Machinery Developments Limited v Sealed Air Corporation

[2004] FCA 925

FEDERAL COURT OF AUSTRALIA

Machinery Developments Limited v Sealed Air Corporation [2004] FCA 925

PRACTICE AND PROCEDURE - Discovery - Patent proceedings concerning rights to certain packaging apparatus - Dispute over categories of documents for discovery - Relevance of certain research and development documents - Definition of "packaging apparatus" - Relevance of research documents to the issue of obviousness - Long-felt want - admissibility of various categories - no final orders or formulation of categories made.

Patents Act 1990 (Cth) s 60(4)

Wellcome Foundation Ltd v VR Laboratories (Australia) Pty Limited (1981) 148 CLR 262 approved
F Hoffman-La Roche AG v Chiron Corporation & Anor (2000) 171 ALR 295 cited
Murex Diagnostics Australia Pty limited v Chiron Corp (No 2) (1995) 62 FCR 424 cited
Elconnex Pty Ltd v Gerard Industries Pty Ltd (1992) 25 IPR 173 approved
ICI Chemicals & Polymers Ltd v Lubrizol Corp Inc (2000) 106 FCR 214 cited.
Haberman v Jackel International Limited [1999] FSR 683 discussed
Microsoft Corp v Adelong Electronics Pty Ltd (1997) 37 IPR 283 discussed
Lubrizol Corporation Inc v Imperial Chemical Industries Plc [2000] FCA 1464 approved
Grace Australia v MBT Holdings (2002) FCA 1512 cited
Arrow Pharmaceuticals v Merck & Co (2003) 58 IPR 231 cited
Microsoft Corp v Intertrust Technologies Corp (2003) FCA 656 cited

MACHINERY DEVELOPMENTS LIMITED v SEALED AIR CORPORATION
N 709 OF 2003

PECHINEY PLASTIC PACKAGING INCORPORATED & ORS v
CRYOVAC AUSTRALIA LTD
N 167 OF 2003

TAMBERLIN J
SYDNEY
16 JULY 2004

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 709 OF 2003

BETWEEN:	MACHINERY DEVELOPMENTS LIMITED APPLICANT
AND:	SEALED AIR CORPORATION RESPONDENT
N 167 OF 2003
BETWEEN:	PECHINEY PLASTIC PACKAGING INCORPORATED & ORS APPLICANT
AND:	CRYOVAC AUSTRALIA LIMITED RESPONDENT
JUDGE:	TAMBERLIN J
DATE OF ORDER:	16 JULY 2004
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

The parties are directed to prepare Short Minutes of Orders sought to give effect to my reasons for judgment within two weeks at a time to be arranged with my Associate.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 709 OF 2003

BETWEEN:	MACHINERY DEVELOPMENTS LIMITED APPLICANT
AND:	SEALED AIR CORPORATION RESPONDENT
N 167 OF 2003
BETWEEN:	PECHINEY PLASTIC PACKAGING INCORPORATED & ORS APPLICANT
AND:	CRYOVAC AUSTRALIA LTD RESPONDENT

JUDGE:	TAMBERLIN J
DATE:	16 JULY 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is a dispute between the parties in two patent proceedings as to categories of documents for discovery.  The parties have exchanged lists of categories of documents that each claims should be discovered and objection has been taken to a number of those categories.  The parties were able to narrow the ambit of the dispute prior to the hearing.  The proceedings in which the discovery applications are made concern rights to, and the exploitation in Australia of, packaging apparatus used by meat processors for packaging variable-sized cuts of chilled fresh red meat.

2. The two patent proceedings are matters N 167 of 2003 and N 709 of 2003. In matter N 167 of 2003 (“the infringement proceeding”), the applicants, Pechiney Plastic Packaging Incorporated (“Pechiney”) and Danaflex Packaging Corporation Limited (“Danaflex”), as licensees, and Machinery Developments Limited (“MDL”), as patentee, seek relief from the respondent, Cryovac Australia Pty Limited (“Cryovac”), for infringement of three Petty Patents (“the Petty Patents”). The alleged acts of infringement concern the supply and offering for hire or sale to meat processors in Australia of a meat packaging apparatus known as the FlexiBag M501. Cryovac denies infringement and cross claims against MDL for revocation of the Petty Patents. Matter N 709 of 2003 (“the appeal proceeding”) is an appeal by MDL pursuant to s 60(4) of the Patents Act 1990 (Cth) (“the Patent Act”) from a decision of a delegate of the Commissioner of Patents given in opposition proceedings concerning an application for a standard patent that is related to the Petty Patents (“the Standard Patent”). MDL is the applicant for the Standard Patent. The respondent in the appeal proceeding, Sealed Air Corporation, was the opponent before the delegate and is the ultimate parent company of Cryovac. In these reasons, unless otherwise indicated, the term “applicants” refers to Pechiney, Danaflex, and MDL, and the term “respondents” refers to Cryovac and Sealed Air Corporation.

