Gambro Pty Limited v Fresenius Medical Care Australia Pty Limited

Case •

[2004] FCA 665

•

31 MAY 2004

FEDERAL COURT OF AUSTRALIA

Gambro Pty Limited v Fresenius Medical Care Australia Pty Limited
[2004] FCA 665

GAMBRO PTY LIMITED AND ANOR v FRESENIUS MEDICAL CARE AUSTRALIA PTY LIMITED
NG 474 of 1997

ALLSOP J
31 MAY 2004
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 474 of 1997

BETWEEN:

GAMBRO PTY LIMITED
FIRST APPLICANT
SECOND CROSS-RESPONDENT

GAMBRO LUNDIA AB
SECOND APPLICANT
FIRST CROSS-RESPONDENT

AND:

FRESENIUS MEDICAL CARE AUSTRALIA PTY LIMITED
RESPONDENT
CROSS-CLAIMANT

JUDGE:

ALLSOP J

DATE OF ORDER:

31 MAY 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.On or before 9 June 2004, the respondent file and serve:

(a)   any notice of motion upon which it seeks to move in these proceedings;

(b)   any further evidence in support of that motion;

(c)   a document entitled “Evidence To Be Relied Upon” identifying each affidavit, document or other piece of evidence upon which it will seek to rely in support of the motion; and

(d)   written submissions in support of the motion and to the extent that prior submissions are relied on a written indication thereof.

2.On or before 16 June 2004, the applicants file and serve:

(a)   any evidence and submissions in answer to such filed by the respondents; and 

(b)   a document entitled “Evidence To Be Relied Upon” identifying each affidavit, document or other piece of evidence upon which they will seek to rely in the motion.

3.On or before 23 June 2004, the respondent file and serve any affidavit or submission strictly in reply.

4.Any such notice of motion to be filed by the respondent be stood over for hearing on 25 June 2004 at 10.15 am

5.The proceedings be stood over to 25 June 2004 at 10.15 am.

6.The question of costs since 25 March 2004 be reserved.

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

NG 474 of 1997

BETWEEN:

GAMBRO PTY LIMITED
FIRST APPLICANT
SECOND CROSS-RESPONDENT

GAMBRO LUNDIA AB
SECOND APPLICANT
FIRST CROSS-RESPONDENT

AND:

FRESENIUS MEDICAL CARE AUSTRALIA PTY LIMITED
RESPONDENT
CROSS-CLAIMANT

JUDGE:

ALLSOP J

DATE:

31 MAY 2004

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. In this matter I published my reasons for judgment on 25 March 2004.  On that day, I stood the proceedings over to enable the parties to formulate short minutes to reflect the views that I had expressed.

  2. A dispute arose as to the terms of some of the orders that were thought to be appropriate to be made, conformably with my reasons.  It was accepted by the respondent that some orders could be made.  I made some orders on 12 May 2004, with a reservation that I may make further orders depending on this, and any other, application.

  3. The orders made on 12 May 2004 comprised declarations as to infringement in the past by the sale, hire and disposition of “biBag Articles”, “Dialysis Machines with the biBag Option” together with at least one biBag Article, and “biBag Modification Kits” as these terms were defined in those declarations, and as to infringement by various other acts described in the orders.  Orders by way of injunctive relief were made restraining acts in the future in relation to “biBag Modification Kits” and “biBag Articles”.  Other related orders were made.

  4. The declaration and orders about which there is a dispute are in the following terms:

    1.DECLARES that the Respondent has infringed Australian letters patent No. 595423 (the “Patent”) by, in Australia selling, hiring and otherwise disposing of Dialysis Machines with the biBag Option.

    2.ORDERS that from a date to be determined by the Court, the Respondent by itself, its directors, officers, servants, agents or otherwise be permanently restrained from, in the patent area, as that phrase is defined in the Patents Act 1990 (Cth) and without the licence of the Applicants:

    (a)     selling, hiring or otherwise disposing of Dialysis Machines with the biBag Option;

    (b)     offering to sell, hire or otherwise dispose of Dialysis Machines with the biBag Option;

    (c)     importing, using or procuring that others use Dialysis Machines with the biBag Option;

    (d)     keeping Dialysis Machines with the biBag Option for the purpose of doing any of the acts described in paragraphs (a) to (c) above; or

    (e)     authorizing or procuring that others do any of the acts described in paragraphs (a) to (d) above.

