Merial, Inc. v Intervet International B.V. (No 3) - [2017] FCA 21

FEDERAL COURT OF AUSTRALIA
Merial, Inc. v Intervet International B.V. (No 3) [2017] FCA 21

File number: VID 399 of 2015

Judge: MOSHINSKY J

Date of judgment: 25 January 2017

Catchwords:
PATENTS – appeal under s 60(4) of the Patents Act 1990 (Cth) – entitlement – where opponent contended that applicant for patent did not derive title to alleged invention from inventor – where invention described in patent application was a soft chew formulation for administering an anti-parasite pharmaceutical to certain animals – whether opponent clearly established lack of entitlement

PATENTS – appeal under s 60(4) of the Patents Act 1990 (Cth) – inventive step – obviousness – where opponent contended that alleged invention lacked an inventive step – person skilled in the relevant art – the common general knowledge – information mentioned in s 7(3) of the Patents Act – whether applicant clearly established lack of inventive step

Legislation:
Evidence Act 1995 (Cth), s 140

Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth)

Patents Act 1952 (Cth), s 100(1)(e)

Patents Act 1990 (Cth), ss 7, 15, 18, 40, 59, 60(4)

Patents Amendment Act 2001 (Cth)

Cases cited:
Abraxis Bioscience, Inc v Navinta LLC, 625 F 3d 1359 (Fed Cir 2010)

Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411

Allegheny Steel & Brass Corp v Elting, 141 F 2d 148 (7th Cir 1944)

AstraZeneca AB v Apotex Pty Ltd (2015) 323 ALR 605

Baltimore & Ohio R Co v United States, 261 US 592 (1923)

Banks v Unisys Corp, 228 F 3d 1357 (Fed Cir 2000)

Bd of Trustees of the Leland Stanford Junior University v Roche Molecular Systems, 563 US 776 (2011)

Bldg Innovation Indus, LLC v Onken, 473 F Supp 2d 978 (D Ariz 2007)

Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232

Commissioner of Patents v Sherman (2008) 172 FCR 394

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466

EI Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd (2003) 128 FCR 392

Enzo Apa & Son, Inc v Gaepag AG, 134 F 3d 1090 (Fed Cir 1998)

F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56

Gilson v Commissioner, Docket No 3801-78, 1984 Tax Ct Memo LEXIS 228 (US TC Aug 21, 1984)

Hercules, Inc v US, 516 US 417 (1996)

Intervet International B.V. v Merial Inc [2016] FCA 1030

Kaiser v Millard Lumber, Inc, 25 Neb 943; 587 NW 2d 875 (1999)

Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 235 CLR 173

Mellon Bank, N.A. v Aetna Business Credit, 619 F 2d 1001 (3rd Cir 1980)

Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253

Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157

SiRF Tech, Inc v Int’l Trade Comm’n, 601 F 3d 1319 (Fed Cir 2010)

Speedy Gantry Hire Pty Ltd v Preston Erection Pty Ltd (1998) 40 IPR 543

St Paul Fire & Marine Ins Co v Indemnity Ins Co of N Am, 32 NJ 17; 158 A 2d 825 (1960)

Stack v Davies Shephard Pty Ltd (2001) 108 FCR 422

Standard Parts Co v Peck, 264 US 52 (1924)

Teets v Chromalloy Gas Turbine Corp, 83 F 3d 403 (Fed Cir 1996)

United States v Dubilier Condenser Corp, 289 US 178 (1933)

University of British Columbia v Conor Medsystems, Inc (2006) 155 FCR 391

Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262

Date of hearing: 29, 30 and 31 August and 1, 2, 5 and 6 September 2016

Date of last submissions: 8 September 2016

Registry: Victoria

Division: General Division

National Practice Area: Intellectual Property

Sub-area: Patents and associated Statutes

Category: Catchwords

Number of paragraphs: 208

Counsel for the Appellant: Mr C Dimitriadis SC with Ms C Cunliffe

Solicitor for the Appellant: Ashurst Australia

Counsel for the Respondent: Ms K Howard SC with Mr CH Smith

Solicitor for the Respondent: Spruson & Ferguson Lawyers

ORDERS

VID 399 of 2015

BETWEEN:
MERIAL, INC.

Appellant

AND:
INTERVET INTERNATIONAL B.V.

