Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd

[2010] FCA 108

FEDERAL COURT OF AUSTRALIA

Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Limited
[2010] FCA 108

Citation:

Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Limited [2010] FCA 108

Parties:

INVERNESS MEDICAL SWITZERLAND GMBH
v MDS DIAGNOSTICS PTY LIMITED
(ACN 090 764 702), MDS DIAGNOSTICS LIMITED (NEW ZEALAND COMPANY NO 1000571), PRAKASH APPANNA, AUSTRALIAN MEDICAL TESTING PTY LIMITED (ACN 101 245 176), FLAMUR KRASNIQI

File number:

NSD 1722 of 2006

Judge:

BENNETT J

Date of judgment:

22 February 2010

Catchwords:

PATENTS – devices for assays involving specific binding – alleged infringement by respondents’ pregnancy testing devices – construction of claims – validity – utility – whether product within the claims not useful – claim leaves reader to select appropriate specific binding reagents – novelty – whether applicant’s earlier patent anticipates its later patent – whether additional feature in later patent disclosed in earlier patent – construction of “carrier” propounded by applicant for purposes of infringement applies on consideration of anticipation – whether divisional patent takes priority date of priority documents, parent or own filing date – whether divisional patent fairly based on parent patent or priority documents  – sufficiency – clarity

PATENTS – personal liability of director for infringement by companies – joint tortfeasor – relevant test– relevance of director’s knowledge that acts constitute patent infringement – director’s involvement in managing companies and procuring and distributing infringing products – meaning of “authorise” under s 13 of the Patents Act – whether analogous to copyright law – whether applicable to directors – sanction, approve or countenance

EVIDENCE – admissibility – exception to hearsay rule – whether representation obtained in connection with proceeding

Words and phrases:

“specific binding reagent”, “dry porous carrier”, “within said casing”, “authorise”

Legislation:

Patents Act 1990 (Cth) ss 13, 18, 40, 79B
Patents Act 1952 (Cth) ss 40, 100
Patents Regulations 1991 (Cth) Reg 3.12
Evidence Act 1995 (Cth) s 69

Cases cited:

Abbott Laboratories v Corbridge Group Pty (2003) 57 IPR 432 considered
Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 applied
Allen Manufacturing Co Pty Limited v McCallum & Co Pty Limited (2001) 53 IPR 400 considered
Austal Ships Pty Ltd v Stena Rederi Aktiebolag (2006) 66 IPR 420 applied
Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 61 IPR 575 applied
Australian Competition and Consumer Commissionv Advanced Medical Institute Pty Ltd (2005) 147 FCR 235 considered
Bristol-Myers Squibb Company v F H Faulding & Co Ltd (1998) 41 IPR 467 not followed
Bristol-Myers Squibb Company v F H Faulding & Co Ltd (2000) 97 FCR 524 followed
Cooper v Universal Music Australia Pty Limited (2006) 156 FCR 380 considered
Décor Corporation Pty Ltd v Dart Industries Inc (1988) 13 IPR 385 discussed
Delnorth Pty Limited v Dura Post (Aust) Pty Limited (2008) 78 IPR 463 distinguished
Flexible Steel Lacing Company v Beltreco Ltd (2000) 49 IPR 331 cited
Grain Pool of Western Australia v Commonwealth of Australia (2000) 202 CLR 479 applied
H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 applied
Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd (2003) 9 VR 171 cited
Interlego AG v Toltoys Proprietary Limited (1973) 130 CLR 461 cited
Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (1998) 42 IPR 111 applied
Kimberly-Clark Australia Pty Limited v Arico Trading International Pty Limited (2001) 207 CLR 1 applied
King v Milpurrurru (1996) 66 FCR 474 considered
Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667; (2004) 64 IPR 444 cited
Lockwood Security Products v Doric Products Pty Limited (2004) 217 CLR 274 applied
Martin Engineering Co v Trison Holdings Pty Ltd (1989) 14 IPR 330 applied
Mentmore Manufacturing Co Limited v National Merchandising Manufacturing Co In (1978) 89 DLR (ED) 195 explained/applied
Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231 applied
Nesbit Evans Group Australia Pty Ltd v Impro Ltd (1998) 39 IPR 56 applied
Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 cited
NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1992) 24 IPR 1 considered
NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239 considered
Pioneer Electronics Australia Pty Ltd v Lee (2001) 108 FCR 216 cited
Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC (2008) 77 IPR 449 applied
Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd (2001) 53 IPR 481 considered
Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 applied
Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119 applied
Sachtler GmbH and Co KG v RE Miller Pty Ltd (2005) 22 ALR 373 cited
Sydneywide Distributors Pty Ltdv Red Bull Australia Pty Ltd  (2002) 55 IPR 354 considered
Synthetic Turf Development Pty Ltd v Sports Technology International Pty Ltd (2005) 67 IPR 475 applied
Texas State Commission for the Blind v the United States 796 F2d 400 (Fed Cir 1986) considered
University of New South Wales v Moorhouse (1975) 133 CLR 1 applied
Washex Machinery Corporation v Roy Burton & Co Pty Ltd (1974) 49 ALJR 12 cited
Welch Perrin and Company Proprietary Limited v Worrell (1961) 106 CLR 588 cited
WM Wrigley Jr Co v Cadbury Schweppes Pty Ltd (2006) 66 IPR 298 discussed

Date of hearing:

26, 30, 31 March 2009, 1, 8 April 2009, 13 May 2009

Date of last submissions:

15 June 2009

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

205

Counsel for the Applicant:

Ms K Howard SC, Mr P Flynn

Solicitor for the Applicant:

Addisons Lawyers

Counsel for the First, Second and Third Respondents:

Mr A Franklin SC, Mr A Fox

Solicitor for the First, Second and Third Respondents:

Breens Lawyers until 27 November 2009, Douros Lawyers thereafter

Counsel for the Fourth and Fifth Respondents:

The Fourth and Fifth Respondents did not appear.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1722 of 2006

BETWEEN:

INVERNESS MEDICAL SWITZERLAND GMBH
Applicant

AND:

MDS DIAGNOSTICS PTY LIMITED (ACN 090 764 702)
First Respondent

MDS DIAGNOSTICS LIMITED
(NEW ZEALAND COMPANY NO 1000571)
Second Respondent

PRAKASH APPANNA
Third Respondent

AUSTRALIAN MEDICAL TESTING PTY LIMITED
(ACN 101 245 176)
Fourth Respondent

FLAMUR KRASNIQI
Fifth Respondent

JUDGE:	BENNETT J
DATE OF ORDER:	22 FEBRUARY 2010
WHERE MADE:	SYDNEY

THE COURT DIRECTS THAT:

1.The parties submit proposed orders within 14 days to give effect to these reasons.

2.The parties file and serve any submissions on costs within 14 days.

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

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1722 of 2006

BETWEEN:

INVERNESS MEDICAL SWITZERLAND GMBH
Applicant

AND:

MDS DIAGNOSTICS PTY LIMITED (ACN 090 764 702)
First Respondent

MDS DIAGNOSTICS LIMITED
(NEW ZEALAND COMPANY NO 1000571)
Second Respondent

PRAKASH APPANNA
Third Respondent

AUSTRALIAN MEDICAL TESTING PTY LIMITED
(ACN 101 245 176)
Fourth Respondent

FLAMUR KRASNIQI
Fifth Respondent

JUDGE:	BENNETT J
DATE:	22 FEBRUARY 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE RESPONDENTS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[3]
THE PATENTS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[7]
PRINCIPLES OF CLAIM CONSTRUCTION........ ........ ........ ........ ........ ........ ........ ........ ...	[12]
THE SKILLED ADDRESSEE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[16]
BACKGROUND CHEMISTRY AND TERMINOLOGY........ ........ ........ ........ ........ ........ .	[21]
CONSTRUCTION OF TERMS IN THE PATENTS........ ........ ........ ........ ........ ........ ........ .	[29]
“Specific Binding Reagent”........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[30]
The positions of Inverness and MDS........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[32]
The evidence of the experts........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[38]
Consideration of the meaning of “specific binding reagent for an analyte” in the first patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[44]
Generally........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[44]
Embodiments and examples of the invention........ ........ ........ ........ ........ ........ .....	[51]
The claims........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[65]
Summary of the main reasons for the conclusion that the meaning of “specific binding reagent for an analyte” is not a reagent that binds only the target analyte but one that binds the analyte in a specific binding reaction........ ........ ........ ........ ....	[69]
The second, third and fourth patents........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[70]
“Dry porous carrier”........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[74]
Bibulous sample liquid receiving member “within said casing”........ ........ ........ ........ ......	[82]
Porous material backed with transparent moisture-impervious material........ ........ .......	[88]
INFRINGEMENT GENERALLY, APART FROM CONSIDERATION OF VALIDITY........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[93]
The first and second patents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[93]
The third patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .	[94]
The fourth patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .......	[96]
Electron micrograph evidence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[97]
Email from the manufacturer of macroporous body in the MDS devices........ ........ ..	[106]
VALIDITY........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[114]
Applicable law........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[114]
Utility........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[115]
Sufficiency........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[130]
Clarity........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[135]
Priority date of the third patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[140]
Disclosures in the first patent and the Parent Priority Documents........ ........ ........ ...	[146]
Fair basing on the Parent Priority Documents........ ........ ........ ........ ........ ........ ........ ...	[149]
Fair basing on the first patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ......	[152]
Novelty – third and fourth patents........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....	[156]
Legal principles........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[156]
Third patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[157]
Fourth patent........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........	[159]
LIABILITY OF DR APPANNA........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...	[176]
Joint tortfeasor........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..	[179]
Authorising conduct of MDS - s 13(1) of the 1990 Act........ ........ ........ ........ ........ ........ ....	[193]
MDS’ CROSS CLAIM UNDER S 128 OF THE 1990 ACT........ ........ ........ ........ ........ ......	[204]
CONCLUSION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .....	[205]

1. The applicant (Inverness) is the owner of four patents (together, the patents).  The inventions described and claimed in the patents relate to assays involving specific binding, especially immunoassays.  The device described in the patents is an analytical device suitable for home use as a single step device for, but not limited to, pregnancy testing.