    3.Orders the Respondent:

    (a)     within 3 months of the date determined by the Court for Order 2, to deliver up to the First Applicant or to permanently modify all Dialysis Machines with the biBag Option in the possession, custody or power of the Respondent, its directors, officers, servants and agents (either directly or by virtue of an agreement with another), to dialysis machines without the biBag Option (including without limitation, by removing from each such dialysis machine the biBag connector and all other components of the kind included in a biBag Modification Kit);

    (b)     within 4 months of the date determined by the Court for Order 2, to deliver up to the First Applicant all biBag connectors and other components removed under paragraph (a) above; and

    (c)     within 5 months of the date determined by the Court for Order 2, to file and serve on the First and Second Applicants an affidavit verifying the compliance by the Respondent with paragraphs (a) and (b) above.

  5. The phrase “Dialysis Machine with the biBag Option” is defined in the orders that were made on 12 May 2004 as meaning certain machines sold by the respondent (model numbers 2008A, 4008B, 4008E, 4008H, 4008H Online Plus and 4008S Diasafe Plus):

    which dialysis machines are manufactured, modified or adapted such that in order to perform a haemodialysis, haemofiltration or haemodiafiltration treatment, the user is able to affix a biBag Article to the dialysis machine to enable the dialysis machine to produce a concentrate solution of the sodium bicarbonate in water

  6. The respondent says that as a matter of what was pleaded and agitated before me in the eight days of the hearing in 2003 the orders sought are not open.  It also says that as a matter of law the orders are not open.

  7. The matter before me is the application by the applicants to have further orders made conformably with my reasons and pursuant to the orders made by Tamberlin J on 23 August 2000 that issues of liability be heard separately before any issue of damages or an account of profits.

  8. It is thus necessary to go to the pleadings and the conduct of the case.  Before doing so I should make one correction to my reasons published on 25 March 2004.  I recall and withdraw [436] and [437] and the heading immediately above those paragraphs.  Mr Berry’s affidavit was not relied upon at the hearing.  It had been filed.  It was dealt with by the written objections that I asked the parties to file and which was marked as an exhibit (exhibit C1).  I asked the parties to file this document and I marked it as an exhibit in order to ensure clarity in understanding what was read and relied on and the objections thereto.  I apparently failed in that endeavour.  Nevertheless, the mistake was mine.  I should have re-read the transcript to ensure the accuracy of exhibit C1.  As can be seen from [436] and [437], Mr Berry’s affidavit played no substantive part in my reasoning and the recall and withdrawal of those paragraphs does not in any way affect my reasoning on the substantive issues or the orders that flow therefrom.

  9. Before turning to the pleading, it is appropriate to identify the physical object that is the subject of the orders.  I marked as Exhibit B on the application an exhibit to an affidavit which has, as yet, not been read.  That exhibit was a diagram of a Fresenius machine with a “biBag Option”.  That page is annexure 1 to these reasons.  This annexure was not before me at the hearing last year.  The circular representation in the upper right corner of figure 1 in annexure 1 is the fitting which is so configured as to take for attachment the biBag depicted in [107] of my substantive reasons by use of the outer annulated ring in the moulded plastic fitting at the top of the biBag.  It is said that figure 1 depicts the relevant Fresenius dialysis machine (of whatever number) being used in a way leaving the fitting in the upper right unused.  Thus it is said that the relevant Fresenius dialysis machines can be employed without any infringement, since infringement involves a system for the production of the concentrate solution.  Figure 2 depicts the use of the machine using the fitting to accept a “biBag Article” in a manner which I have found to be an infringement.

  10. It was not put by Mr Archibald QC, who, with Messrs Burley and Murray, appeared for the respondent on the application, that the fitting is to be, or is able to be, employed for any purpose other than the acceptance of the affixation of a “biBag Article” which, when used as a system in dialysis and cognate procedures, I have found to be an infringement. 