3. In the infringement proceeding, the respondents allege the invalidity of the Petty Patents, relying on grounds of lack of novelty, lack of inventive step, insufficient clarity and disclosure and lack of fair basing.  In the appeal proceeding, the respondent alleges that the Standard Patent is invalid because the apparatus is not novel and does not contain any inventive step.  The allegations in each of the proceedings bring into question the obviousness of the invention the subject of the Petty Patents and the Standard Patent, the scope of the prior art base as at the relevant priority date, the common general knowledge of a person skilled in the relevant art and the qualities that must be imputed to an uninventive person skilled in the art. 

4. On 27 October 2003, the Court ordered that discovery made in each of the proceedings be discovery in the other proceeding.  On 20 February 2004, the Court ordered that the parties exchange proposed categories of documents for discovery by 19 March 2004, and objections to those proposed categories by 26 March 2004.  The parties exchanged proposed categories and objections during March 2004, and a dispute arose concerning a number of those categories.  On 26 March 2004, the Court set down a hearing on 10 May 2004 in relation to the dispute regarding the categories of documents for discovery.  Prior to the hearing, on 15 April 2004, the applicants served revised categories of documents for discovery by the respondents.  These have significantly reduced the ambit of the dispute between the parties concerning the categories of documents requested by the applicants. 

5. The submissions initially raised five matters in relation to the categories of documents for discovery, including privilege, the confidential nature of some of the material, the onerous nature of some of the categories, and whether discovery of documents held by related bodies corporate of the respondents could be obtained.  These issues were narrowed down to the first of the five matters raised, namely, whether documents falling within the categories proposed by the applicants, more specifically, technical documents, research and development documents, and documents relating to apparatus other than the particularised apparatus known as the FlexiBag M501, were irrelevant.

   THE INVENTION

6. The invention relates to an apparatus for producing packages such as plastic bags.  The apparatus is able to automatically vary the length of each bag to suit the dimensions of the product to be packaged.  The invention has particular application in the area of bag-making machines installed at workstations where goods are packaged at the same time as the bags are made or dispensed.  A major area where it is envisaged that the invention will be used is in the packaging of cuts of meat where each individual cut has different dimensions from the others.  A major advantage is in minimising wastage of packaging material. 

   RELEVANCE

7. As noted above, the major issue between the parties concerns the relevance, particularly of research and development documents.  The question in relation to these documents can be considered in the light of the applicants’ formulation of Category 6 in their proposed category of documents for discovery in the infringement proceedings, which reads as follows:

   “All Documents recording or referring to any research, development, design, testing, evaluation or studies conducted by or on behalf of the Respondent/Cross Claimant or any Related Body Corporate of the Respondent/Cross Claimant in relation to the design, manufacture, reduction to practice and operation of each Packaging Apparatus, including inventors’ notes, research records and notebooks, patents, publications and manuscripts of publications.”

8. The respondents’ objection to this category includes a contention that the category seeks documents concerning any research and development conducted by the respondents in relation to the design, manufacture and operation of not only the specific machine, but also in relation to “packaging apparatus”, which is widely defined.  It is said that such documents are unlikely to be helpful.  The respondents point to Wellcome Foundation Ltd v VR Laboratories (Australia) Pty Limited (1981) 148 CLR 262 (“Wellcome”), where Aickin J made it clear that while such documents might be relevant to obviousness in the strict sense, they are unlikely to be very probative or relevant.  The respondents say that issues of novelty and obviousness are usually to be determined upon the evidence of experts who are addressees of the specification in suit, and that documents recording research and development are unlikely to be relevantly useful to the Court.  It is submitted that any concessions made by the respondents in the documents may have been made by persons who were uninventive or outside Australia.  It is said that the category should be confined strictly to the pleadings and that the above wording is inappropriate.  Similar submissions are made in respect of Category 7 in the applicants proposed documents for discovery for the Infringement Proceedings. 