2. Inverness alleges that pregnancy testing devices marketed under the names of QuickStream (QuickStream) and QuickCard (QuickCard) infringe various claims in its four patents.  The proceedings relate to questions of infringement and validity of the patents.  Issues of liability and quantum have been separated.

   THE RESPONDENTS

3. The application seeks orders against five respondents.  Only the first three respondents have filed a notice of appearance.  The first respondent (MDS Aus) is the sponsor under the Therapeutic Goods Act 1989 (Cth) of, and the second respondent (MDS NZ) is the New Zealand and Australian distributor of, QuickStream and QuickCard (together the MDS devices).   

4. The third respondent, Dr Appanna, is a director of both MDS Aus and MDS NZ.  Inverness alleges that Dr Appanna is personally liable as a joint tortfeasor for the infringement by the MDS companies and also for authorising the same infringement.  When referring to the submissions made by the first to third respondents, I will refer to the three respondents together as MDS, unless I need to refer to them individually.

5. The fourth respondent was deregistered on 5 November 2008.  The proceedings as against the fourth respondent have been brought to an end, as the fourth respondent has ceased to exist on deregistration (s 601AD(1) of the Corporations Act 2001 (Cth)). The proceedings against the fourth respondent should be dismissed with no order as to costs.

6. Inverness informs me that on 21 September 2007 the fifth respondent entered into a personal insolvency agreement under the Australian Bankruptcy Act 1966 (Cth) such that the proceedings against him have been stayed.  Inverness has taken no further steps in the proceedings against him since that time.  As requested by Inverness, I will grant leave for Inverness to file a notice of discontinuance of the proceedings against the fifth respondent.  The fifth respondent has not filed an appearance.  There will be no order as to costs as between Inverness and the fifth respondent. 

   THE PATENTS

7. Australian Patent No. 626207 is a PCT application (the first patent).  There is no challenge to the fact that the invention there described involves an inventive step.  From that parent patent, two divisional patents, Australian Patent No. 656966 (the second patent) and Australian Patent No. 656967 (the third patent) were granted.  Questions of the priority date have been raised in respect of the third patent.  Australian Patent No. 643430 (the fourth patent) was filed separately.  There is no dispute the invention described in the fourth patent involves an inventive step.  The fourth patent is not a divisional and takes its own filing date, 16 February 1990, as its priority date.  The first, second and third patents expired on 26 April 2008.

8. The parties have presented the infringement issues by reference to claim 1 of each patent with the proviso that, if claim 1 of the third patent is anticipated, it will be necessary to consider claims 9 and 10 of that patent.  As to the third patent, Inverness initially claimed infringement of claims 1, 2, 3 and 4.  Those claims then formed the basis of MDS’ attack on validity.  Inverness now claims infringement also of claims 9 and 10.  MDS says that it is not in a position to deal with the validity of those claims.

9. MDS challenges the validity of all four patents on the grounds of lack of utility and sufficiency.  If its argument on the priority date of the third patent is accepted, MDS also challenges claims 1 to 4 of the third patent on the basis of lack of novelty.  It further challenges the validity of the claims of the fourth patent on the basis of lack of novelty and challenges particular claims in the second and fourth patents on the basis of lack of clarity.

10. A key issue is the meaning of certain terms used in the claims, specifically:

    1.“specific binding reagent for an analyte/ the same analyte” as it appears in the claims of the first patent and the second patent;

    2.“specific binding reagent” as it appears in the claims of the third patent and the fourth patent;

    3.“dry porous carrier” or “carrier”, as they appear in the claims of the patents;

    4.“bibulous sample liquid receiving member within said casing” in sub-paragraph (b) of claim 1 of the third patent; and

    5.“porous material backed with a layer of transparent moisture-impervious material” in claim 9 of the third patent.

11. During the course of the hearing MDS accepted that if either QuickStream and QuickCard are found to infringe any of the four patents, MDS NZ (as well as MDS Aus) exploited that patent in Australia within the definition of “exploit” in the Patents Act 1990 (Cth) (the 1990 Act).  Relevantly to the claimed infringement, MDS also admitted during the hearing that the reagent in the detection zone of the MDS devices is “permanently immobilised” and that the label used in the labelled reagent is a “particulate direct label” within the meaning of the claims of the patents.

    PRINCIPLES OF CLAIM CONSTRUCTION

12. There is no issue between the parties as to the principles to be applied in the construction of patents, drawn from Welch Perrin and Company Proprietary Limited v Worrell (1961) 106 CLR 588, Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Limited (1980) 144 CLR 253 and Kimberly-Clark Australia Pty Limited v Arico Trading International Pty Limited (2001) 207 CLR 1.

13. It is of particular importance to keep in mind that the question is what the person skilled in the art would have understood the patentee to be using the language of the claim to mean (Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667; (2004) 64 IPR 444 at [34] per Lord Hoffman; H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 at [118] per Bennett J (Middleton J agreeing)). It is necessary to read the whole of the patent, including the claims, and to construe the terms in dispute through the eyes of the skilled addressee. The complete specification is to be construed in the light of the common general knowledge as at the priority date (Kimberly-Clark at [24]).

1. The claims are construed in the context, and not in isolation, of the specification.  That is not to say that the clear meaning of a claim can be varied by reference to the body of the specification, although terms which are unclear may be clarified by reference to the body of the specification (Kimberly-Clark at [15]).  As noted by Sheppard J in Décor Corporation Pty Ltd v Dart Industries Inc (1988) 13 IPR 385 at 410, the claim should be understood and interpreted in the context of the specification as a whole. As Sheppard J went on to say, there are two specific circumstances in which the body of the specification may be referred to. One is where there is ambiguity. The other is where the specification discloses an intention that words used elsewhere are to have a particular meaning, in which case that meaning should be given effect because the draftsman of the patent has used his or her own dictionary (Décor at 410-41; Flexible Steel Lacing Company v Beltreco Ltd (2000) 49 IPR 331 at [76] per Hely J).

2. An essential part of the process of construction involves understanding the nature of the invention described and claimed and the way in which the patentee has used words or phrases in describing and then claiming that invention.  Sometimes the patentee provides a clear dictionary in the body of the specification for words and phrases.  However, that is not always the case.  While a patent is a public instrument which must define a monopoly in such a way that it is not reasonably capable of being misunderstood, it is also appropriate to try to understand what the patentee seeks to convey by the words used, especially where those words convey matters of biological or technological complexity (see generally Welch Perrin).  The body of the specification may be used to resolve ambiguities or to clarify what is uncertain in meaning.  It may not be used to restrict, expand or qualify what appears in the claim (Interlego AG v Toltoys Proprietary Limited (1973) 130 CLR 461 at [16]). However, as stated in Sachtler GmbH and Co KG v RE Miller Pty Ltd (2005) 22 ALR 373 at [42] per Bennett J, there is a fine line between, on the one hand, reading down the words of a patent claim to reflect how a person skilled in the art would understand it in a practical and common sense way and, on the other, impermissibly limiting the clear words of a claim because a reader skilled in the art would be likely to apply those wide words only in a limited range of all the situations they describe (citing Stanway Oyster Cylinders Pty Ltd v Marks (1996) 66 FCR 577 at 585 per Drummond J).

   THE SKILLED ADDRESSEE

3. Neither Inverness nor MDS has objected to the evidence of the expert witnesses.  There is a slight difference between the parties in the characterisation of the skilled addressee.  Inverness contends that such a person is one with a practical interest in immunoassays and immunoassay kits.  MDS’ characterisation is a person experienced in the area of assay development, particularly immunoassays and in generating, working with and characterising antibodies.  Both parties accept that the person may either have a PhD in Science or have otherwise gained such experience.

4. Inverness relies on the evidence of Ms Boscato, who leads the manual immunoassay team at St Vincent’s Hospital in Sydney.  Ms Boscato is a person who works at a bench in a laboratory rather than being a theoretical researcher.  She has designed and made immunoassays, uses them routinely and has a “practical interest” in the subject matter of the invention.

5. MDS relies on the evidence of Dr Sinosich, the Scientific Director of the Prenatal Testing and Molecular Genetics Divisions of Sonic Clinical Institute in Sydney.  He supervises Australia-wide prenatal screening and molecular testing and accreditation of assays as provided by the Sonic Clinical Institute.  In summary, Dr Sinosich has worked in the field of immunoassay development, including immunoassays for a range of fertility, pregnancy and non-pregnancy associated analytes.  He has generated both polyclonal and monoclonal antibodies; all of his research activity has been antibody-based.  Dr Sinosich has primarily undertaken development of quantitative immunoassays for detection of pregnancy-associated analytes (a competitive immunoassay).  The fundamental principles utilised in that work are equally applicable to qualitative immunoassays (such as a sandwich design).  Inverness does not challenge Dr Sinosich’s qualifications but says that he is more of a theoretical researcher.

6. Dr Sinosich states that, in his opinion, in relation to the test strip aspect of the inventions, the patents are addressed to a person experienced in the area of assay development (specifically immunoassays) who generates, works with and characterises antibodies.  Other persons would become involved to develop the casing associated with the strip and commercialise the product.

7. While the respective experts differ in their qualifications and experience, each of MDS and Inverness accept that both of the experts, Dr Sinosich and Ms Boscato, are skilled addressees able to give evidence of terms of art and of the understanding of the person skilled in the art of the language of the specifications and the claims.

   BACKGROUND CHEMISTRY AND TERMINOLOGY

8. The background chemistry is not in dispute.  Inverness stresses, however, that as at the priority date of the first patent in 1987, some of the knowledge was not as advanced as it is now.