  11. The orders sought by the applicants, and which are opposed by the respondent, seek a declaration and orders to the effect that the respondent is obliged to modify such machines, permanently, to change them to dialysis machines without the “biBag Option”; that is, to disable the machine in some fashion, but in a manner that is permanent, from using the fitting and any other part of the machine to take the “biBag Article”.  The delivery up and destruction of the machines is not sought: rather, what is sought is the modification of the machines to disable them permanently from being able to operate as shown in figure 2.

    The originating process and the pleadings

  12. The further amended application filed in Court on 30 July 2003 (the “FAA”) sought the following declarations in [1(b)] and [1(k)]:

    1.a declaration that the Respondent has infringed Australian letters patent No. 595423 (the Patent) by in the Patent Area (as that term is defined in the Patents Act 1990 (Cth) [by]:

    …

    (b)     selling, hiring or otherwise disposing of dialysis machines which are manufactured, modified or adapted such that in order to perform a haemodialysis, haemofiltration or haemodiafiltration treatment, the user is able to affix a biBag Article to the dialysis machine to enable the dialysis machine to produce a concentrate solution of the sodium bicarbonate in water (Dialysis Machines with the biBag Option);

    …

    (k)   supplying biBag Articles, Dialysis Machines with the biBag Option, Fesenius biBag Systems and biBag Modification Kits and each or any of them to another person or persons in circumstances where the use of all, each or any of which by that other person or persons would infringe the Patent.

  13. There was no paragraph to precisely the same effect in the original application and the amended application filed on 19 June 1997 and 4 September 2000, respectively. Though, as shall be seen, the same issue of “indirect” infringement under s 117 of the Patents Act 1990 (Cth) (the “Act”) was to be found in the earliest pleading by the applicants.

  14. Order 2 sought in the FAA was in the following terms:

    2.an order that the Respondent by itself, its directors, officers, servants, agents or otherwise be permanently restrained from doing each and any of the acts referred to in paragraph 1 above;

  15. Though the FAA was filed on the sixth day of hearing, it had been provided to the respondent before the hearing commenced.

  16. Mr Archibald accepted that the orders sought and which are opposed textually fall within the orders sought in the FAA.

  17. The further amended statement of claim (the “FASC”), also filed in Court on 30 July 2003, pleaded infringement in a number of ways.  One of those was in [8(k)] of the FASC which was in the following terms together with the relevant part of the particulars to this alleged infringement sub-joined in the FASC itself.

    8.From a date unknown to the First Applicant or the Second Applicant but subsequent to the Date of Publication and until the date of the application in these proceedings the Respondent, without the licence of the First Applicant or the Second Applicant, has, in the Patent Area (as that term is defined in the Patents Act 1990 (Cth):

    …

    (k)   supplied biBag Articles, Dialysis Machines with the biBag Option, Fresenius biBag Systems and biBag Modification Kits and each or any of them to another person or persons in circumstances where the use of all, each or any of which by that other person or persons would infringe the Patent.

    PARTICULARS OF USE

    (i)biBag Articles Dialysis Machines with the biBag Option,  Fresenius biBag Systems, biBag Modification Kits and each or any of them are capable of only one reasonable use, namely use as, or as a component of, or in connection with systems made in accordance with the invention claimed in the Patent.

  18. I should say, and there was no demur from Mr Archibald when I raised this, that I read [(i)] of the particulars as containing a comma after the first two words, “biBag Articles”.

  19. The FASC defined the phrase “Dialysis Machines with the biBag Option” in the same words as in the orders sought. (See [5] above.) This is a definition which identifies a machine manufactured, modified or adapted such that the user is able to affix a biBag Article to the machine to enable the production of a relevant concentrate solution. The definition clearly speaks of capacity.

  20. Plainly [8(k)(i)] of the FASC was a pleading seeking to raise s 117 of the Act, which was and is in the following terms:

    s 117

    (1) 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.

    (2) A reference in subsection (1) to the use of a product by a person is a reference to:

    (a)     if the product is capable of only one reasonable use, having regard to its nature or design—that use; or

    (b)     if the product is not a staple commercial product—any use of the product, if the supplier had reason to believe that the person would put it to that use; or

    (c)   in any case—the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.