9. In Wellcome, Aickin J, with whom the other four members of the High Court agreed, made the following relevant comments at 270:

   “… the question of obviousness involves asking the question whether the invention would have been obvious to a non-inventive worker in the field, equipped with the common general knowledge in that particular field as at the priority date, without regard to documents in existence but not part of such common general knowledge.  The question is not whether it was or would have been obvious to the inventor or to some other particular worker in the field…”

10. At 287-8 his Honour said:

    “The fact that extensive research and experiment was carried out by a person claiming to be an inventor will not of itself prove that an invention has been made.  Invention will depend on the nature of the result ultimately claimed, whether product or process, viewed against the background of common general knowledge.

    “… I have concluded that evidence of research and experiments (if any) of a patentee leading up to his claimed invention is generally admissible though not always likely to be helpful.  The fact that in a particular case there may not have been any research or development involved in the making of an invention does not require the conclusion that evidence relating to research and experiments, where they took place, will not be admissible.

    “… It may be that in many cases documents recording such research and experiment could properly be said to relate solely to the inventor’s own case but that ground for refusing discovery is not longer available…”

11. At 288 his Honour concluded:

    “The cases to which I have referred appear to show that some discovery in respect of the work done by a patentee in arriving at his invention has been given as a matter of course and that the dispute have been as to the extent of discovery.  Since evidence of such work may in some cases be relevant to the issue of obviousness it must follow that discovery should generally be given, even if only on the basis that the documents discovered may suggest a line of inquiry worth investigation.”

12. These principles have often been applied in subsequent patent cases: see F Hoffman-La Roche AG v Chiron Corporation & Anor (2000) 171 ALR 295; Murex Diagnostics Australia Pty limited v Chiron Corp (No 2) (1995) 62 FCR 424 at 425-6, Elconnex Pty Ltd v Gerard Industries Pty Ltd (1992) 25 IPR 173 (“Elconnex”) and ICI Chemicals & Polymers Ltd v Lubrizol Corp Inc (2000) 106 FCR 214 at [76]-[78].

    LONG-FELT WANT

13. In Elconnex, Lockhart J referred, at 182, to the relevance of evidence of the failure of attempts to solve a well-known problem or to satisfy a long-felt want. He expressed the view that evidence in support of the inventive nature of the successful solution to such a problem might in some cases be a powerful indication that the invention is not obvious. He referred, at 183, to the absence of evidence from an inventor to say that there was a perceived problem which it was necessary to overcome, and that time had been taken in trying to research it and overcome it. His Honour expressed the view that evidence of this kind from the inventor would not be conclusive but that it would have been relevant and admissible.

14. In relation to this point, counsel for the respondents argued that the applicants have not identified any long-felt want or problem, and that the research and development documents are therefore entirely irrelevant, and that it would be inappropriate to give discovery concerning research and development documents concerning attempts to solve a problem.  The respondents maintain that there was no problem to overcome, and that their machines were developed in a routine fashion to improve general performance.  It is said that if the applicants wish to press such a case at point of discovery they need evidence to demonstrate and articulate the problem that the machine was to solve.  

15. Counsel for the applicants point out that the respondents bear the onus of establishing that the subject matter of the patents does not involve an inventive step, because it is the applicant for revocation that must prove that there was no inventive step.  Counsel refers to the four patent specifications and submits that the discussion of the prior art and the identity of the deficiencies are sufficiently spelt out in those documents, particularly in relation to the statement that the prior art was not able to automatically vary the length of bags and packaging apparatus during the operation of the apparatus.  This is said to identify the problem.  In my view, this submission of counsel should be accepted on a fair reading of the specification.  I consider that there is a statement of the problem and of an advantage to be gained by solving it, and that therefore there was a need for a solution.  I also accept that it would be inappropriate and unnecessarily expensive at this stage of discovery to require evidence in relation to issues as to whether this is a case of long-felt want or the nature of any problem or the solving of a problem.