9. Immunoassays are a type of analytical technique used to detect, either quantitatively or qualitatively, a hormone or marker of some kind.  Hormones are molecules that are released in one area of an organism to exert their action in another area of the organism.  A marker is a molecule that has particular attributes associated with a function or physiological state.  The hormone or marker that is the subject of the immunoassay is known as the analyte.  In the context of immunoassays, the antigen is referred to interchangeably as the analyte.  The key reactants in an immunoassay are the analyte (antigen) and the antibody.

10. The analyte is the target molecule that is sought to be detected or measured.  Some of the most common target molecules are the four trophic hormones (the glycoprotein hormones): luteinising hormone (LH), follicle stimulating hormone (FSH), thyroid stimulating hormone (TSH) and human chorionic gonadotropin (hCG).  Of these, only hCG is pregnancy derived; that is, it is a peptide hormone produced in pregnancy.  LH, for example, would normally be present in a non-pregnant woman’s urine in varying concentrations, usually peaking at ovulation.  hCG is heterodimeric, which means that it has two different parts: an α-subunit and a ß-subunit.  The α-subunit is common to all four glycoprotein hormones which may be present in human urine: LH, FSH, TSH and hCG.  Each is distinguished by its unique ß-subunit.  In a pregnancy test, the analyte is hCG.

11. The antibody, also referred to as a binding reagent, may be used to identify the presence of the analyte.  It is usually produced by the organism or host in response to immunisation with the antigen (analyte), that is, the introduction of the analyte to the organism or host.  Immunisation is required to stimulate antibody production; a particular antigen induces the production of antibodies which can bind to it.  The antibody can then be used in assays to measure or detect the analyte.  Each antibody binds to a different part of the analyte which is termed the epitope or the antigenic determinant.  There are one or more specific binding sites at which this binding occurs.  If the epitope or a similar structure is present in another molecule, then the antibody could also bind to that molecule.  These substances are then said to cross-react with the antibody.  The antibody binds to a limited but defined number of substances. The number of cross–reactants and the degree of binding of the cross-reactants compared to the analyte determine the degree of specificity of the antibody. 

12. Antibodies can be either polyclonal or monoclonal.  Monoclonal antibodies are a single, pure, homogeneous type of antibody, produced by a single clone of cells, which react with a single epitope on the analyte.  Polyclonal antibodies are a mixture of monoclones and therefore generally bind, with different affinities, to multiple epitopes on an analyte.  Different antibodies may have different affinities for an epitope, so that there may be different strengths of binding.  Immunoassays can use monoclonal or polyclonal antibodies.

13. Immunoassays can be either competitive or sandwich assays.  As Dr Sinosich accepted, the development of those assays was still evolving as at the priority date.  Both types of immunoassays use labelled reagents which may be either the antibody (sandwich) or the analyte (competitive).  Labels used for tagging the analyte in competitive immunoassays are small molecules, such a, radioactive isotopes or metals.  Labels for tagging the antibody in sandwich immunoassays can include small and large molecules, such as radioactive isotopes, metals or enzymes.  Labelling enables detection and/or quantification of analyte-antibody complexes (immunecomplex) and, accordingly, the presence of the analyte.  An immunoglobulin participates in an antigen/antibody reaction, in which there is binding to particular sites.

14. A competitive assay involves the use of a labelled analyte or analyte analogue which is physico-chemically identical to the unlabelled target analyte.  The labelled analyte competes with the unlabelled target analyte for limited binding sites on the antibody.  Competitive assays are used to determine the concentration of an analyte in a biological specimen.  The strength of the signal from the label, whether it is colour or radioactivity, is inversely related to the analyte concentration.

15. A sandwich assay (which is a non-competitive assay) usually involves the use of two antibodies, with specificities directed at two distinct epitopes on the target analyte.  One antibody is immobilised on an inert stationary surface to serve as capture.  The other antibody is labelled.  When the sample containing the analyte is added, the labelled antibody binds to it and forms an immunecomplex.  The immunecomplex is then captured by the immobilised antibody, so that the analyte is sandwiched between the two antibodies.  A sandwich assay can be used for detecting the presence of an analyte and also its concentration.  In contrast to a competitive assay, the signal generated from the label is proportional to the amount of analyte present in the sample.

    CONSTRUCTION OF TERMS IN THE PATENTS

16. The parties agree that, save where dependent claims are specifically referred to, questions of construction can be determined by reference to claim 1 in each patent.

    “Specific Binding Reagent”

17. The primary issue in these proceedings is the construction of ‘specific binding reagent for an analyte’ in claim 1 of the first and second patents and of ‘specific binding reagent’ in claim 1 of the third and fourth patents.  The parties agree that:

    (a)It is an essential integer of claim 1 of the first and second patents that the analytical test device must have a ‘labelled specific binding reagent for an analyte’ and an ‘unlabelled specific binding reagent for the same analyte’.

    (b)It is an essential integer of claim 1 of the third patent that the analytical test device must have a ‘labelled specific binding reagent’.

    (c)It is an essential integer of claim 1 of the fourth patent that the analytical test device must have a ‘labelled specific binding reagent’ and an ‘unlabelled specific binding reagent’.

18. The MDS devices are devices for pregnancy tests where the analyte is hCG.  These devices contain a labelled anti-ß hCG antibody in the first zone and an unlabelled anti-α hCG antibody immobilised in the detection zone.  MDS accepts that the labelled anti-ß hCG antibody is a specific binding reagent within the meaning of the patents.  MDS denies that the unlabelled anti-α hCG antibody is a specific binding reagent within the meaning of the patents.  Accordingly, MDS submits that the MDS devices do not contain an unlabelled specific binding reagent, which is an essential integer of the claims of the first, second and fourth patents.

    The positions of Inverness and MDS

19. Both parties have analysed the meaning of the expression “specific binding reagent” by reference to the first patent, the parent patent of the second and third patents.  The substance of the difference between the parties as to the meaning of this term is whether this expression means that the reagent may bind not only to the analyte that is sought to be detected but also to other molecules related to the analyte (Inverness’ position) or whether it means that the reagent will preferably bind only to the analyte and to no other molecule in the sample (MDS’ position).

20. MDS characterises “specific” in the term “specific binding reagent” as the adjective applied to a binding reagent.  Inverness does not dispute that “specific” alone can be used as an adjective.  However, Inverness says that “specific binding reagent” as used in the patents is a composite phrase, in effect equated with “specific binding reaction”.  That is, a reagent can be specific in that it is able to bind to the hormone in a specific binding reaction but not totally specific, as it can bind other hormones as well.  An anti-α hCG antibody is thus a specific binding reagent for the glycoprotein hormones but not totally specific for any one of them.

21. Inverness’ position is that a specific binding reagent is something that binds to the analyte, in that it has an inherent specificity for the analyte, but may also bind to other molecules.  That is, there may be cross-reactivity with other molecules.  Inverness contends that the expression “specific binding reagent for an analyte” means ‘a binding reagent which binds to the analyte in a specific binding reaction’.  When used in the manner described in the claims of the first and second patents, it enables the presence of the analyte, or target molecule, to be determined.  Inverness maintains that a specific binding reagent may bind to other molecules that are related to the analyte and still be a specific binding reagent for the analyte as long as it enters into a specific binding reaction with the analyte.  It is not necessary that it be specific only for one analyte.  The parties accept that if Inverness’ construction is adopted, the anti-α hCG antibody in the MDS devices is a specific binding reagent.

22. MDS says that, in ordinary English, the word “specific” relevantly means ‘[s]pecially or peculiarly pertaining to a certain thing or class of things’ so that a specific binding reagent is capable of discriminating between analytes.  This capability is, MDS says, the meaning of the term in immunology now and before the priority date.    Therefore, it says, the word “specific” imports the requirement that the reagent should bind to the target molecule and not to any other molecule.  MDS says that this would be and would have been the understanding of skilled workers in the field.  MDS says that “specific” equates with “absolute” but accepts that there may be a slight degree of cross-reactivity of the reagent with another protein, of the order of less than 1% and still be a specific binding reagent for an analyte.  For the purpose of discussion, this property can be referred to as the reagent being “mono-specific”.  MDS says that simply because the antibody can bind to the analyte does not mean that it is specific for the analyte.Otherwise, MDS asks rhetorically, why include the word “specific” in the expression “specific binding reagent for an analyte”?

23. There is no dispute that the anti-α and anti-ß hCG antibodies used in the MDS devices both bind to hCG or that the combination of anti-α and anti-ß antibodies enable the specific detection of hCG from among the glycoprotein hormones.  MDS says that the requirement imported by the expression “specific binding reagent” in the patents is that the reagent must bind only to hCG.  Under this construction, claim 1 of the first, second and fourth patents would require both the labelled and unlabelled specific binding reagents to be mono-specific for hCG.  This would require an anti-ß antibody in each case.  The anti-α hCG antibody is not a specific binding reagent for hCG under this construction because it also binds to the other glycoprotein hormones.

24. MDS denies that the competing constructions are merely a matter of semantics.  It points to the decreased likelihood of false positives in a testing device where the reagents will not bind to other molecules in the sample.  It also points to the problem of false negative results in a device such as its own, where one of the two reagents, the anti-α hCG antibody, can bind the other glycoprotein hormones, such as LH and FSH, which can then compete with hCG and “fill up” the available anti-α antibodies such that hCG present in the sample may not be detected.  MDS points to evidence that, where the reagents lack the required specificity, scavenger molecules (not part of the invention in the patents) are used to remove unwanted antigens or hormones such as LH to address cross-reactivity that could interfere with the assay.  MDS says that without such scavenger molecules, devices which use binding reagents which can cross-react with other molecules in the sample are non-useful because of problems of false positive and false negative results.

    The evidence of the experts

25. MDS relies on Dr Sinosich to support its submission that, to those skilled in the art of immunoassay in Australia before the priority date, the adjective “specific” used in relation to a reagent was a term of art meaning that the reagent will preferentially bind to the analyte in the immunoassay with no binding to any other molecule in the sample.  Dr Sinosich emphasised that, otherwise, the immunoassay will not be able to detect the presence of the analyte to the exclusion of other molecules in the sample.  Dr Sinosich was firmly of the view that, in the context of antibodies, “specific” in the phrase “specific binding reaction for an analyte”, means that the reagent will bind the target molecule and no other: it is mono-specific.

