ICI Chemicals and Polymers Ltd v Lubrizol Corp Inc - [1999] FCA 1636

FEDERAL COURT OF AUSTRALIA
ICI Chemicals & Polymers Ltd v Lubrizol Corp Inc [1999] FCA 1636
ICI CHEMICALS & POLYMERS LTD v LUBRIZOL CORP INC
NG190 OF 1997
LUBRIZOL CORP INC v WOOLWORTHS LTD & ORS
NG552 OF 1997
EMMETT J
5 NOVEMBER 1999
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 190 OF 1997

BETWEEN:

ICI CHEMICALS & POLYMERS LIMITED
Applicant

AND:

THE LUBRIZOL CORPORATION INC
Respondent

JUDGE:

EMMETT J

DATE OF ORDER:

5 NOVEMBER 1999

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The Applicant’s Application dated 14 March 1997 be dismissed.
THE COURT DIRECTS THAT:
2.Australian Patent Number 638710 be amended as set out in the marked up schedule which is annexed.
3.Further advertisement of the amendments be dispensed with.

THE COURT CERTIFIES THAT:
4.The validity of Claims 1 to 27 of the Respondent’s Australian Patent Number 638710, as accepted, was questioned in these proceedings. The challenge was unsuccessful on the following grounds:
(a)whether the alleged invention is not a patentable invention within the meaning of the Patents Act 1990 because the alleged invention is not novel; does not involve an inventive step; is not a manner of manufacture within the meaning of section 6 and is not useful.
(b)whether the patent was obtained on a false suggestion or representation.

The challenge was successful in that, in the absence of amendment, there was a failure to comply with section 40(3). The patent as amended under Order 2 above now contains claims 1-20 and does not fail to comply with section 40(3).
THE COURT FURTHER ORDERS THAT:
5.The Applicant pay the Respondent’s costs of the proceedings (including proceedings NG76 of 1997) up to and including 31 March 1999. The Respondent to pay the Applicant’s costs of the application to reopen heard on 5 May 1999 and the application for amendment. Costs of today reserved.
6.The time for any application for leave to appeal be extended until 24 November 1999 or such later date as the Court may determine.
7.The matter be listed for further directions on 24 November 1999.
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 552 OF 1997

BETWEEN:

THE LUBRIZOL CORPORATION INC
Applicant

AND:

WOOLWORTHS LIMITED
ACN 000 014 675
First Respondent

AND

AUSTRAL REFRIGERATION PTY LIMITED
ACN 001 702 594
Second Respondent

AND

WOOLWORTHS (VICTORIA) PTY LIMITED
ACN 004 177 155
Third Respondent

AND

LAWRENCE REFRIGERATION PTY LIMITED
ACN 005 912 176
Fourth Respondent

JUDGE:

EMMETT J

DATE OF ORDER:

5 NOVEMBER 1999

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The Respondents’ Cross Claim be dismissed.
2.The Respondents/Cross-Claimants pay the Applicant’s/Cross-Respondent’s costs of the proceedings (including proceedings NG76 of 1997) up to and including 31 March 1999. The Applicant/Cross-Respondent pay the Respondents’/Cross-Claimants’ costs of the application to reopen heard on 5 May 1999 and the application for amendment. Costs of today reserved.
3.Directions as to the conduct of the further trial be given as follows:
(a)The First Respondent (Woolworths Limited), on or before 2pm on 22 November 1999, file and serve an affidavit setting out, in respect of each store operated by it or any of its subsidiaries, the number and type of refrigeration units operated, and the period of time the said units have been operated, using a combination of:
(i) as the refrigerant, either or both of KLEA 61 or KLEA 66 (or any other refrigerant comprising of at least one fluorine-containing hydrocarbon containing 1 or 2 carbon atoms and wherein fluorine is the only halogen present); and
(ii) as the lubricant, Emkarate RL32S (or any other lubricant comprising at least one carboxylic ester of polyhydroxy compound containing at least 2 hydroxy groups and characterised by the general formula set out in the schedule annexed).