  21. As I have said, 117 was not a fresh issue on the pleadings in the FASC. The original statement of claim filed in 1997 contained in [8(l)(i)] a plea raising s 117. There, infringement was alleged in that the respondent was said to have:

    supplied New Dialysis Machines, biBag Articles, Modification Kits, Modified Dialysis Machines and Dialysis Systems and each or any of them to another person or persons, the use of all, each or any of which by that other person or persons would infringe the Patent.

    PARTICULARS OF USE

    (ii)New Dialysis Machines, biBag Articles, Modification Kits, Modified Dialysis Machines and Dialysis Systems and each or any of them are capable of only one reasonable use, namely use as, or as a component of, or in connection with systems made in accordance with the invention claimed in the Patent.

  22. The original defence filed on 30 January 1998 (of five paragraphs and half a page) responded, relevantly, to [8] of the statement of claim as follows:

    4.In relation to paragraph 8 of the Statement of Claim, the Respondent admits that it has:

    (a)sold, hired or otherwise disposed of dialysis machines;

    (b)sold, hired or otherwise disposed of articles containing bicarbonate concentrate in powder form by reference to the trade mark BIBAG; and

    (c)sold, hired or otherwise disposed of modification kits which enable Fresenius dialysis machines to operate with the articles referred to in (b) above,

    but otherwise denies the matters alleged.

  23. Before coming to the defence to the FASC some aspects of the interlocutory procedures prior to that defence being propounded need be noted.  In May 2001, the applicants served a Notice to Admit Facts dated 15 May 2001 upon the respondent.  In that notice the phrase “Fresenius biBag Dialysis Machine” was defined by reference to six nominated models each at particular locations as meaning:

    any of the [identified] models of Fresenius dialysis machine, which is manufactured, modified or adapted (by means of a Modification Kit or otherwise) such that when the dialysis machine is used in conjunction with a Bibag Article and a source of water, the dialysis machine is able to produce a concentrate solution of the bicarbonate powder concentrate in water:

  24. By admission 2B the respondent admitted that it had sold, hired or otherwise disposed of Fresenius biBag Dialysis Machines (as defined) in Australia after 11 August 1988. Further admissions were made which more specifically related to s 117 of the Act. In [37], [42], [43] and [44] of the answer to the Notice to Admit Facts the respondent admitted:

    [37]That Fresenius biBag Dialysis Machines (as defined) are capable of only one reasonable use having regard to their nature and design, namely use in conjunction with a source of water and a biBag Article to perform Treatment Procedures.

    [42]That Fresenius biBag Dialysis Machines are not staple commercial products.

    [43] That users of Fresenius biBag Dialysis Machines use them in conjunction with sources of water and biBag Articles to perform Treatment procedures.

    [44]That at all material times the respondent had reasons to believe that Users of Fresenius biBag Dialysis Machines would use them in conjunction with sources of water and biBag Articles to perform Treatment Procedure.

  25. Plainly these admissions could only have been seen to be sought in order to satisfy s 117(2)(a) and (b), and, through these provisions, s 117(1). It is in this context that one comes to the terms of the FASC provided prior to the hearing, and in particular [8(k)] of the FASC and [(i)] to the particulars sub-joined thereunder.

  26. The pleading of indirect infringement under s 117 of the Act which can be seen in [8(l)] of the original and amended statement of claim read with [(i)] of the particulars of use thereto, was reworked into [8(k)] of the FASC and [(i)] of the particulars of use thereto, which are set out at [17] above.

  27. It is in this context that one comes to the further amended defence (the “FAD”) filed in answer to the FASC.  The FAD was provided to the applicants prior to the case being opened by Mr Catterns QC, who, with Ms Howard, appeared for the applicants at the hearing and on the application for orders.

  28. In [14] of the FAD the respondent pleaded to [8(k)] of the FASC as follows:

    14.In relation to paragraph 8(k) of the Further Amended Statement of Claim, the Respondent admits that it supplied to another person or persons, biBag Articles, Dialysis Machines with the biBag Option and biBag Modification Kits but denies that any such use of all, each or any of those products by that other person or persons would infringe the Patent.

