Liberation Developments Pty Ltd v Lomax Group Pty Ltd
[2018] FCA 842
•5 June 2018
FEDERAL COURT OF AUSTRALIA
Liberation Developments Pty Ltd v Lomax Group Pty Ltd [2018] FCA 842
File number(s): QUD 117 of 2018 Judge(s): GREENWOOD J Date of judgment: 5 June 2018 Catchwords: INTELLECTUAL PROPERTY – consideration of the question of whether the respondents/cross‑claimants ought to be given leave to pursue a cross‑claim for invalidity in Claims 1, 3 and 4 of an Innovation Patent on a ground engaging s 138(3)(f) and s 40(3) of the Patents Act 1990 (Cth) Legislation: Patents Act 1990 (Cth), ss 138(3) and 40(3) Date of hearing: 4 June 2018 Date of last submissions: 4 June 2018 Registry: Queensland Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and Associated Statutes Category: Catchwords Number of paragraphs: 13 Counsel for the Applicants: Mr A Franklin SC and Mr D B Larish Solicitor for the Applicants: Bennett & Philp Lawyers Counsel for the Respondents: Mr B Gardiner Solicitor for the Respondents: Interface Legal Pty Ltd ORDERS
QUD 117 of 2018 BETWEEN: LIBERATION DEVELOPMENTS PTY LTD ACN 127 681 118
First Applicant
TITAN HOARDING SYSTEMS AUSTRALIA PTY LTD ACN 166 386 303
Second Applicant
AND: LOMAX GROUP PTY LTD ACN 615 835 848 (and others named in the Schedule)
First Respondent
JUDGE:
GREENWOOD J
DATE OF ORDER:
5 JUNE 2018
THE COURT ORDERS THAT:
1.Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers.
2.Subject to Order 3, the cross‑claimants are given leave to press, in the proceedings, a claim for invalidity of Claims 1, 3 and 4 of the patent in suit on the ground of fair basing.
3.The cross‑claimants are to file any evidence upon which they propose to rely in support of the cross‑claim contemplated by Order 2, by 1.00pm on Thursday, 7 June 2018.
4.The applicants/cross‑respondents are to deliver their evidence in relation to the questions in issue contemplated by Order 2 of these orders by 9.00am on Monday, 11 June 2018.
5.The respondents are given leave to rely upon the affidavit of Mark Andrew Lomax affirmed 3 June 2018.
6.Costs are reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GREENWOOD J:
Yesterday afternoon, a Case Management Hearing took place in relation to the proceeding, the trial of which is to commence on Monday morning. A number of important questions were reserved for consideration overnight on the footing that orders (and reasons) would be published from Chambers this morning.
The first question which arose is whether the cross-claimants, Lomax Group Pty Ltd and Hoarding Ideas Pty Ltd, ought to be given, in effect, leave to press their claim for an order for revocation of Claims 1, 3 and 4 of Innovation Patent “057” on the ground which engages s 138(3)(f) and s 40(3) of the Patents Act 1990 (Cth) as that latter section stood prior to the Raising the Bar changes. The particular ground, of course, is that those claims are invalid because the specification does not provide a real and reasonably clear disclosure of particular matters and thus, the claims are not fairly based on matters described in the specification. The other contention is that the claims travel beyond the invention disclosed in the specification and are thus not fairly based.
The particular dilemma arises because on Tuesday, 8 May 2018 at 10.50pm, the solicitor for the respondents in the principal proceeding and the two cross‑claimants to the cross-claim, sent an email to the solicitors for the applicants and cross‑respondents in which he referred to an attached letter dated 8 May 2018 containing four formal offers of compromise. The second paragraph in that email is a one line sentence which says this:
We further advise that the Cross‑claimants are no longer pressing the patent invalidity claim.
Perhaps, by accident rather than design, the text of that sentence is in larger font than the rest of the email. 8 May 2018 is an important date in terms of the timetabling orders because on that date the respondents and relevantly the cross-claimants were to file any evidence in support of any cross‑claim by that date. No evidence was filed by 8 May 2018 in support of the cross‑claim. Not surprisingly, the applicants/cross-respondents on receiving the email of 8 May 2018 (late at night) assumed that the cross-claimants were no longer pressing their claims of patent invalidity.
The difficulty is that the cross‑claimants, by their counsel, say that the statement in the email of 8 May 2018 was a mistake. It ought to have said that the cross‑claimants were no longer pressing their claim of invalidity “on the ground of lack of novelty”. Counsel for the cross‑respondents says that the cross‑respondents never intended to abandon the claim that Claims 1, 3 and 4 of the 057 Patent are invalid on the footing that they are not fairly based on matters described in the specification.