26. I formed the clear impression that, while Dr Sinosich gave his opinion honestly and impartially, his approach was, as he conceded in evidence, influenced by his own specific area of expertise and his own rigorous approach to the relevant terminology.  It was apparent during cross-examination when Dr Sinosich was taken to different parts of the specification that the patentee did not adopt the same limited use of terminology.  This may be explained in part by the fact that the application of the patent is not limited to antigen-antibody reactions, or to pregnancy kits.   

27. Dr Sinosich construed the patent as an expert in immunology interested in pregnancy testing.  The patents are not based solely on the use of antibodies in an immunoassay to detect pregnancy or fertility.  While the claimed invention especially relates to immunoassays, it is not so limited.  Dr Sinosich accepted that, for other analytes referred to in the specification such as some hormones and proteins, a mono-specific reagent may not have been available, especially as at the priority date and he acknowledged that other skilled workers in the field may use words or expressions of relative specificity.  Despite this, Dr Sinosich said that he applied his interpretation of “specific” and “specific binding reagent” uninfluenced by the way in which the terms were used in the specification or the context of the specification.  His use of terminology which does not allow for relative specificity or degrees of specificity does not accord with Ms Boscato’s evidence, or with much of the literature as at the priority date, or with the specification, which has broader application.  Dr Sinosich’s use of the terminology may well reflect his own experience and practice but the evidence suggests that it is not and was not the common use of others in the art to which the specification relates.

1. On the other hand, Ms Boscato agreed that, in the context of immunoassays, “specificity” means the ability to measure the analyte without interference from other substances which would cause a false positive response, or interference from other substances causing an inaccurate result.  Some confusion was introduced into the evidence by the use of the word “specific” on its own, in questions concerning whether or not a reagent would bind only to hCG and therefore be specific.  This term then introduced concepts of “totally specific” or “highly specific”.  Ms Boscato adopted and used these terms.  However, she drew a distinction between the use of “specificity” and “specific” as stand-alone words and the use of “specific” in the phrase “a specific binding reagent for an analyte” which, she repeated, means that the reagent has to be able to bind the analyte of interest in a specific binding reaction, but not necessarily exclusively.  Ms Boscato’s understanding of the phrase “specific binding reagent for an analyte” is that it describes a reagent as ‘a component used in an assay…for [an] analyte that is able to bind the analyte in a reaction that is particular to that reagent and analyte’.  As used in the specification, Ms Boscato says that the phrase is used as a generic term for a broad range of molecules that are able to bind to the analyte of interest.  Put shortly, as the evidence of Ms Boscato explained it, a reagent that participates in a specific binding reaction with an analyte or analytes may have different degrees of specificity for different analytes.

2. Ms Boscato explained that a specific binding reagent binds in a specific binding reaction, in contrast to binding that may be non-specific.  Dr Sinosich also explained that a specific binding reaction is only one way of an analyte becoming bound.

3. Ms Boscato pointed to literature that formed part of the art as at the priority date, including papers by Dr Ekins who, she said, was regarded as the person who introduced specific binding assays.  His articles were considered to be very important in the field at the time.   Throughout the Ekins article in evidence, the phrase “specific binding reagent” is used as a composite phrase.  This provides support for Inverness’ submission that the expression “specific binding reagent for an analyte” as used in the specification, reflects and describes the prior art as of the priority date.  This may explain why the phrase is used in the specification, although its use as a composite phrase does import redundancy in the use of “specific”: Ms Boscato accepted that every binding reagent that binds to an analyte will bind in accordance with a specific binding reaction.

   Consideration of the meaning of “specific binding reagent for an analyte” in the first patent

   Generally

4. The expression “specific binding reagent for an analyte” is not self-explanatory.  It is open to different interpretations and is an expression as to which the parties’ experts differ.  What are the indicia in the specification as to whether the specific binding reagent for the analyte binds exclusively to that analyte?  The question is whether the expression “specific binding reagent for an analyte” in claim 1 of the first patent means, where the analyte is hCG, a reagent that binds with hCG in a specific binding reaction but may also bind with other hormones containing the α-subunit, or whether it means a reagent that binds with and only with hCG, that is, with its unique ß-subunit.  The language of the specification is not rigorous. 

5. The definitions of “specific” in ordinary English and immunology highlighted by MDS support both MDS’ and Inverness’ constructions of “specific binding reagent”.  On Inverness’ construction, the reagent must engage in a specific binding reaction with the analyte of interest, which means that there must be a special binding site on the analyte capable of binding to that reagent.  In that sense, it specifically binds with the analyte and is capable of discriminating between analytes.  On MDS’ construction, it binds only to the analyte of interest; it does discriminate between analytes. 

6. The title of the specification of the first patent is ‘Immunoassays and devices therefor’.  The field of the invention is said to concern assays involving “specific binding”, especially immunoassays.  The background section of the specification refers to “specific binding assays, such as immunoassays”.  Previously proposed specific binding assays are described as involving the use of a specific binding reagent for the analyte which is immobilised and can therefore bind the analyte in the detection zone where the extent of binding can be determined with the aid of labelled reagents.  The invention of the first patent is not to new reagents or new assay techniques.  Rather, the invention improves and adapts known assay techniques in terms of the configuration, arrangement and labelling of reagents to operate in a test device suitable for home use.

7. A reading of pages 1 and 2 of the first patent discloses, inter alia, the following:

   ·The assays to which the invention relates involve specific binding especially, but not limited to, immunoassays or pregnancy tests.

   ·The invention also relates to “analytical devices” suitable for home, clinic, or surgery use.  The devices are intended to give an analytical result which is rapid and which requires the minimum degree of skill and involvement from the user.

   ·The stated improvement is that these devices do not require the user to perform a sequence of operations to obtain an observable test result.

   ·The device is contacted with a sample, such as a urine stream, and no further action by the user is required.

   ·Prior methods are described, including the use of reagent-impregnated test strips in specific binding assays such as immunoassays.  In such procedures, the sample is applied to one portion of the test material, usually with the aid of an eluting solvent such as water.  The sample progresses into or through a detection zone where ‘a specific binding reagent for an analyte’ suspected of being in the sample is immobilised.  Analyte present in the sample can therefore become bound within the detection zone.  The extent of binding can be determined with the aid of labelled reagents.

   ·The promise of the invention is to provide diagnostic test devices especially suitable for home use which are quick and convenient to use and which require the user to perform as few actions as possible.

   ·The device can be applied to different analytes (also on page 17).

8. The specification describes different embodiments of the invention.  In one embodiment (at page 4):

   ·The labelled reagent is a specific binding partner for the analyte.

   ·The labelled reagent, the analyte (if present) and the immobilised unlabelled specific binding reagent cooperate together in a “sandwich” reaction. 

   ·This results in the labelled reagent being bound in the second zone if analyte is present in the sample.

   ·The two binding reagents must have specificities for different epitopes on the analyte.

9. The specification seems to draw a distinction between specificity and a specific binding reagent.  The former is the characteristic that defines the ability of the reagent to identify only that analyte, the latter is the characteristic that ensures that the reagent does bind with the analyte in a specific binding reaction.  There is repeated reference to “specific binding”.  MDS points out that any reagent which binds to an analyte binds in a specific binding reaction, so that the word “specific” is either redundant or imports a requirement of mono-specificity.  Inverness’ response is that, in context, “specific” refers to the type of binding: the binding reagent must bind to the analyte in a specific binding reaction, being one where it is known which particular sites are bound, standing in contrast to a non-specific binding reaction.  Under this construction, examples of specific binding reagents are antibodies, receptors and binding proteins.  Inverness submits that examples of non-specific binding would be the non-specific binding of the reagent to the preferred carrier material, nitrocellulose, and of the label to the reagent, as described in the specification.  This can be contrasted with the specific binding that occurs between reagent and analyte, for example by recognition of an epitope.

10. I do not accept MDS’s contention that “specific” in the phrase “specific binding reagent” and “specificity” have equivalent meanings in the specification.  The Oxford Dictionary defines “specificity” as used in medicine and biology to mean: ‘the narrowness of the range of substances with which an antibody, enzyme, or other agent acts or is effective’.  Ms Boscato agreed that “specificity” means the graded ability to measure the analyte without interference from other substances causing an inaccurate result.  High specificity means low cross-reactivity.  Ms Boscato also said that the references in the specification to the range of specific, highly specific and monoclonal antibodies indicate that the patentee accepts that specificity, reflected in the word “specific” as used in the specification and the claims, is a relative term.

    Embodiments and examples of the invention

11. The embodiments of the invention utilise the sandwich reaction and the competition reaction.  In the sandwich reaction, the labelled reagent is a specific binding partner for the analyte.  The labelled reagent, the analyte and the immobilised unlabelled specific binding reagent cooperate together in a “sandwich”.  Binding occurs because of the recognition of the reagent for an epitope (or binding site) on the analyte.  In the embodiment involving a sandwich reaction (at page 4), it states that the two binding reagents must have specificities for different epitopes on the analyte.  This suggests that the reagents should bind preferably to the analyte.  However, in the embodiment involving the competition reaction (at page 4), the labelled reagent is the analyte itself, or an analyte analogue with identical specific binding characteristics to the analyte.  That labelled reagent binds with the immobilised reagent.  If the analyte is present in the sample, there will be competition between the analyte and the labelled reagent in binding to the immobilised reagent, so that there is a decrease in the intensity of the signal in comparison with the situation where there is no analyte.  This does not import a requirement for the reagent to be mono-specific.  In a competition reaction, the labelled reagent does not bind to the analyte. This requires specificity of the immobilised reagent but does not involve a concept of mono-specificity.  In either reaction, the immobilised specific binding reagent in the second zone is said to be preferably a highly specific antibody and, more preferably, a monoclonal antibody.  If the specific binding reagent for the analyte were necessarily mono-specific, it would not be necessary to state a preference for a highly specific antibody.