    The Respondent further admits that:

    (i)      biBag, Dialysis Machines with the biBag Option and biBag Modification Kits are capable of only one reasonable use having regard to their nature and design, namely use as, or as a component of, or in connection with a system which prepares a concentrate solution of bicarbonate powder concentrate in water and a mixes that concentrate with water and with an acid concentrate to perform a haemodialysis, haemofiltration or haemodiafiltration treatment.

    (iii)   biBag Articles, Dialysis Machines with the biBag Option and biBag Modification Kits are not staple commercial products and the Respondent had reason to believe that the person or persons to whom they were supplied would put them to the use which they were to be put, namely use as, or as a component of, or in connection with a system which prepares a concentrate solution of bicarbonate powder concentrate in water and a mixes that concentrate with water and with an acid concentrate to perform a haemodialysis, haemofiltration or haemodiafiltration treatment.

    (iv)    biBag Articles, Dialysis Machines with the biBag Option and biBag Modification Kits were used or were to be used in accordance with instructions or inducements supplied by the Respondent or contained in advertisements published by or with the authority of the Respondent.

    But otherwise denies the matters alleged.

  1. These plainly were admissions going to s 117 of the Act.

  2. The respondent asserted on the application that the admissions in [14] of the FAD (and the admissions in the Notice to Admit) were limited to the supply of the Fresenius machines together with the biBag Articles.  It was said to be an admission in relation to the system, not an admission to what was said to be a “further admitted proposition” that the supply of relevant machines with the fitting to which I have referred (that is with the “biBag Option”) was an infringement.  Thus, it was submitted by the respondent, there was no debate at the trial, because fundamentally there was no relevant allegation as to whether the supply of the relevant machines with the biBag Option was capable of more than one reasonable use, having regard to its nature and design.

  3. I reject these submissions.  The FAA was wide enough to encompass the contested orders now sought.  The relevant paragraph of the FASC, [8(k)(i)], is clear.  It is to be read in a manner which is both individual and collective.  The relevant paragraph of the FAD, and, in particular, [(i)] of the further admissions in [14] of the FAD, is responsive to the collective and individual pleading of [8(k)].  The admissions are not to be read in some narrow way.  They were admissions which included the admission that the machines with the biBag Option, that is with the fitting to which I have referred, were capable of only one reasonable use as set out in [(i)] of [14] of the FAD.

  4. There certainly was no debate at the trial as to whether the supply of the machines with the biBag Option were capable of more than one reasonable use, having regard to its nature and design.  That was not because the issue had not been exposed for hearing by the originating process, pleadings, particulars and admissions, but because the matter had been admitted.

  5. The matter does not end there.  There was an opening.  In their written opening Mr Catterns and Ms Howard said the following:

    There is little or no dispute as to how the Respondent’s systems and cartridges work, nor as to the factual elements which go to the Respondent’s liability when its supplies or offers systems and cartridges, installs or uses them, or supplies them to others who will use Respondent’s infringing system (if the Court holds that any of the systems do infringe) – under section 117 of the Act 1990.

    The Applicants respectfully submit that if the Respondent perceives issues in addition to those identified here, it should identify them in its outline of opening submissions.
    [emphasis added]

  6. Mr Catterns accepted in submissions on the application for orders that in this part of the written opening he was “trailing his coat”. He was. He did so clearly. In the light of the pleadings and admissions, this may have been for an abundance of caution. That is irrelevant. The originating process, the pleadings and the admissions were clear. He was clear. If there was a s 117 issue to be ventilated, he was inviting it. It did not otherwise exist as enunciated in any way in the controversy. The matter was not taken up by the respondent in opening. No doubt Mr Catterns thereafter proceeded on the basis that there were no issues in addition to those identified in the documents constituting the terms and limits of the controversy. I certainly did in conducting the hearxing and writing my judgment.