The email of 8 May 2018 which contained the error attached a letter which the cross‑respondents say is highly material. The letter is also dated 8 May 2018. It is a lengthy letter. Most of it is redacted so that I have before me the first one line sentence and at page 5 a paragraph which is now relied upon. No other part of the letter is before me. The relevant paragraph is in these terms:
The construction that the Applicants seek to apply to the claims of the patent in suit is widely divergent from the content of the patent, and the infringement is therefore destined to fail. Furthermore, even under the test for fair basis, the claims of the patent in suit shall be held invalid under section 40(3) of the Patents Act 1990 (Cth) if the interpretation adopted by the Applicants’ in their infringement case is maintained.
The cross‑claimants say that it should have been clear to the applicants/cross‑respondents that the cross‑claimants were pressing the proposition that the claims of the patent in suit would, in a forward‑looking way (“shall”), be held invalid on the ground of fair basing even if the interpretation or construction adopted by the applicants in their infringement part of the case is maintained.
At para 5 of the affidavit of Mr Smith, the solicitor for the respondents and the cross‑claimants, of 4 June 2018, he says that the statement in the email of 8 May 2018 that the cross‑claimants were not pressing the revocation of the patent on the ground of fair basing was directly contrary to the letter of the same date (by reference to the quoted paragraph above) and the statement in the email was written in error.
On 1 June 2018 at 2.45pm, the solicitor for the applicants/cross‑respondents, Mr Bennett, sent an email to Mr Smith addressing a number of topics one of which was the patent revocation cross-claim and in that part of his email he said that Mr Smith had previously advised that his clients were no longer pressing the cross‑claim seeking cancellation of the 057 patent and thus the parties needed to serve the Commissioner with an order made by the Court dismissing the cross-claim so that the dismissal of the claim to invalidity could be recorded on the public register. Mr Bennett suggested that the parties submit a consent order to the Court by which the paragraph of the cross‑claim dealing with patent invalidity would be dismissed with costs payable by the cross‑claimants. Such an order would then be served on the Commissioner. That email provoked a response from Mr Smith on 1 June 2018 at 4.58pm in which he said this as to the patent revocation cross‑claim:
Please note that the Cross‑claimants intend to continue the lack of fair basis claim in the cross‑claim, but not the lack of novelty claim. We apologise for any confusion caused in this respect, though we do note that in substance the lack of fair basis claim operates as an alternative to the Respondents’ position in relation to claim construction on infringement and therefore should not create much, if any, additional substantive argument between the parties.
Counsel for the cross‑claimants says that the fair basing argument is a question of construction and does not engage any questions of evidence. The applicants/cross‑respondents say, put simply, that the question of fair basing is to be answered on the footing of whether there is a real and reasonably clear disclosure in the body of the specification of what is claimed so that the alleged invention as claimed is broadly, that is to say in a general sense, described in the body of the specification. They say that the question of whether there is any disconformity between the specification and the claims involves a question of construction but also, because the document is addressed to the skilled addressee infused with the common general knowledge, evidence is likely to be necessary from such a person (expert) of that understanding. They say that they have not prepared their case with the expert to answer a challenge to validity on the ground of fair basing because they proceeded on the basis that it had been abandoned.
I have looked at all of this material carefully. It seems to me that the challenge to validity on the ground of fair basing is fundamentally a construction question although evidence of the kind described by the applicants/cross‑respondents is relevant and admissible. The experts are due to meet this afternoon. That conclave should go ahead and address that which can be addressed. I propose to give leave to the cross‑claimants to press the claim for invalidity on the ground of fair basing but subject to this. Any evidence they propose to rely upon in support of the cross-claim is to be filed by 1.00pm on Thursday, 7 June 2018. The applicants/cross‑respondents are to deliver their evidence by 9.00am on Monday, 11 June 2018. I appreciate, of course, that the trial starts at 10.15am on Monday, 11 June 2018. The respondents/cross‑claimants will only see the evidence of the cross‑respondents shortly before the start of the trial. However, they are the authors of that problem. They will just have to deal with it as best they can.
The second question concerns leave to rely upon an affidavit of Mr Mark Lomax. The affidavit is late and it is unexplained. However, having looked at the material carefully I am not persuaded that it is particularly controversial and I give leave to rely upon the affidavit.
There are some other issues that were raised in the Case Management Hearing. They were addressed yesterday. One matter should be mentioned. As to the question of a “hot tub” with the experts, although I have found this process to be very useful in a number of cases especially in Competition Law cases and in one large Admiralty claim, I would prefer to see, in principle, the experts, in this case, simply give their evidence in the usual way without recourse to a hot tub. However, we will see how things emerge at the trial and I remain open to the possibility of some joint evidence by the experts if that is necessary and useful.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 5 June 2018
SCHEDULE OF PARTIES
QUD 117 of 2018 Respondents
Second Respondent:
HOARDING IDEAS PTY LTD ACN 604 219 712
Third Respondent:
MARIA LOMAX
Fourth Respondent:
MARK LOMAX
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