(b)The Second and Fourth Respondents (Austral Refrigeration Pty Limited and Lawrence Refrigeration Pty Limited), on or before 2pm on 22 November 1999, file and serve an affidavit setting out each occasion and particulars of the number, type and location of refrigeration units that they, whether by themselves, servants or agents, have converted, retrofitted or charged with either:
(i) as the refrigerant, either or both of KLEA 61 or KLEA 66 (or any other refrigerant comprising of at least one fluorine-containing hydrocarbon containing 1 or 2 carbon atoms and wherein fluorine is the only halogen present); and,
(ii) as the lubricant, Emkarate RL32S (or any other lubricant comprising at least one carboxylic ester of polyhydroxy compound containing at least 2 hydroxy groups and characterised by the general formula set out in the schedule annexed);

where the said unit/units were intended to operate or were operating the said refrigerant and the said lubricant in combination.

4.The matter be listed for further directions on 24 November 1999. Reserve questions of the form of injunctive relief, stay of injunction and further directions for the damages/account of profits hearing until then.
5.The time for any application for leave to appeal be extended until 24 November 1999 or such later date as the Court may determine.
SCHEDULE
R[OC(O)R¹]_n

wherein R is a hydrocarbyl group, each R1 is independently hydrogen, a straight chain lower hydrocarbyl group, a branched chain hydrocarbyl group, or a straight chain hydrocarbyl group containing from 8 to 22 carbon atoms provided that at least one R1 group is hydrogen, a lower straight chain hydrocarbyl or a branched chain hydrocarbyl group, or a carboxylic acid- or carboxylic acid ester-containing hydrocarbyl group, and n is at least 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

NG 190 OF 1997

BETWEEN:

ICI CHEMICALS & POLYMERS LIMITED
Applicant

AND:

THE LUBRIZOL CORPORATION INC
Respondent

NG 552 OF 1997

BETWEEN:

THE LUBRIZOL CORPORATION INC
Applicant

AND:

WOOLWORTHS LIMITED
ACN 000 014 675
First Respondent

AND

AUSTRAL REFRIGERATION PTY LIMITED
ACN 001 702 594
Second Respondent

AND

WOOLWORTHS (VICTORIA) PTY LIMITED
ACN 004 177 155
Third Respondent

AND

LAWRENCE REFRIGERATION PTY LIMITED
ACN 005 912 176
Fourth Respondent

JUDGE:

EMMETT J

DATE:

5 NOVEMBER 1999

PLACE:

