilling mud which is the subject of the patent application in Norway have advantages which represent important properties over the prior art and a different solution to the problem.

12. The respondents obtained the experimentation document by means of a notice to produce.  They are bound by an implied undertaking concerning the use of the document.  As a matter of general principle, a party who obtains documents in legal proceedings and, in particular, by processes of compulsion, is bound by an implied undertaking of confidentiality concerning the documents and is not to use them for some collateral or ulterior purpose.  However the party can be released from that undertaking in special circumstances.  Ordinarily the implied undertaking operates unless the Court is satisfied that circumstances exist which warrant the party bound by the undertaking being released from it: see Crest Homes Plc v Marks [1987] AC 829 at 860 and Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 221.

13. In the present matter there is no expert evidence concerning Norwegian law which would justify a finding the experimentation document can be tendered, as of right or with leave, in the appeal before the Norwegian Appeal Court.  The respondents say that they would not be pursuing this application if it were futile.  That may be so.  However it is necessary that I am satisfied that circumstances exist which warrant release from the undertaking.  Even accepting that the experimentation document may be relevant (and there is at least some evidence indicating a similarity between the nature of the evidence relied upon by Fina Research SA in the Appeals Division of the Norwegian Patent Office and the nature of the evidence which might emerge from the experimentation document), in the sense that it might be admitted into evidence in the appeal as material probative of an inventive step, and also accepting that whether it would be admitted might ultimately a matter for the Norwegian Appeal Court, I am not satisfied that the respondent should be released from the implied undertaking.

14. The respondent to the Norwegian appeal is not Fina Research SA.  It is the Norwegian Government.  It is conceivable that those representing the Norwegian Government would understand the significance of the experimentation document and would be able to deal with its tender and, if admitted, deal with its contents.  However it is also conceivable that they would not.  I would imagine that expert evidence, concerning Norwegian law, could have been tendered in this proceeding which established that the Norwegian Government effectively stood in the shoes of the Fina Research SA and Norsk Hydro AS in the appeal in the sense that it was required to protect the interests of the Fina Research SA by defending in the Norwegian Appeal Court, the decision initially of the Oslo City Court and ultimately of the Appeal Division of the Norwegian Patent Office.  One could infer that this has been the role of the Norwegian Government having regard to the reasons for judgment of the Oslo City Court.  However it is another question, whether the Norwegian Government would be able to (in a legal sense) and could be expected to resist the tender of the experimentation document.  There is also the question of whether the Norwegian Government would be able to deal with the evidence if it was admitted in the sense of responding to what the appellants might say in those proceedings about the relevance and significance of the experimentation document.

15. In addition, the question of release from the undertaking and the use of the experimentation document in the Norwegian appeal is being raised only weeks before the appeal (and could have been raised by the respondents much earlier in this proceeding).  I cannot discount the possibility that the Norwegian Government would be taken by surprise by any attempt to tender the experimentation document in the Norwegian appeal even given that fourteen days notice of its use, I was informed, would be required.  I am not affirmatively satisfied that Fina Research SA’s interests (it having been required to produce the experimentation document) will be sufficiently protected in the Norwegian proceedings to warrant releasing the respondents from the implied undertaking.

16. I accept that there is a public dimension to the use of evidence in patent proceedings and a view that it is desirable information used in one jurisdiction between the same or similar parties concerning the same or similar subject matter to determine whether a patent should be granted, should be available in other jurisdictions: see SmithKline Beecham Biologicals SA v Connaught Laboratories Inc [1999] 4 All ER 498 at 511. However, in the present case, the application for leave to use the experimentation document has been made at a very late stage in the proceedings in Norway (and in this proceeding) and in circumstances where I am not satisfied the interests of the party who was required to disclose the document will be sufficiently protected.

17. The respondents also relied on O 15 r 18 of the Federal Court Rules.  Order 15 r 18 provides that any undertaking not to use a document for any purpose other than those of the proceedings in which it is disclosed shall cease to apply after the document has been read to or by the Court or referred to in such terms as to disclose its contents.  This provision is said to be relevant in relation to the exercise of the discretionary power to grant leave.  Counsel for the respondents said the affidavit to which the experimentation document was exhibited would be read at the trial in February 2003 so the document would be in the public domain in due course in any event.  This, it was submitted, should incline me to give leave to use the document now.  In my view this is irrelevant.  Whether, and on what basis, the affidavit is read and its contents revealed will only be determined during the trial.  It cannot be assumed that the preconditions in O 15 r 18 enlivening the release will be satisfied.

18. I should mention one other matter concerning O 15 r 18.  At one point during the hearing of these interlocutory matters, counsel for Fina Research SA indicated that he relied on the affidavit of Thomas Shumate to which the experimentation document is exhibited. The document was referred to in paragraph 137 of the affidavit as an exhibit.  The contents of the affidavit and paragraphs including that paragraph were referred to in general terms during submissions by counsel for Fina Research SA.  Those paragraphs were later referred to in written submissions by the applicant and tendered.

19. However, it was not suggested by counsel for the respondents that the course adopted by counsel for Fina Research SA enlivened the release in O 15 r 18.  Had such a submission been made it would have been necessary to consider whether the experimentation document had been read to or by the Court or referred to in such terms as to disclose its contents.  It may have been necessary to consider the principle that while the contents of an affidavit which has been filed do not form part of the evidence (and this would include the annexures which are treated as being part of the affidavit) they do if the affidavit is read in fact or when the party relying on the affidavit invites the Court to treat the affidavit as having been read and the judge acquiesces or the contents of the affidavit or document is otherwise published to the Court: see Practice Note No 5 of the Federal Court, Barristers' Board of Western Australia v Tranter Corporation Pty Ltd [1976] WAR 65 at 67, Robowash Finance Pty Ltd v Robowash Pty Ltd [1999] WASC 134, Chapmans Ltd v Australian Stock Exchange Ltd (Tamberlin J, 25 August 1995, Unreported), In the Marriage of Crowe (1988) 12 Fam L R 696, SmithKline Beecham Biologicals SA v Connaught Laboratories Inc (supra) (a patent case) (which refers to another relevant authority Derby & Co Ltd v Weldon (1988) Times, 20 October), GIO Personal Investment Services Ltd v Liverpool and London Steamship Protection and Indemnity Association Ltd [1999] 1 WLR 984 and also an article by Emmett J, Practical litigation in the Federal Court of Australia: Affidavits (2000) 20(1) Aust Bar Rev 28. 

20. In any event the experimentation document was not an annexure to the affidavit but an exhibit.  If a paragraph of an affidavit is read (actually or notionally), and thereby put into the public domain, any annexure referred to in the paragraph would, as a result, ordinarily form part of the evidence and also be in the public domain.  However it is the practice, at least in this Court, that an exhibit needs to be tendered to become part of the evidence.  The mere reading of the paragraph referring to the exhibit or, as in this case, the tender of the paragraph does not have the result that the exhibited document forms part of the evidence and is in the public domain.  The experimentation document was not tendered and is not an exhibit.

1. I propose to add as respondents the parties sought to be added by the present respondents.  I also propose to refuse leave to use the experimentation document.

I certify that this and the preceding twenty-one (21) paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore

Associate:

Dated:            21 October 2002

Counsel for the Applicant:	Mr J J J Garnsey QC, Mr J V Nicholas SC and Mr C Dimitriadis
Solicitor for the Applicant	Phillips Fox
Counsel for the Respondent:	Dr A C Bennett and Mr S C G Burley
Solicitor for the Respondent	Sprusons Solicitors
Date of Hearing:	15 October 2002
Date of Judgment:	21 October 2002