Respondent

JUDGE:

MOSHINSKY J

DATE OF ORDER:

25 JANUARY 2017

THE COURT ORDERS THAT:
1.Subject to paragraph 2, by 4.00 pm on 3 February 2017, the parties file an agreed minute of proposed orders to give effect to these reasons.
2.If the parties cannot agree, then by 4.00 pm on 10 February 2017, each party file and serve a minute of proposed orders to give effect to these reasons, together with a short outline of submissions in support of those proposed orders.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
MOSHINSKY J:
Introduction

On 31 July 2009, the respondent (Intervet) filed in Australia an application for a standard patent titled “Compositions and process for delivering an additive” (Application AU 2009203180 C1) (the Patent Application). The invention described in the application, in simple terms, is a soft chew formulation for administering an anti-parasite pharmaceutical to certain animals. The inventors named on the application are Sebastien Huron, Mark Pieloch and Susan Cady.
The Patent Application is a divisional of application number PCT/US2003/025358 filed pursuant to the Patent Cooperation Treaty on 13 August 2003 (the PCT Application) designating Australia (among other jurisdictions).
Both the Patent Application and the PCT Application claim priority to provisional application number 60/403,201 filed in the United States of America on 13 August 2002 (the First US Provisional Application) and provisional application number 60/433,677 filed in the United States of America on 16 December 2002 (the Second US Provisional Application). Both provisional applications (the US Provisional Applications) name Mr Huron, Ms Cady and Mr Pieloch as the inventors.
On 28 October 2011, the appellant (Merial) served a notice of opposition to the Patent Application. Merial’s grounds of opposition, as pursued at the hearing before a delegate of the Commissioner of Patents (the Delegate) in June 2015, were lack of novelty, lack of inventive step and failure to satisfy the “manner of manufacture” requirements. On 10 July 2015, the Delegate decided that Merial’s opposition failed on all grounds and directed that the application proceed to grant (the Delegate’s Decision).
Merial ‘appeals’ to this Court against the Delegate’s Decision pursuant to s 60(4) of the Patents Act 1990 (Cth) (Patents Act). Although called an ‘appeal’, the proceeding is in the original jurisdiction of this Court and involves a hearing de novo on the grounds and evidence before the Court. In this Court, Merial has raised a ground of opposition not raised before the Delegate, namely lack of entitlement. Although at the commencement of the hearing Merial relied on four grounds (lack of entitlement, lack of novelty, lack of inventive step, and grounds under s 40 of the Patents Act), in closing submissions it confined its case to two grounds, namely lack of entitlement and lack of inventive step (each of which provides an independent basis for the refusal of the Patent Application). These two grounds can be summarised as follows:
(a)Merial contends that Intervet is not entitled to the grant of a patent for the alleged invention on the basis that it does not derive title to the alleged invention from Mr Pieloch, who Intervet admits is an “actual inventor” of the alleged invention; and
(b)Merial contends that the alleged invention does not involve an inventive step on the basis that it was obvious in the light of the common general knowledge when combined with United States patent US 6,387,381 dated 14 May 2002 (Christensen).
Merial, as the opponent, bears the onus in relation to each ground of opposition. The authorities establish that, for an opposition to be upheld, it must be “clear” (or “practically certain”) that the patent, if granted, would not be valid.
In relation to the lack of entitlement ground, I note the following facts and matters:
(a)On 7 July 2011, Intervet filed a notice of entitlement under the Patents Act in connection with the Patent Application (the Notice of Entitlement). This stated that Intervet had an entitlement from the “actual inventors” on the following basis:
[Intervet] is the assignee of Akzo Nobel N.V. Akzo Nobel N.V. as the parent company of Intervet Inc at the relevant time and by virtue of a Contract of Employment between actual inventors Huron and Cady as employees and Intervet Inc. as employer, is the person which would be entitled to have the patent assigned to it if a patent were granted on an application made by actual inventors Huron and Cady.
Pharma Chemie by virtue of a contract of employment between actual inventor Pieloch as employee and Pharma Chemie as employer, is the person which would be entitled to have the patent assigned to it if a patent were granted on an application made by actual inventor Pieloch. [Intervet] by virtue of a contract with Pharma Chemie has entitlement to the invention of actual inventor Pieloch.
(b)The evidence does not suggest that Mr Huron or Ms Cady (both of whom worked at Intervet Inc, a related company of Intervet, in 2002) played any, or any substantial, role in developing the alleged invention. However, it is unnecessary to determine whether or not Mr Huron and Ms Cady played a role. There is no issue that, if there was an invention, Mr Pieloch was either the inventor or one of the inventors. Accordingly, for Intervet to have title to the alleged invention, it needs to have acquired title from Mr Pieloch.