12. There are references in the specification to an “important embodiment” (at pages 7 and 8) where the carrier contains in the first zone a labelled highly-specific anti-hCG antibody and has immobilised in the second zone an unlabelled highly-specific anti-hCG antibody.  The labelled and unlabelled antibodies are to have specificities for different hCG epitopes.  If a specific binding reagent must be mono-specific, there is no room for degrees of specificity.  Further, an “important alternative” in the same important embodiment is ‘a fertile period device, essentially as described for hCG except that the analyte is LH’.

13. In an embodiment of the invention (at page 16) a labelled antibody having specificity for an epitope and a second antibody having specificity for a different epitope on the same analyte are used.  As a given example of an analysis to which this can be applied, the analyte can be hCG and the reagents can be monoclonal antibodies to hCG.  The specification goes on to state that an assay based on these principles can be used to determine a wide variety of analytes by choice of appropriate specific binding reagents.  The analytes can be, for example, proteins, immunoglobulins, hormones, drugs or infectious diseases agents. 

14. The specification describes how to produce certain examples of the invention. In the section describing the preparation of labelled reagents, the specification describes the process for coupling an anti-α hCG antibody to the dye sol label (at page 34). It goes on to state that:

    Due to the structural homology between the alpha subunits of hCG and LH, [an] anti-α hCG antibody can be used to detect LH in a cross-reactive immunoassay (at page 34).  Thus, a labelled antibody may be prepared for use in an LH assay in an identical manner to that described for Example 1, using an anti-alpha hCG antibody. 

    In the section describing the preparation of the reagent strip (at page 35), the specification provides that the immobilised protein can be a suitably selected antibody preparation such as anti-ß hCG, using a second (labelled) anti-hCG antibody in a sandwich format.  However, the specification later provides (at page 36) that sandwich-type reactions may be performed for the detection of hCG in a liquid sample using an anti-hCG antibody as described earlier in the specification, that is, using an anti-α hCG antibody linked to dye sols, gold sols or coloured latex particles.  It further provides that a similar embodiment can be prepared using LH instead of hCG. 

15. As Inverness points out, the only difference between the MDS kits and this example in the first patent is that the antibodies are reversed in the MDS kits in that the anti-α hCG antibody is the unlabelled reagent and the anti-ß hCG antibody is the labelled reagent.  Inverness says that the reverse use of the antibodies makes no difference in terms of determining whether or not there are two specific binding reagents in the MDS kits. 

16. In the context of sandwich assays, the specification repeatedly uses the term specific binding reagent to describe the labelled reagent, for example:

    In one embodiment of the invention, the labelled reagent is a specific binding partner for the analyte.  The labelled reagent, the analyte (if present) and the immobilised unlabelled reagent cooperate together in a “sandwich” reaction (at page 4).

    Another important preferred embodiment of the invention is the use of so called “direct labels”, attached to one of the specific binding reagents.  Direct labels such as gold sols and dye sols, are already known per se (at page 5).

    The only description in the specification of the preparation of a labelled reagent for hCG detection for use in a sandwich assay utilises an anti-α hCG antibody.  It describes how an anti-α hCG antibody can be labelled with dye sol for use in a sandwich assay.  The most obvious conclusion is that the specification describes an anti-α hCG antibody as a specific binding reagent for hCG within the meaning of claim 1.  This use of this expression to describe a reagent which binds to the α-subunit of hCG, which it shares with the other glycoprotein hormones, argues against a meaning of mono-specificity.  The anti-α antibody is specific for hCG in that it will bind to hCG in a specific binding reaction; it has specificity for hCG but it is not exclusively specific for that analyte.  It will also bind to the α-subunit of LH and to the other proteins with that subunit.  It has specificity for LH, as well as FSH and TSH and may be used to detect those hormones.  Indeed, the specification states that the anti-α hCG antibody can be used to detect LH in a cross-reactive immunoassay.  The specification recognises the existence of cross-reactive immunoassays and makes reference to antibodies that will cross-react with molecules other than the target antigen.  That is, the reagents are not absolutely specific.

17. MDS seeks to overcome this exemplification of the anti-α hCG antibody by arguing that it was not provided as an example of a specific binding reagent.  MDS argues that the body of the specification, consistently with the parent priority documents, does not limit the labelled reagent in the first zone to a specific binding reagent, although it always limits the unlabelled immobilised reagent to a specific binding reagent.  It finds support for this from the use in the specification and parent priority documents of the phrase “labelled reagent”, without using the word “specific” while the phrase “specific binding reagent” is always used to describe the unlabelled reagent.  This, MDS says, is a deliberate differentiation between any binding reagent and a specific binding reagent, the latter meaning one that is mono-specific for the analyte.  MDS says that the anti-α hCG antibody is an example of a labelled reagent which is not a specific binding reagent.  It says that claim 1 is narrower than the specification in that it requires both the labelled specific binding reagent in the first zone and the permanently immobilised unlabelled specific binding reagent in the detection zone to be mono-specific.

18. In essence, MDS argues that claim 1 is not satisfied by the use of the exemplified assay involving the labelled anti-α hCG antibody.  That is, of course, possible.  However, it is equally likely, in my view, that the claim includes rather than excludes an exemplified embodiment of the invention.  As there is an available construction that would include the exemplified use of anti-α hCG antibody as a specific binding reagent, the exemplification supports that construction.  I do not accept MDS’ submission that the specification deliberately differentiates between “labelled reagent” and “labelled specific binding reagent” with only the latter meaning a reagent mono-specific for the analyte.  Rather, I accept Ms Boscato’s evidence on the parent priority documents of the first patent, that the references to a “labelled reagent” in the context of a sandwich reaction is a reference to a labelled specific binding reagent such that the example of the labelled anti-α hCG antibody is an example of a labelled specific binding reagent.

19. The examples in the specification assist in clarifying the invention and the application of the terminology.  The specification states that an assay based on the principles described can be used to determine a wide variety of analytes by choice of the appropriate specific binding reagent.  The assays can be sandwich assays, for example for hCG, or competition assays.  The reference in one embodiment to the fact that the analyte can be hCG and the reagents can be monoclonal antibodies to hCG suggests that the reagents are not necessarily monoclonal antibodies. 

20. MDS looks to the efficacy of the device in identifying, exclusively, hCG.  It points out that unless one of the binding reagents is specific only for hCG, the system will not differentiate between hCG and the other glycoprotein hormones.  That is, the reagent must bind with the ß-subunit of hCG.  MDS points to the definition of “specific” of ‘capability of discriminating between analytes’.  It says that, unless such a mono-specific reagent is used, the reagent is not so capable of distinguishing between hCG and other analytes in the sample. 

21. The specification is not limited in its description to a test device for hCG.  As examples of certain preferred test strip materials and reagents, the specification exemplifies the anti-α hCG antibody as an appropriate labelled reagent and the anti-ß hCG antibody as an appropriate immobilised unlabelled reagent for use in a sandwich assay for hCG.  There is no example in the first patent which utilises two reagents each mono-specific for hCG. 

22. The specification explains (at page 11) that ‘the immobilised specific binding reagent in the second zone is preferably a highly specific antibody, and more preferably a monoclonal antibody.  In the embodiment of the invention involving the sandwich reaction, the labelled reagent is also preferably a highly specific antibody, and more preferably a monoclonal antibody’ (emphasis added).  Highly specific does not mean mono-specific.  It recognises that, while the reagent is thought specifically to target the analyte of choice, there is a possibility that it may also bind to another analyte.  By directing the use of a highly specific reagent, the likelihood of cross-reaction is reduced.  The patentee has used an expression that allows for a degree of specificity. 

1. The degree of specificity concerns the number of different analytes with which a reagent will bind.  If “specific binding reagent” already meant mono-specific, such as a monoclonal antibody, this description would be unnecessary and contradictory.  Dr Sinosich acknowledged that, if “specific binding reagent” does mean exclusive specificity as advanced by MDS, a qualification that an antibody is “highly specific” is redundant. 

2. MDS submits that “highly specific” contemplates analytes that will not have binding reagents that are mono-specific but this is negated by the use of the expression in the context of the detection of hCG, which has the unique ß-subunit.  If the description in the specification is designed to encompass analytes that do and analytes that do not have mono-specific binding reagents, the repeated use of “specific binding reagent for the analyte” in that context is more likely to mean a reagent that binds the analyte in a specific binding reaction than a mono-specific reagent.  Not all reagents will be antibodies or highly specific antibodies.  As described in the specification, they are subclasses of “specific binding reagents”. 

   The claims

3. Claim 1 does not differentiate in language between the “specific binding reagent” in each of the two zones, other than to specify that one is labelled and one unlabelled.  MDS says that if the same expression or terminology is used for the binding reagent in each zone of the device, they must both have the same characteristics of mono-specificity. 

4. The language of the specification is not consistent or rigorous.  For example, the patentee has used the expressions “labelled reagent” and “labelled binding reagent”.  The specification seems to use “reagent”, “binding reagent” and “specific binding reagent” somewhat interchangeably.  In a sandwich assay a “labelled reagent” which does not bind to the analyte would be ineffective in carrying out the purpose of enabling detection of the analyte-reagent complex in the detection zone.  It is apparent that the former expression is shorthand for the latter.  This is reinforced by the language of claim 2.  Claim 1 refers to a labelled specific binding reagent and an unlabelled specific binding reagent.  Claim 2, which is dependent on claim 1, uses the expressions “labelled reagent” and “unlabelled reagent”, clearly referring to the labelled and unlabelled specific binding reagents of claim 1.  Other dependent claims include the shorthand description.  This does not support MDS’s submission that the specific binding reagent is a sub-class of the broader class of labelled and unlabelled reagents. 