16. In my view, the substance of the cases on discovery of documents which concern evidence of attempts to solve a well-known problem, or to satisfy a long-felt want is that the respondents’ research and development documents are relevant to assessing the level of knowledge and experience that should be imputed to the uninventive person with general knowledge in the field when assessing the obviousness of the invention, and in relation to common general knowledge.  In addition, the evidence can go the attempts to solve problems addressed by the invention. 

17. Accordingly, I consider that documents referring to research and development as set out in categories 6 and 7 should be the subject of discovery.

    DEFINITION OF “PACKAGING APPARATUS”

18. A second major issue between the parties, which also touches upon the issue of relevance, concerns the definition of the “Packaging Apparatus” in the categories of documents sought by the applicants on discovery.  In the applicants’ list of categories, the definition of “Packaging Apparatus” is expressed to mean:

    “… packaging apparatus for the automatic making and dispensing of variable length bags from roll-stock tubing for packaging meat including the FlexiBag M501 machine but to avoid any doubt excluding the FlexiBag System 300 machine and the FlexiBag System 500 machine.”

19. The contention of the respondents is that the request for discovery of these documents travels beyond what is permissible in so far as it seeks documents relating to machines other than the FlexiBag M501.  It is said that this definition incorporates an unduly wide definition of packaging apparatus.  The respondents concede that there could be no objection if the definition were limited to the respondents’ FlexiBag M501 machine.

20. In response to this submission, the applicants refer to the decision in Haberman v Jackel International Limited [1999] FSR 683, where Laddie J, at 699, said:

    “If skilled workers in the art had looked at the priority date both at the prior art relied on and had turned their minds to solving a known problem their reactions would come closer to showing what would have been the approach of the hypothetical skilled man.  Unfortunately evidence in that form rarely exists.  However some inside into the thinking of those in the art at the priority date can be provided by evidence of commercial success.”

21. In considering the question of commercial success, his Lordship referred to issues such as the period of time over which the problem had existed, how significant the problem was perceived to be in the trade, how widely known the problem was, how many persons were seeking a solution, the nature of any other solutions that were put forward in the period leading up to the publication of the development by the patentee, and the extent to which actors would have held back the exploitation of the solution even if it was technically obvious.  The applicants contend that these factors, when considered in relation to the respondents’ apparatus, which is the subject of the Standard Patent and Petty Patents, can be relevant to the question of commercial success in relation to the issue of obviousness.  It is said that the respondents’ knowledge and experience as a global leader in the development of online packaging automation equipment is relevant and important in examining these considerations.

22. In my view, work done in relation to other packaging apparatus that is concerned with the automatic making and dispensing of variable length bags from roll stock tubing is potentially relevant, when deciding the question of obviousness, to considerations of the pool of knowledge and information available.

23. The applicants also rely on a decision of Lindgren J in Microsoft Corp v Adelong Electronics Pty Ltd (1997) 37 IPR 283 (“Adelong”), which concerned infringement of copyright. His Honour there held that a copyright owner could obtain discovery for the purpose of particularising and proving additional instances of infringement. His Honour said at 291:

    “Fourthly, and as I think to be the case, the copyright owner can simply plead in general terms, and obtain discovery for the purpose of particularising and proving, earlier instances of infringement.  Whatever may be the position in another case, where … a copyright owner believes that there have been such earlier instances of infringement in the course of the respondent’s business and has reasonable ground, based on the evidence, for that belief, the law does not, in my opinion, confine the copyright owner [to initiate a series of pre-litigation “trap orders”, seek Anton Piller orders ex parte or conduct pre-action discovery under O15A, r 6 of the Federal Court Rules].”

24. The applicants contend that this principle applies equally in relation to the alleged patent infringements in the present case, because the pleading is sufficiently general to allow discovery of documents relating to machines other than the machines specifically particularised, namely, the FlexiBag M501.  Accordingly, it cannot be said that this is a roaming or fishing expedition for new or irrelevant infringements.  The respondents contend that Adelong is distinguishable and does govern the outcome in the present case.  In my opinion, there is some force in this submission.  Nevertheless, I consider that the material in relation to other “packaging apparatus”, as that term is defined in the document setting out the applicants’ list of categories for discovery, is of sufficient relevance to require discovery of the documents sought in relation to such other machines.