(c)At all relevant times, Pharma Chemie Inc (Pharma Chemie) was owned and controlled by Mr Pieloch.
(d)In early 2002, Ms Cady (on behalf of Intervet Inc) engaged Pharma Chemie to develop a ‘soft chew’ for horses containing the active ingredient, ivermectin (the Horse Project).
(e)Also in 2002, Intervet Inc engaged Pharma Chemie to develop a soft chew for dogs containing the active ingredients, ivermectin, praziquantel and fenbendazole (the Dog Project).
(f)In 2002, Intervet Inc and Pharma Chemie entered into an agreement, referred to in correspondence as a Manufacturing and Supply Agreement, in relation to the joint development of a veterinary pharmaceutical product. A copy of this agreement cannot be located.
(g)In August 2003, Intervet Inc’s patent attorney sent Mr Pieloch a patent application with a request that he sign an inventor’s declaration. Mr Pieloch refused to sign the declaration. In September and October 2003, Pharma Chemie’s lawyers sent letters and documents to Intervet Inc. In that correspondence, Pharma Chemie’s lawyers stated that Pharma Chemie invented the soft chew technology described in the patent application; that all of the work on this technology was completed prior to Pharma Chemie’s entry into an agreement with Intervet Inc in 2002; and that Pharma Chemie was therefore the owner of the technology described in the patent application. Mr Pieloch gave evidence in this proceeding to the same effect. No witness gave contradictory evidence.
(h)Intervet has not produced any agreement by which Pharma Chemie assigned to Intervet (or Intervet Inc) rights in an invention in terms of any of the claims in the Patent Application or rights in any invention that resulted from the Horse Project or the Dog Project.
I have concluded that the lack of entitlement ground is clearly established. My reasons, in summary, are as follows.
(a)First, I have found that Pharma Chemie was not engaged by Intervet Inc to develop a soft chew dosage form – it was engaged to incorporate Intervet Inc’s active ingredients into a formulation, using Pharma Chemie’s soft chew technology; and that Pharma Chemie had already developed the soft chew technology described in the relevant patent applications before it was engaged by Intervet Inc to carry out the Horse Project and the Dog Project.
(b)Secondly, I have found that there was no express assignment from Pharma Chemie to Intervet Inc of an invention in terms of any of the claims in the Patent Application; that the Manufacturing and Supply Agreement referred to in the correspondence did not contain an express assignment of rights from Pharma Chemie to Intervet Inc in any invention that resulted from the Horse Project or the Dog Project; and that no other agreement contained an express assignment from Pharma Chemie to Intervet Inc of rights in any invention that resulted from the Horse Project or the Dog Project. It follows that, even if an invention did result from or arise in the course of the Horse Project or the Dog Project, there was no express assignment of that invention from Pharma Chemie to Intervet Inc (or Intervet).
(c)Thirdly, I am satisfied that a term is not to be implied in any agreement between Intervet Inc and Pharma Chemie requiring Pharma Chemie to assign to Intervet Inc an invention as described in the claims in the Patent Application or any other relevant invention. Both parties proceeded on the basis that the agreement (or agreements) between Intervet Inc and Pharma Chemie was (or were) governed by the law of a State of the United States and principles of US law were therefore relevant to the implication of a term. The relevant principles of US law are to be determined as a question of fact in this proceeding. There was an issue between the US law experts as to whether the “hired to invent” doctrine was capable of application where the relevant person is an independent contractor rather than an employee. Having considered the competing positions, I am not satisfied that the “hired to invent” doctrine could not apply to such a situation. Proceeding on the basis that the doctrine is capable of application, it was emphasised in the expert evidence on US law that what “controls” is the nature of the contractual relationship between the parties and how the invention was made; and that the critical fact is whether the contract specifically required the invention to be made. In the present case, I have found that Pharma Chemie was not engaged by Intervet Inc to develop a soft chew dosage form; it was engaged, rather, to incorporate Intervet Inc’s active ingredients into a formulation, using Pharma Chemie’s soft chew technology. Further, in light of the express provisions of the Manufacturing and Supply Agreement, there is no room to imply a term (in this or any other agreement relating to the Horse Project or the Dog Project) requiring Pharma Chemie to assign to Intervet Inc any invention resulting from the projects.
In light of that conclusion, it is unnecessary to determine the lack of inventive step ground. Nevertheless, for completeness, I have considered this ground. In summary, I have concluded that the ground of lack of inventive step is made out in relation to claim 1; is not made out in relation to claims 2, 3, 10, 11, 12 and 14; and is partially made out in relation to the balance of the claims.
Applicable principles in relation to the proceeding generally