5. The way in which these expressions and “labelled specific binding reagent” and “unlabelled specific binding reagent having specificity for the analyte” are used in the patent provide support for Inverness’ interpretation, supported by Ms Boscato, that the expressions are not used to describe a mono-specific reagent but one that binds with the analyte in a specific binding reaction.  That is, the reagent is one that binds to that analyte, in the sense of pairing with the analyte.  Inverness contends that “specific” is used to distinguish the kind of binding and that “specific binding” indicates just that:  specific binding as distinct from non-specific binding.  This is supported by the statement in page 1 of the patent that ‘the present invention relates to assays involving specific binding, especially immunoassays’, that is, assays involving specific binding reactions between the reagent and the analyte.  This is in contrast to non-specific binding, with the example of that binding given in the patent of a reagent to nitrocellulose.  The extra words “having specificity for the analyte”  may denote an extra requirement for the reagent in the detection zone, that it not only binds in a specific binding reaction but also that it has a degree of specificity for the analyte and, in that way, has the capability to distinguish between analytes.

6. It follows that claim 1 of the first patent requires the presence in each zone of a reagent that will bind to hCG in a specific binding reaction.  That requirement is fulfilled by the labelled anti-ß hCG antibody and the unlabelled anti-α hCG antibody in the detection zone of the MDS devices.

   Summary of the main reasons for the conclusion that the meaning of “specific binding reagent for an analyte” is not a reagent that binds only the target analyte but one that binds the analyte in a specific binding reaction

7. A first, untutored, lay construction might be to look to the word “specific” as an adjective describing the kind of binding reagent.  This would be consistent with MDS’ construction that the reagent is one that binds specifically to and only to that analyte.  However, there are a number of important reasons to reject this untutored approach, which include:

   1.The specification uses the expression “specific binding reagent”, in context, compendiously.

   2.The interpretation of the expression must take account of the range of subject matter of the specification and of the claimed invention.

   3.The link in meaning and expression of “specific binding reaction” and “specific binding reagent” as used in the specification and by Ms Boscato.

   4.The distinction between specific binding where a reagent binds to a specific site on the analyte (a specific binding reaction) and non-specific binding.

   5.The concept, recognised in the specification, of degrees of specificity which is inconsistent with a meaning of mono-specific and the inconsistency between a mono-specific binding reagent and the references in the specification of the degree of specificity of that reagent for an analyte.

   6.Examples in the specification of the claimed invention include anti-α hCG antibodies, which are not mono-specific for hCG, as labelled reagents to be used in sandwich assays.  The labelled reagent in sandwich assays is consistently described as a specific binding reagent for the analyte elsewhere in the specification.

   7.The evidence of and explanation by Ms Boscato as to the meaning of the expression, which I accept.

   8.The use in the literature, as at the priority date, of the expression “specific binding reaction” as a compendious phrase, which supports Ms Boscato’s construction.

   9.The more limited construction of Dr Sinosich is one that may be appropriate in his particular area of expertise and in his own experience but that is not necessarily the construction adopted by other skilled workers, either in immunology or more broadly.

   The second, third and fourth patents

8. The additional integer of the claimed device of the second patent does not affect the specific binding reagent or the construction of the term.  Claim 1 of the second patent makes it clear that the labelled specific binding reagent can also participate in a competition reaction in the presence of an analyte.  Grammatically, the claim is not well constructed in the expression ‘the device also containing a labelled specific binding reagent for an analyte, or which can participate in a competition reaction in the presence of an analyte’.  I accept Ms Boscato’s evidence that the skilled reader would read this to mean that the labelled specific binding reagent can bind in a specific binding reaction with the analyte, that is, “be” for an analyte or can participate in a competition reaction in the presence of the analyte.  As discussed above, the labelled analyte in a competition reaction can be the analyte itself.  In the case of hCG being the labelled specific binding reagent, it can bind to both an anti-α antibody via its α-subunit and to an anti-ß hCG antibody via its ß-subunit.  That is, it binds to more than one molecule and is not mono-specific.

9. This reinforces, for the purposes of the second patent, the meaning contended for by Inverness.  The expression “specific binding reagent for an analyte” has the same meaning in the second patent as in the first patent. 

10. The third patent, like the second patent, states that it incorporates the disclosure of the specification of the first patent. Claim 1 of the third patent requires a “reagent-impregnated carrier” and a labelled specific binding reagent and provides for the labelled reagent to become bound if the sample liquid contains the analyte.  The claim does not specify the means by which the labelled specific binding reagent becomes bound.  MDS accepts that the anti-ß hCG antibody used in the MDS devices is a labelled specific binding reagent within the meaning of the third patent.

11. The fourth patent cites the United Kingdom equivalent of the first patent as prior art.  The fourth patent explains that the use of reagent-impregnated test strips in specific binding assays such as immunoassays has previously been proposed and that analyte present in the sample can participate in a sandwich or a competition reaction within the detection zone, with a labelled reagent.  The invention of the fourth patent is described in terms of a mobile labelled specific binding reagent and an immobilised unlabelled specific binding reagent, which reagents are capable of participating in either a sandwich or competition reaction in the presence of the analyte.  An additional integer is a macroporous body.  The fourth patent uses the same meaning of the expression “specific binding reagent” as in the first patent, in that the reagent may bind not only to the analyte but also to other molecules.  No different meaning to that of the first patent is suggested and the context makes it apparent that the same meaning is used, as supported by the explanation of Ms Boscato.

    “Dry porous carrier”

12. The construction of the phrase “dry porous carrier” contained in the claims of all four patents is also in issue and is relevant to whether the MDS devices infringe the four patents.  Claim 1 of the first patent defines the invention as containing ‘a dry porous carrier which communicates directly or indirectly with the exterior of the casing such that a liquid test sample can be applied to the porous carrier…’.  Claim 1 of the second and fourth patents also includes the essential integer of a dry porous carrier and claim 1 of the third patent includes the essential integer of ‘a dry porous reagent-impregnated carrier, such as an assay strip’.

13. I shall consider the specification of the first patent.  It is not suggested that there is any relevant difference in meaning in the specifications of the other patents.  Inverness accepts that the claims of the second patent and the third patent do not regard the ‘bibulous sample liquid receiving member’ as part of the carrier and says that the fourth patent does not regard the ‘macroporous body’ or the ‘porous receiving member’ as part of the carrier.  The main issue for the purposes of infringement is whether the dry porous carrier is limited to a single continuous piece of material.

14. Inverness’ construction of the expression is simple: a dry and porous carrier is a carrier which carries, conveys or transports the liquid sample, whether it is a single strip or a number of strips stuck together, whether it is a single body or a number of discrete bodies.  Inverness says that the specification focuses on the function of the carrier in carrying the reagent rather than on the physical form of the carrier.  As described in the specification of first patent, in summary, the dry porous carrier:

    ·receives the sample, either directly or indirectly;

    ·carries within it the labelled specific binding reagent which is mobile when in the moist state;

    ·carries the immobilised unlabelled specific binding reagent; and

    ·contains the reagents positioned such that a liquid sample applied to the carrier can pick up the labelled reagent and thereafter permeate into the detection zone.

15. MDS contends that “a dry porous carrier” is a single continuous piece of material which:

    ·is dry and porous; and

    ·can carry (meaning support or bear) “within” it a labelled specific binding reagent and “on” it an unlabelled specific binding reagent; and

    ·can carry (meaning transport or convey) a liquid sample through the carrier when the sample is applied to it.

16. The MDS devices contain a number of dry and porous discrete pieces which, together, receive the liquid sample and carry the labelled and unlabelled reagents.  There is porous material that receives the liquid sample, a separate “conjugate pad” (a small pink pad) being a dry porous body in which the labelled anti-ß hCG antibody is carried, and a separate nitrocellulose test strip on which the unlabelled anti-α hCG antibody is permanently immobilised.  The sample permeates through these discrete pieces.  Together, the discrete pieces work as described in the specification.  A sample is applied, any analyte in the sample binds to the labelled specific binding reagent at one part of a carrier and the analyte/reagent complex is then carried to another part of the carrier where it is detected.

17. The specification does refer to the carrier material in the form of a strip or a sheet but only as a preferred embodiment or example (for example at pages 6, 12, 14), which suggests that it contemplates that a device according to the invention can incorporate a carrier consisting of two or more discrete bodies of porous phase material.  For example, an important aspect of the invention is said to enable a directly labelled specific binding reagent to be used in a carrier-based analytical device, such as one based on a strip format, to give a quick and clear result (at page 6).  Claim 9 of the first patent is a dependent claim which limits the dry porous carrier of claim 1 to a device in which ‘the dry porous carrier comprises a strip or sheet of porous material’.  Claim 1 is not so limited.

18. I consider it clear from the specification and the claims of the first patent that the phrase “a dry porous carrier” in the claims other than claim 9 is not limited to a single continuous piece of material, although a carrier in the form of a single strip may be a preferred embodiment of the invention as described in the specification.  As used in claim 1, the dry porous carrier describes that part of the device which works to receive the sample and carry it through the two zones for labelling and detection.  While a preferred embodiment of that carrier is a single strip or sheet, the claim is not so limited.

19. Accordingly, I find that the MDS devices contain a dry porous carrier within the meaning of claim 1 of the first patent.  For the same reasons, I find that the MDS devices contain a dry porous carrier within the meaning of claim 1 of the second, third and fourth patents.

    Bibulous sample liquid receiving member “within said casing”

20. Only the claims of the third patent contain the integer of a ‘bibulous sample liquid receiving member within said casing to receive sample liquid applied to said application aperture’.  In issue is whether “within” in this integer means only “wholly within” as contended by MDS or also “partly within” as contended by Inverness.  It is agreed between the parties that if MDS’ construction is correct, this integer is absent from QuickStream but present in QuickCard.

21. MDS relies on the Oxford English Dictionary meaning of the word “within”, namely: ‘in the inner part or interior, or on the inner side (of a receptacle or other material thing); inside, internally’ to contend that the QuickStream sample receiving member is not “within” the casing because it protrudes from it.  In answer, to support its construction that, in the context of the specifications, “within” does not require the sample receiving member to be wholly within the casing, Inverness relies on figures 8 and 9 in the specification depicting an embodiment of the invention with the sample receiving member protruding from the casing.