SYDNEY

REASONS FOR JUDGMENT

On 31 March 1999, I delivered my reasons for concluding that the application for revocation of the Patent should be dismissed in so far as it relies on any ground other than non-compliance with section 40 of the Patents Act 1990 (“the Act”). I said that that ground might be affected by any amendment if one is allowed. I also concluded that if the Patent is valid, there has been an infringement of the Patent by Woolworths, Austral, Woolworths Victoria and Lawrence and that Lubrizol would be entitled to an injunction restraining further infringement and to recover damages or an account of profits, at its election.
The form of any proposed amendment of the Patent had not been formulated at that stage. I said that, if it is intended to pursue amendment under section 105 of the Act and that is opposed by ICI, I would direct the parties to bring in short minutes relating to the interlocutory steps necessary to bring that question before the Court for resolution. That is, in fact, what happened. However, following the delivery of those reasons, an application was made to re-open argument concerning the failure to comply with section 40 of the Act. ICI contended that, as a consequence of the abandonment by Lubrizol of claims 1 and 4 to 9, the Remaining Claims do not conform to the Specification in that the Specification is too wide.
I had concluded that amendment would be required to achieve conformity between the body of the specification and the claims that are maintained, and that in the absence of such amendment, there was a failure to comply with section 40. After hearing further argument I granted leave to Lubrizol to reopen.
On 20 May 1999, I delivered reasons in which I maintained the view that I had previously expressed that the Patent was invalid by reason of non-compliance with section 40, but that I would then embark on a hearing of the question of whether or not amendment should be allowed. ICI then foreshadowed that it would oppose any amendment of the Specification, if one was made. I therefore directed the parties to bring in short minutes relating to any proposed application by Lubrizol for amendment pursuant to section 105. Issues were then formulated and further evidence was filed.
After a further hearing, I delivered my reasons on 15 October 1999 for concluding that neither of the bases advanced on behalf of ICI for opposing the amendments sought by Lubrizol had been made out. I concluded that an order should be made directing the amendment of the Patent in the manner set out in the notice of intention to amend filed by Lubrizol on 7 June 1999. I reserved all costs of the proceedings at each stage to which I have just referred.
A number of questions now arise, in the light of the conclusions that I have reached.
CERTIFICATE UNDER SECTION 19
First, Lubrizol seeks a certificate under section 19 of the Act. Section 19(1) provides as follows:
“In any proceedings in a court in which the validity of a patent or of a claim is disputed, the court may certify that the validity of a specified claim was questioned.”
The consequence is that if, in later proceedings the validity of the patent is challenged, special orders for costs may be made against an unsuccessful party.
Strictly speaking, I determined that the Patent was invalid. However, as I have indicated, while a number of grounds were raised by ICI, ICI succeeded only on one of those. That success was, in a sense, short lived because, following amendment, the Patent is, in my view, valid.
The order sought by Lubrizol under section 19 is as follows:
“That the validity of claims 1 to 20 of the respondent’s Australian patent number 638710 as amended, was questioned unsuccessfully in these proceedings.”
That is not strictly correct, for the reasons I have just indicated.
Senior counsel for ICI contended that there was no utility in making any order under section 19, having regard to the circumstances to which I have just referred. However, I consider there is some point in formalising the fact that the court has, after a fully contested hearing, determined that the Patent, following amendment, would be valid. It seems to me to be appropriate that the Court certify that the validity of claims 1 to 20 was questioned unsuccessfully on all grounds other than failure to comply with section 40 of the Act. In due course, I will make an order directing the amendment of the patent. The effect of that amendment is that there will no longer be a failure to comply with section 40.
FUTURE PROGRESS OF THE PROCEEDING
The second question concerns the future progress of the proceeding. Lubrizol seeks an order that the respondents in the infringement proceedings, NG 552 of 1997, be directed to file affidavits concerning possible infringement of the Patent. In the case of Woolworths, Lubrizol seeks an affidavit setting out, in respect of each store operated by Woolworths or any of its subsidiaries, the number and type of refrigeration units operated and the period of time the units have been operated using a combination of refrigerant and lubricant that would infringe the Patent as amended.
In the case of Austral and Lawrence, Lubrizol seeks an affidavit setting out each occasion and particulars of the number, type and location of refrigeration units that they, whether by themselves, servants or agents, have converted, retrofitted or charged with a combination of refrigerant and lubricant that would infringe the Patent as amended. That order is not opposed.
FORM OF FINAL INJUNCTION
The third question concerns the form of final injunction to which Lubrizol is entitled in consequence of its success in the proceedings. Lubrizol, in effect, seeks an injunction that would restrain use of a liquid composition that involves a lubricant as described in Claim 1 as amended. ICI, on the other hand, contends that the injunction should be limited to a liquid composition involving a lubricant of the kind actually involved in the refrigeration units in the Woolworths stores.
I consider the appropriate course is to await receipt of the affidavits to which I have just referred. The final injunctions should be moulded to reflect the extent of any infringement that is proved by those affidavits.
COSTS
Finally, there is the question of the costs of the proceedings. Lubrizol had a high measure of success in the principal proceedings that resulted in my reasons of 31 March 1999. However, it was not entirely successful. Further, it abandoned, at a late stage, its claims insofar as the claims were based on Claim 1. It abandoned at a later stage, in the circumstances to which I have referred in my reasons of 15 October 1999, the claim insofar as it is based on Claims 4 to 9.
ICI had, at least initially, a degree of success in persuading me that the Patent did not comply with section 40 and that, accordingly, it would be necessary for Lubrizol to apply for an order directing amendment in order to maintain the validity of the Patent. There is also the further argument that resulted from the reopening of the proceedings. In addition, there are the costs of hearing the amendment application. Finally, there were costs reserved in a proceeding under Order 15A of the Federal Court Rules, which I directed should be costs of the parties in these proceedings.
It is undesirable, in my view, to endeavour to make a costs order in respect of each separate issue that arises in the proceedings. While such an approach may, theoretically, result in a more ideal result, it is costly and extraordinarily difficult for a taxing officer to determine the costs that are attributable to particular issues.
I consider that Lubrizol is entitled to an order for the costs of the proceedings up to and including 31 March 1999. Those costs would include the costs of the proceedings under Order 15A. Lubrizol would also be entitled to the costs of the final orders, including the argument today and on any later occasion when the form of orders will be finalised. However, those costs have not yet been incurred and they will be dealt with at the appropriate time. Lubrizol concedes in effect that it should bear the costs of the proceedings up to 23 October 1998, in relation to the claims based on Claim 1. On the other hand, Lubrizol has been significantly successful in relation to the application for an order directing amendment.
Nevertheless, in relation to the last matter, that hearing was necessitated by the conduct of Lubrizol. Lubrizol drafted its Specification and made its claims in the form in which it did. As a consequence of that, it has been necessary to seek the order under section 105. It was reasonable for ICI to oppose that order. Indeed, if ICI had not done so I consider that it would have been desirable for the court to invite the Registrar, or someone else, to act as contradictor. While the argument involved substantial factual inquiries, I do not consider that ICI has acted in any way untoward in raising the issues that it raised. Prima facie, in my view, ICI is entitled to its costs on the basis that it was, in effect, acting as amicus curiae in opposing the amendment.
That leaves the question of the hearing on the re-opening. Lubrizol was unsuccessful in that regard. I consider that it is appropriate to order Lubrizol to pay the costs of the further hearing, which resulted in my reasons of 20 May 1999, but to make no qualification concerning the claims by Lubrizol based on Claim 1 and Claims 4 to 9.
The appropriate orders would then be that ICI should pay Lubrizol’s costs of the proceedings, including the costs of the proceedings under Order 15A, up to and including 31 March 1999. Lubrizol should pay ICI’s costs of the further argument and of the application for an order under section 105. The costs of today and of subsequent proceedings should not be the subject of any order at this stage, but I would expect that, in the ordinary course, they would be ordered in favour of Lubrizol.
ICI has foreshadowed an application for a stay and for leave to appeal. I have indicated that I consider it to be preferable to await receipt of the affidavits from the respondents concerning infringement. If, on receipt of those affidavits, it appears that any further hearing concerning damages or account of profits would be of short compass, then it would be preferable to dispose of that matter as soon as possible. No question of leave would then arise. If, however, there are substantial matters to be inquired into by the Court, then it may well be appropriate to entertain any application for leave to appeal that ICI or the respondents in the infringement proceedings may wish to make.
I will today make orders, if requested by Lubrizol, directing the amendment of the Patent. I propose to list the matter for further hearing on 24 November 1999 and I will extend up to and including that day the time for making any application for leave to appeal.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Associate:
Dated: 23 November 1999