1. In light of the above principles, I now turn to the categories that remain in dispute between the parties.  I will consider each of these categories specifically and make a ruling on each one.  It will then be left to the parties to formulate Short Minutes of the categories of discovery in accordance with the principles set out in these reasons.  They should be read bearing in mind my ruling that the definition of “Packaging Apparatus” is not too wide.

   APPLICANTS CATEGORIES OF DOCUMENTS SOUGHT FROM RESPONDENT

   N 167 OF 2003 (THE INFRINGEMENT PROCEEDING)

   Categories 1 and 2      I allow these categories and I reject the objection based on the definition of “packaging apparatus” for the reasons given above.

   Categories 3 and 4      I consider these categories to be framed too widely, and I restrict them to “documents” recording the matters referred to.  The words “referring” or “relating to” are unduly wide.  I do not consider that documents that go only to quantum need be furnished at this point.  They may never be required and are probably substantial in number.  Otherwise I allow these categories. 

   Category 5This category is too wide.  In my view “documents” should be restricted to those recording the matters referred to, and should be more closely defined to exclude routine documents which do not bear on the liability issue.

   Categories 6 and 7      These categories should be allowed for the reasons given earlier.  In relation to Category 7, the neutral word “developments” should be substituted for the word “problems”.

   Category 8I allow this category.  This material could bear on common general knowledge, prior art and the understanding of persons in the industry.

   Category 9This category is too wide because it refers to non-parties.  I limit it to infringement by the respondents/cross-claimant or any related body.

   Category 10                I allow this category, bearing in mind the obligation to make continuing discovery.

   N 709 OF 2003 (THE APPEAL PROCEEDING)

   Category 1                  I allow this category for the reasons given earlier.

   Category 2                  I allow this category for the reasons given in relation to Category 7,

   above.

   Category 3I allow this category for the reasons given in relation to Category 8, above.

   Category 4                  I allow this category.

   RESPONDENTS CATEGORIES FOR DISCOVERY BY APPLICANTS

   N 167 OF 2003 (THE INFRINGEMENT PROCEEDING)

2. Leaving aside those categories agreed or not pressed, I rule as follows on the categories in dispute:

   Categories 17 and 18   I do not consider without greater particularity that documents outside Australia would be relevant in this matter.  See the remarks of Branson J in Lubrizol Corporation Inc v Imperial Chemical Industries Plc [2000] FCA 1464 at [32], which I consider to be apposite in the present case. The laws of unspecified other countries in general are not shown to be sufficiently analogous to be of utility. I consider that documents relating to the drafting, filing and prosecution of Australian petty patents should be discovered.

   Category 21I consider that the alternative reformulation by the respondents is appropriate and that discovery should be granted in these terms.

   N 709 OF 2003  (THE APPEAL PROCEEDING)

   Categories 1 and 2      These categories fall within the same ruling as that made for Category   17 above.

   Categories 3 and 4      These categories are not pressed by the respondents.

   Category 5                  This category has been agreed.

   REQUESTS FOR PARTICULARS

3. The written submissions by the parties refer to cases that deal with requests for particulars with respect to the existence, or non-existence, of an inventive step: see Grace Australia v MBT Holdings (2002) FCA 1512; Arrow Pharmaceuticals v Merck & Co (2003) 58 IPR 231; Microsoft Corp v Intertrust Technologies Corp (2003) FCA 656. There appear to be some differences in the authorities as to the circumstances in which further particulars need be furnished. However, on this application, it is neither necessary nor appropriate to make a ruling on this issue.

   CONCLUSION

4. I will make no order or final formulation of categories at this point.  I direct the parties to formulate appropriate orders and categories in the light of the above reasons and to forward a copy to my associate within fourteen days.  In event of disagreement, the matter can be listed for a short hearing by arrangement with my associate.  In my view, the costs of these applications should be costs in the substantive proceedings, but I will make no order until the other orders have been settled if the parties are in disagreement.

I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate:

Dated:             16 July 2004

Counsel for the Applicants:	Christian Dimitriadis
Solicitor for the Applicants:	Allens Arthur Robinson
Counsel for the Respondents:	Glenn McGowan
Solicitor for the Respondents:	Davies Collinson Cave Solicitors
Date of Hearing:	10 May 2004
Date of Judgment:	16 July 2004