22. Relevant dictionary definitions of “within” provide for a meaning that includes penetration into the interior of an enclosed space (see Macquarie Dictionary online, Oxford English Dictionary online, Black’s Law Dictionary (6^th ed, West Publishing Co, 1990)).  They also include definitions that necessitate being inside and not beyond the boundaries or limits of a space.  As was said in Texas State Commission for the Blind v the United States 796 F2d 400 (Fed Cir 1986) at [92], the word is not without some ambiguity and can mean “a part of” as well as “inside”.

23. An embodiment of the invention at pages 7 and 8 of the specification and another embodiment at pages 22 to 26 (see also figures 8 and 9) both clearly involve a sample receiving member which protrudes from the casing, that is, partly within and partly outside the casing.  However, that does not necessarily mean that the claims, by using the expression ‘bibulous sample liquid receiving member within said casing’ include those embodiments.  The claims can be narrower than the description in the specification. 

24. In describing the position of the porous sample receiving member 506 depicted in figures 8 and 9, which protrudes from the casing, the specification does not use the word “within” (at pages 22-26).  However, in describing the same embodiment, the patentee uses the word “within” to describe the position of the carrier strip 510 which is depicted in figures 8 and 9 as wholly within the casing, for example:

    …as long as the strip is held firmly in place within the housing… (at page 23)

    Member 506 therefore provides the sole route of access for the sample to the strip within the housing… (at page 25)

    In another embodiment where there is no protruding sample receiving member, the specification uses the words ‘within the body’ to describe a test strip which is depicted in figure 3 as wholly within the casing of the device (at page 20).

25. The use of the word “within” in the specification supports the definition contended by MDS that “within” means “wholly within” and the bibulous receiving member of the claims of the third patent must be wholly within the casing.  Accordingly, the integer of a ‘bibulous sample liquid receiving member within said casing to receive sample liquid applied to said application aperture’ is present in QuickCard but not in QuickStream.

    Porous material backed with transparent moisture-impervious material

26. Inverness alleges that QuickStream infringes claims 9 and 10 of the third patent.  Claim 9 contains the integer:

    [the] porous carrier is a strip or sheet of porous material backed with a layer of transparent moisture-impervious material, said transparent layer being in contact with the inside of said casing adjacent said result observation aperture to inhibit ingress of moisture or sample liquid.

27. MDS contends that QuickStream does not contain this integer for the following reasons:

    1.It does not have a single “strip or sheet of porous material” but a test strip made up of individual components.

    2.It is not backed with a layer of “transparent moisture-impervious material”, but rather with a strip of white vinyl which is not transparent.  This white vinyl strip is also not adjacent to the observation apertures but is against the casing on the other side, opposite the apertures.

    3.A very small transparent piece of material (the clear plastic strip) covers only the pink conjugate pad.  However, the clear plastic strip is not adjacent the apertures, in that it is not directly beneath the apertures when the casing is closed, and also does not perform the function of inhibiting ingress of moisture or sample.  In QuickStream, inhibition of moisture is achieved in a completely different way, by external plastic windows that form part of the casing.

28. Inverness contends that the clear plastic strip, which is in contact with the casing on the same side as the apertures, constitutes the integer in question.  It submits that the word “backed” means no more than “coated” so that the impervious layer can be on top of or underneath the porous carrier because it has a functional meaning.  I do not accept this contention.  The claim uses “backed” which has a different meaning to “coated”.

1. For patent infringement, there is no necessary mental element.  It is not necessary to show that a director, to be liable, knows that the acts which he or she procures or directs constitute patent infringement, as such a condition does not exist for patent infringement generally.  The parties agree that even under the Mentmore test there is no requirement that the director knows or has reason to know that the acts which he or she directed or procured constituted infringement of another party’s patent (Allen at [43]).

2. The apparent inconsistency is resolved if the mental element in the Mentmore test of ‘the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it’ relates to the pursuit of the course of the conduct and not to its characterisation.  The question is whether Dr Appanna knowingly pursued a course of conduct which, judged objectively, led to infringement or was likely to constitute infringement, or reflected indifference to the risk of infringement.

3. The shares in MDS NZ are held by trustees for the benefit of Dr Appanna, his wife and their children. The shares in MDS Aus are held by a company of which Dr Appanna is the sole director. The shares in that company are held by Dr Appanna and his wife. I do not accept that the fact that Dr Appanna controls the MDS companies as shareholder, or the mere description of Dr Appanna as Managing Director are, alone, sufficient to establish that he directed or procured the infringing acts of the MDS companies. Dr Appanna’s liability should be determined by reference to his involvement in the management and operations of MDS concerning the MDS devices. His shareholding of itself is insufficient to establish liability either as a joint tortfeasor or under s 13. Something more is necessary.

4. MDS’s submissions are that while Dr Appanna played an important role in the day to day operations of MDS, he did not at any relevant time possess the acumen, ability or skill to determine by himself the strategic and business decisions adopted by MDS NZ.  MDS points to Dr Appanna’s qualifications as a general medical practitioner and emphasises that the expertise that he brought to the Board of Directors was his ability to understand the nature of the medical products to be sold by MDS.  It was, MDS says, other directors of MDS NZ, being Mr Hills (a chartered accountant) and Mr Vallant (a solicitor) who brought critical and necessary skills to the management of the company.  In addition, the day to day activities were managed by an Operations Manager until about March 2004 and thereafter by a General Manager.  MDS emphasises that Mr Hills and Mr Vallant each attended board meetings and took actions within their relative areas of responsibility.  While Mr Hills provided an affidavit in New Zealand proceedings, it is only Dr Appanna’s affidavit that was read on this issue in the Australian proceedings.  No evidence was called from Mr Hills or Mr Vallant.  MDS points out that the strategic plan for MDS was not prepared by Dr Appanna and was determined by the Board.  That plan outlined proposed responsibilities in the proposed business model and allocated certain responsibilities to Dr Appanna.  Dr Appanna denies taking all of those proposed responsibilities, which included sponsorship, supplier relations, imports/exports, regulatory affairs and product sourcing.  He says that his responsibilities as Manager Director have been to liaise with the General Manager on behalf of the Board and that he had occasionally been involved in supply relations and product sourcing.  Dr Appanna says that he did not have responsibility for regulatory affairs, which was the responsibility of the Operations Manager and then the General Manager.  Dr Appanna has been the director responsible for MDS’ defence of the litigation commenced by Inverness in Australia and New Zealand and has, in part, personally funded that litigation.

5. MDS says that the evidence establishes that Dr Appanna ‘was part of a suite of appropriately skilled personnel who managed and supervised the operations of MDS, both its day to day activities and the “higher level” strategic and business decisions’.  MDS relies on Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd (2001) 53 IPR 481. At first instance, Conti J held that a director, although self-styled as the managing director and accepted by his Honour to be the decision maker of Sydneywide, was not liable as a joint tortfeasor with Sydneywide for passing off. In that case, Conti J accepted at [75] that the director was personally involved in such capacity in the process of design and the ultimate choice of design of the impugned packaging and was closely involved in the company’s contravention of s 52 of the Trade Practices Act 1974 (Cth). His Honour found that not sufficient to render the director liable at common law as a joint tortfeasor, apparently on the basis that the company was a family company involving the director’s two brothers and father in varying capacities. It was not, his Honour said, a “one man company” in the sense described in Auschina. On appeal ((2002) 55 IPR 354), Weinberg and Dowsett JJ at [160] described Auschina as a case concerned not with joint tortfeasors but with circumstances in which a director of a corporation will be held liable for its tort.  Their Honours did not consider the director’s liability because there was no pleading of the Auschina basis for liability nor an allegation that the director procured or directed the passing off by the company. Their Honours did observe at [164], however, that the evidence justified the inference that the director was knowingly concerned in the breach of s 52 and the inference that the director procured the passing off by the company. Red Bull does not assist MDS. 

6. Even if Dr Appanna’s explanation that the five responsibilities listed in the organisational chart in the business plan were only proposed responsibilities for him as Managing Director is accepted, Dr Appanna was the person to whom the General Manager reported within the organisational structure.  Board minutes were prepared by Dr Appanna, often in his own handwriting and not distributed to the other Board members for approval.  This shows a degree of informality consistent with a family business run by Dr Appanna.  In the absence of evidence from Mr Hills and Mr Vallant of their roles on the Board of MDS NZ, the inference is open that they are limited to those of professional advisers within the areas of their expertise of law and accountancy.  Dr Appanna’s evidence is that they each carried out activities linked to their professions.  Mr Vallant and Mr Hill are not directors of MDS Aus.  There is no evidence that any director of MDS Aus other than Dr Appanna played an active role in the management of that company.

7. MDS did not develop QuickCard or QuickStream.  They were supplied by an overseas manufacturer.  From 2000, MDS acquired pregnancy testing devices from the product manufacturer, Phamatech and there is no evidence that Phamatech informed MDS of any allegations of patent infringement by its products.

8. Dr Appanna was aware of competitive products that were on the market, such awareness being at least since 1993.  Dr Appanna’s evidence is to the effect that he did not take an interest in the patents related to the products and was not familiar with patents in that field of activity.  He was apparently not aware that those products bore a reference to the Inverness patents and I am not satisfied, from the evidence, that Dr Appanna was actually aware of Inverness’ first three patents by reason of package warnings on either of the Inverness products “Clearblue” or “Clearview”.  Dr Appanna said that the question whether the products that MDS was intending to purchase from the manufacturer were covered by patents ‘was something we never considered at the time’.