As noted by Heerey, Kenny and Middleton JJ in Commissioner of Patents v Sherman (2008) 172 FCR 394 at [18], the fundamental principles governing an appeal against a decision of the Commissioner of Patents on an opposition to a grant of a patent are well settled. Their Honours stated (at [18]-[22]):
18… First, an appeal under s 60(4) of the Patents Act is not an appeal in the strict sense. Rather, it is a proceeding in the original jurisdiction of the Court and is conducted as a rehearing (sometimes referred to as a hearing de novo): see Jafferjee v Scarlett (1937) 57 CLR 115 at 119 per Latham CJ; and Kaiser Aluminum & Chemical Corporation v Reynolds Metal Company (1969) 120 CLR 136 at 142 per Kitto J. The Court upholds the opposition only if clearly satisfied that the patent, if granted, would be invalid: see Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232 at 251 per Dixon CJ, McTiernan, Fullagar, Taylor and Windeyer JJ; and Denison Manufacturing Company v Monarch Marking Systems Inc (1983) 76 FLR 200 at 201 per Smithers J and 215 per Franki J. An appeal under s 60(4) of the Patents Act is different from some other “appeals” (as referred to in some other enactments) against administrative decisions that may be brought to this Court, where the Court decides whether the decision was correct in law, having regard to the evidence that was before the decision-maker at the time of making the decision. In an appeal under s 60(4) of the Patents Act, the Court does not ask this question.
19Secondly, on an appeal under s 60(4) of the Patents Act, subject to the Court’s direction, the parties may lead evidence-in-chief. The position of the opponent is relatively clear. As Emmett J said in F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 at [30], “[i]t would … be open to an opponent simply to tender the material that was before the Commissioner” and the “Court could, subject to all proper objections, admit that evidence”, although the opponent is not bound to this course.
20Thirdly, the only evidence to be taken into account at the hearing of an appeal under s 60(4) will be the evidence tendered or admitted at the hearing: see Caroma Sales Pty Ltd v Philmac Pty Ltd (1972) 46 ALJR 324 at 324; [1972-73] ALR 427 at 428; Brickwood Holdings Pty Ltd v ACI Operations Pty Ltd [1983] 2 VR 587 at 588-589 per King J; European Community v Commissioner of Patents (2006) 68 IPR 539 at 543 per Young J; and Cadbury Schweppes plc v Effem Foods Pty Ltd (2006) 69 IPR 584 at 586 per Lindgren J. This is the evidence on which the Court acts. As Kitto J said in Kaiser Aluminum 120 CLR at 142-143, in relation to the same kind of proceeding under the former Patents Act 1952 (Cth), the outcome of a proceeding such as this “must be decided upon the evidence adduced before [the] Court”, even if a different case than that made before the Commissioner. We return to this proposition below, which is virtually decisive of the outcome of this appeal.
21Fourthly, whilst the Court will make its own decision on the basis of the evidence before it, in deciding whether the applicant (here, Mr Sherman) has made out his case on the balance of probabilities, the Court will take into account the nature of the proceeding and the fact that the proceeding concerns the decision of an expert administrative decision-maker: see Commissioner of Patents v Emperor Sports Pty Ltd (2006) 149 FCR 386 at [24]; EI Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd (2003) 128 FCR 392 at [28] per Emmett J; EI Du Pont de Nemours and Company v ICI Chemical Industries plc (2002) 54 IPR 304 at [17] per Branson J; Neumann v Sons of the Desert SL [2008] FCA 1183 at [2] per Ryan J; and s 140 of the Evidence Act. The Full Court in Emperor Sports 149 FCR 386 at [24] explained that:
The Commissioner is an administrative decision-maker equipped with technical expertise. Subject to the rules of natural justice both common law and statutory … he or she is entitled to make use of that expertise, and draw inferences that may be rationally drawn from technical knowledge, including how skilled persons of various descriptions may act in their respective occupations … On an appeal by way of hearing de novo the judge would not be a person credited with technical expertise of his or her own. In such an event the judge may be able to take into account conclusions of the Commissioner based on his or her expertise, subject of course to the rights of other parties to call rebutting or supporting evidence.
Also in Emperor Sports 149 FCR 386 at [33], the Full Court noted that, when the identification of the relevant prior art is in dispute, “it is necessary to have either evidence or, which amounts to the same thing, reliance by an administrative decision-maker of expertise appropriate to the office”. Naturally enough, the weight given by the Court to the Commissioner’s findings will be affected by the extent to which the Court permits evidence to be adduced before it that was not before the Commissioner: see Du Pont 128 FCR 392 at [28] and Du Pont 54 IPR 304 at [17]. We return to these matters on the question of the admissibility of the evidence in question under the Evidence Act.
22Fifthly, where a ground of opposition depends on proof of a fact, the onus of proof lies on the party seeking to make out the ground. Usually the party bearing this onus will be the opponent, but sometimes, as in the present case, it will be the Commissioner: see Titan Mining & Engineering Pty Ltd v Arnall’s Engineering Pty Ltd (1988) 12 NSWLR 73 at 75 per McLelland J.