Counsel for ICI, Woolworths, Austral, Woolworths (Victoria) and Lawrence: D.K. Catterns QC

Solicitor for the above: Blake Dawson Waldron

Counsel for Lubrizol: J.T. Gleeson

Solicitor for Lubrizol: Coudert Bros.

Date of Hearing: 5 November 1999

Date of Judgment: 5 November 1999

BETWEEN:	ICI CHEMICALS & POLYMERS LIMITED Applicant
AND:	THE LUBRIZOL CORPORATION INC Respondent

JUDGE:	EMMETT J
DATE OF ORDER:	5 NOVEMBER 1999
WHERE MADE:	SYDNEY

BETWEEN:	THE LUBRIZOL CORPORATION INC Applicant
AND:	WOOLWORTHS LIMITED ACN 000 014 675 First Respondent
AND	AUSTRAL REFRIGERATION PTY LIMITED ACN 001 702 594 Second Respondent
AND	WOOLWORTHS (VICTORIA) PTY LIMITED ACN 004 177 155 Third Respondent
AND	LAWRENCE REFRIGERATION PTY LIMITED ACN 005 912 176 Fourth Respondent

JUDGE:	EMMETT J
DATE:	5 NOVEMBER 1999
PLACE:	SYDNEY

Counsel for ICI, Woolworths, Austral, Woolworths (Victoria) and Lawrence:	D.K. Catterns QC
Solicitor for the above:	Blake Dawson Waldron
Counsel for Lubrizol:	J.T. Gleeson
Solicitor for Lubrizol:	Coudert Bros.
Date of Hearing:	5 November 1999
Date of Judgment:	5 November 1999