  7. In addressing the Court after the close of the evidence Mr Catterns said the following at Tp 391:

    Your Honour, although there is no codification of infringement, section 117 deals with what might be called indirect infringement by supply.  That's largely the infringement that we allege our friends have committed, if the use of a product by a person would infringe a patent.  The reason we largely need that is you need to have the bibag connected to have all the elements of the system, that's as distinct from the sale of a cartridge which would, if we're right, infringe a cartridge claim on its own, but the system claims need a vessel containing a powder concentrate.

    Your Honour, our friends and their instructors, with respect, have very properly admitted all the elements, except that use of a product would infringe, so that we don't have to sue patients and hospitals and the fight between the two companies crystallises on whether or not our friend's system infringes and whether our friend's cartridge infringes.

    Our friend's defence admits each of A, B and C effectively in subsection (2), so that does allow us, on both sides as we've done, to focus on whether the Fresenius systems and cartridges come within the claims.  We make a suggestion in our submission that if your Honour holds that Fresenius type 2 and/or type 3 systems and/or cartridge come within one or more of the relevant claims, and that they're valid, we would probably be able to agree on short minutes of order.

    Similarly, on that point, we ask for delivery up, but of course the whole point of delivery up is that our friends don't infringe, so if your Honour were with us and they could modify their machines in a way that didn't infringe, we wouldn't have them delivering up, that is the machines and smashing them up, for example, so that would be a matter that would be dealt with after your Honour has made a judgment on liability.

  8. No issue was taken with these matters in address by the respondent at the hearing.

  9. The respondent now wishes to say a number of things.  First, it says that the issue of infringement of the relevant machines with the biBag Option without the contemporaneous supply of the “biBag Article” was not pleaded, was not covered by any admissions made by it and was not litigated.  I reject these submissions:  it was pleaded, admissions were made in respect thereof and the proceedings dealt with it.

  10. Secondly, it is said that even taking account of the infringement that I have found, on the proper construction of s 117 the supply of the relevant machines with the biBag Option without the supply of the biBag Article is not, and could never be, an infringement. That raises a question of the scope and construction of s 117. That issue has not been dealt with. It has not been dealt with because it was not pleaded or otherwise raised to introduce it into the controversy otherwise, relevantly, framed by the originating process, the pleadings, the admissions, the openings, the evidence and the addresses.

  11. On the pleadings as they currently stand and on the conduct of the proceedings to date, I would make the contested declaration and orders.

  12. The respondent has indicated that if I am of the view that I have expressed on the current state and form of the proceedings it would seek to withdraw admissions or take other relevant steps.  If that is to be done it should be done by notice of motion.  Some affidavits have been filed already on this issue.

  13. The orders that I made are:

    1.On or before 9 June 2004, the respondent file and serve:

    (a)     any notice of motion upon which it seeks to move in these proceedings;

    (b)     any further evidence in support of that motion;

    (c)     a document entitled “Evidence To Be Relied Upon” identifying each affidavit, document or other piece of evidence upon which it will seek to rely in support of the motion; and

    (d)     written submissions in support of the motion and to the extent that prior submissions are relied on a written indication thereof.

    2.On or before 16 June 2004, the applicants file and serve:

    (a)     any evidence and submissions in answer to such filed by the respondents; and 

    (b)     a document schedule entitled “Evidence To Be Relied Upon” identifying each affidavit, document or other piece of evidence upon which they will seek to rely in the motion.

    3.On or before 23 June 2004, the respondent file and serve any affidavit or submission strictly in reply.

    4.Any such notice of motion to be filed by the respondent be stood over for hearing on 25 June 2004 at 10.15 am

    5.The proceedings be stood over to 25 June 2004 at 10.15 am.

    6.The question of costs since 25 March 2004 be reserved.

I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.

Associate:

Dated:            31 May 2004

Counsel for the Applicant: Mr D K Catterns QC and Ms K Howard
Solicitor for the Applicant: Blake Dawson Waldron
Counsel for the Respondent: Mr A Archibald QC, Mr S C G Burley and Mr N R Murray
Solicitor for the Respondent: Allens Arthur Robinson
Date of Hearing: 12 May 2004
Date of Judgment: 31 May 2004

Annexure 1

Actions
Download as PDF Download as Word Document
Cases Citing This Decision

0

Cases Cited

0

Statutory Material Cited

0