9. Dr Appanna was, however, the person directly involved in obtaining the distribution rights for MDS NZ to sell Phamatech products in Australia.  Dr Appanna was directly and personally involved in obtaining regulatory clearance of the MDS devices in Australia as Managing Director of MDS and in correspondence with the Therapeutic Goods Administration.  He was similarly involved in correspondence with Medsafe in New Zealand and was one of the “responsible persons” listed in an application for a Medsafe licence under New Zealand’s Medicine Act 1981.  He continued to be involved in the sourcing, supply and sale of QuickCard and QuickStream in Australia.  Dr Appanna developed relationships with wholesalers and medical distributors on behalf of MDS NZ.  He signed the document being an agreement with Apothecary Sales Brokers which granted Apothecary Sales Brokers a right to obtain orders for QuickStream and QuickCard from Australian customers on behalf of MDS NZ.  Although Dr Appanna gave evidence that distribution in Australia was through the fourth respondent, the evidence does not support the fourth respondent being an arms-length distributor in so far as Dr Appanna was concerned.  The fifth respondent, who was a co-director of MDS Aus with Dr Appanna until 2006, was also the sole director and shareholder of the fourth respondent.

10. Some of the actions of Dr Appanna took place prior to the actual importation, offer for sale and sale of infringing MDS devices in Australia.  However, those actions enabled and procured the infringement of MDS.  They were necessary preparatory acts to, and part of the process of, the importation and offer for sale of the MDS devices and the using of the devices for the purposes of sale.  They are, therefore, relevant to Dr Appanna’s liability.

11. I am satisfied that Dr Appanna’s position as the Managing Director of MDS NZ and his participation in the procurement and distribution of the MDS devices in New Zealand and Australia are sufficient to establish that he deliberately, wilfully or knowingly pursued a course of conduct that resulted in MDS selling products that infringed the Inverness patents.  Further, he was aware of competing products on the market and was indifferent as to whether or not those products were protected by patents. In taking part in the activities of MDS NZ and MDS Aus as a director and in the management of those companies, Dr Appanna directed or procured the obtaining of and the selling of the products that infringed Inverness’ patents.  Accordingly, he is liable under both the Mentmore test and the Auschina test.  

    Authorising conduct of MDS - s 13(1) of the 1990 Act

12. The “exclusive rights” of the patentee are the rights to “exclude” others from exploiting the invention or authorising another person to exploit the invention (Grain Pool of Western Australia v Commonwealth of Australia (2000) 202 CLR 479 at [83]–[85]). Infringement of the right to authorise exploitation in s 13 looks to whether the product being exploited infringes the claimed invention and not whether the person authorising that conduct intends to authorise infringement or knows that the product will infringe. There is no requirement that the person knows that the authorisation is of an infringement of a patent.

13. It is an infringement of the patentee’s exclusive rights not only to exploit an invention but also to authorise another person to exploit it (s 13 of the 1990 Act). The word “authorise” in s 13 has the meaning in the comparable context of the Copyright Act (Bristol-Myers Squibb Company v F H Faulding & Co Ltd (2000) 97 FCR 524 at [97] per Black CJ and Lehane J; see also Rescare at 155 per Gummow J).  A person authorises an infringement if he or she “sanctions, approves or countenances’” the infringement (University of New South Wales v Moorhouse (1975) 133 CLR 1 at 12 per Gibbs J, at 20-21 per Jacobs J (McTiernan ACJ agreeing); Cooper at [137]-[140] per Kenny J (French J agreeing)). As Burchett J said in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (1998) 42 IPR 111 at 129 (appeal allowed on validity, but not on infringement), s 13 at least embraces the case where a person ‘made himself a party to the act of infringement’ (Walker v Alemite Corp (1933) 49 CLR 643 at 658 per Dixon J).

14. MDS submits that the meaning of “authorises” in s 101 of the Copyright Act 1968 (Cth) (the Copyright Act) is irrelevant and not analogous to “authorise” in s 13(1) of the 1990 Act. MDS says that as s 101 of the Copyright Act defines a species of infringement of authorising another to perform an infringing act, “authorise” means ‘sanction, approve, or countenance’ because it is the infringer who is authorising another to perform the relevant acts although it has no legal right to do so. On the other hand, as the purpose of s 13(1) of the 1990 Act is to define the rights of the patentee, MDS contends that “authorise” in that section means ‘to give legal or formal warrant to (a person) to do something’ (one of several definitions from the Oxford English Dictionary Online) as this is what only the patentee has the right to do.

15. In Bristol-Myers Squibb Company v F H Faulding & Co Ltd (1998) 41 IPR 467 at 488, Heerey J, at first instance, discussed the meaning of “authorise” in s 13 of the 1990 Act. Justice Heerey considered that “authorise” in s 13 does not have the same meaning as “authorise” in the Copyright Act but rather has the meaning:

    ·‘To give authority or legal power to; empower (to do something)’ from the Macquarie Dictionary; or

    ·‘To give legal or formal warrant to (a person) to do; to empower, permit authoritatively’ from the Shorter Oxford Dictionary.

    Although Black CJ and Lehane J expressly disagreed on this point on appeal at [97] in obiter, MDS relies on the reasoning of Heerey J. 

16. The latter aspects of the definitions in the Macquarie and Shorter Oxford Dictionary of “empower (to do something)” and “empower, permit authoritatively” do not support MDS’s submission that “authorise” in s 13 is limited to the giving of legal authority. In any event, it is unlikely that s 13 can have that restricted meaning. The patentee has the right to exclude all others from authorising another to infringe the rights of the patentee. If authorisation required the legal right in the patent, then only the patentee has that right and there could be no infringement by authorisation by any person.

17. Interestingly, in Bristol-Myers Heerey J concluded, based on the definition he adopted, that mere supply of an infringing product with instructions for use did not constitute infringement but that the lease of a factory containing machinery the use of which infringed the patent did constitute infringement by authorisation.  This does not support MDS.  The acts of Dr Appanna relied on by Inverness go beyond mere provision of the opportunity to infringe and are analogous to the example that Heerey J gave of an act that did amount to infringement by authorisation.  Dr Appanna’s actions, in the context of his position with MDS, empowered the infringement.

18. MDS submits that the word “authorise” in s 13(1) is not relevant to the alleged liability of a director for infringing acts by a company and is not a concept that defines any infringing act by a third party. MDS submits that the different contexts of s 13(1) of the 1990 Act and s 101 of the Copyright Act have not been argued before and so were not properly considered by Gummow J in Rescare, by Burchett J in Kimberly-Clark or by the Full Court in Bristol-Myers.I do not accept MDS’ argument that the different statutory contexts justify different meanings for the word “authorise” in patent and copyright law. As Inverness points out, the 1990 Act, unlike the Copyright Act, does not separately define the exclusive rights of the intellectual property owner and the acts which constitute infringement of those rights. Those acts which trespass on the patentee’s exclusive rights under s 13 of the 1990 Act constitute infringement. Further, s 13(2) of the Copyright Act uses the word “authorise” in a similar way to s 13 of the 1990 Act to describe the exclusive right of the copyright owner to authorise a person to do particular acts.

19. MDS contends that a director can never be held liable for patent infringement on the “authorisation” ground because only the company can give the requisite warrant to invoke liability.  It submits that a director cannot give such warrant to the company because of the distinction between the company as a separate, distinct entity and its directors who have an internal role in the management of the company.

20. Put together, MDS’ submissions amount to saying that there can be no infringement by authorisation unless the authoriser is in such a position or such a relationship with the person being authorised that the authoriser has formal authority, in a technical sense, to authorise that person to do the infringing act.  If that submission is that only the patentee has the right to authorise exploitation of a patent, it would follow that no person or company other than the patentee can grant the legal right to another to exploit the invention. This construction of “authorise” does not accord, in my view, with s 13 or the scheme of the 1990 Act, including s 117, or the meaning of “authorise”. To the extent that MDS is arguing that Dr Appanna could not have authorised MDS NZ or MDS Aus to infringe as he was a director without proper authority formally to authorise actions of the company, I reject such a submission. Section 13 does not carry that limitation.

21. I do not accept MDS’ proposition that the position stated in each of Rescare, Kimberly-Clark and by the Full Court in Bristol-Myers should not be followed. I see no reason to construe “authorise” in s 13 in the narrower way contended for by MDS. That is not to say that a director of a company, by reason only of that position, authorises any act of infringement by the company. It is still necessary to show actions that demonstrate that the person did sanction, approve or countenance the act of infringement.

22. There can be no dispute that Dr Appanna knew that the infringing act of the sale of the MDS devices would occur.  He had the power to prevent those acts and some duty to interfere.  Express or formal permission is not essential and inactivity or indifference may reach a degree from which authorisation or permission may be inferred (Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 61 IPR 575 at [19] per Bennett J). Dr Appanna authorised MDS to sell the infringing products. I am satisfied that he had the power to prevent the companies from committing the acts of exploitation (Metro on George at [18]). He arranged for the sourcing of the products and personally participated in the distribution of those products. Dr Appanna sanctioned, approved and countenanced the sale of products that infringed Inverness’ exclusive right to exploit the invention of the first patent and the second patent.

    MDS’ CROSS CLAIM UNDER S 128 OF THE 1990 ACT

23. MDS has cross claimed under s 128 of the 1990 Act alleging unjustified threats of infringement proceedings.  The parties agreed that the cross claim only arises if the MDS devices do not infringe any of the patent claims or the patent claims are found to be invalid.  It follows that there is no need to deal further with the cross claim. 

    CONCLUSION

24. In summary, based on my findings above:

    1.Claim 1 of the first patent is infringed by QuickStream and QuickCard.

    2.Claim 1 of the second patent is infringed by QuickStream.

    3.Claims 1 to 4 of the third patent are invalid for lack of novelty.  The third patent has expired.

    4.Claims 1 and 22 of the fourth patent are invalid for lack of novelty and should be revoked.

    5.Dr Appanna is personally liable for the infringement of MDS Aus and MDS NZ as a joint tortfeasor.

    6.Dr Appanna is liable under s 13(1) of the 1990 Act for authorising the infringement of MDS Aus and MDS NZ.

    I will direct parties to submit proposed orders to give effect to these reasons and any submissions on costs.

I certify that the preceding two hundred and five (205) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated:        22 February 2010