The Court, in hearing an appeal under s 60(4) of the Patents Act, may consider any ground that could, under s 59 of the Act, be raised in opposition to the grant of the patent, whether or not that ground was raised before the Commissioner: EI Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd (2003) 128 FCR 392 at [21] per Emmett J.
The grounds on which the grant of a standard patent may be opposed are set out in s 59 of the Patents Act. These in turn require consideration of other provisions of the Act, including s 15 (in relation to lack of entitlement) and s 7 (in relation to inventive step). Section 7 was amended by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth). However, by reason of the applicable transitional provisions and the date of filing of the Patent Application, the version of s 7 that was in force immediately prior to the passing of the amending Act continues to apply to the Patent Application.
The opponent bears the onus in relation to each ground of opposition. The authorities establish that, for an opposition to be upheld, it must be “clear” (or “practically certain”) that the patent, if granted, would not be valid: Commissioner of Patents v Sherman at [18]; F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 at [29], [67] per Emmett J; see also Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232 at 244-245, 251 per Dixon CJ, McTiernan, Fullagar, Taylor and Windeyer JJ.
While, for an opposition to be upheld, it must be “clear” that the patent if granted would not be valid, the standard of proof that applies is the standard generally applicable in civil proceedings, namely that prescribed by s 140 of the Evidence Act 1995 (Cth): Commissioner of Patents v Sherman at [16], [21]. Section 140 is in the following terms:
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a)       the nature of the cause of action or defence; and
(b)       the nature of the subject-matter of the proceeding; and
(c)       the gravity of the matters alleged.
In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466, Weinberg, Bennett and Rares JJ stated at [30]:
The mandatory considerations which s 140(2) specifies reflect a legislative intention that a court must be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence. Ordinarily, the more serious the consequences of what is contested in the litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion.
In the present context, the Court approaches the task of fact finding mindful of the ultimate issue to be determined, which is whether the opponent has clearly satisfied the Court that a patent, if granted, would not be valid.
While there was some debate as to the standard of proof to be applied at an earlier stage, in closing submissions senior counsel for Intervet accepted the propositions set out in [14]-[16] above. I took Merial’s submissions to be consistent with these propositions.
The Patent Application
The complete specification of the Patent Application takes the form required by the Patents Act, consisting essentially of two parts: a description (pp 1-28 and Figures 1a, 1b, 2 and 3) and a series of claims (pp 29-30).
For the purposes of the grounds of opposition, attention is to be directed to the alleged invention as claimed. Where, as here, there is more than one claim, each claim provides a separate definition of the invention having its own scope and subject-matter. Nevertheless, the claims in a broad sense “relate to one invention only” (s 40(4)).
The title of the alleged invention is “Compositions and process for delivering an additive”. The claimed priority date is 13 August 2002, based on the First US Provisional Application. The background to the invention is set out at pp 1-4 and proceeds on the basis that chewable dosage forms for drug delivery were well known to pharmaceutical technology before the claimed priority date (p 1, lines 9-10). Various matters relevant to chewable dosage forms are discussed. It is said that the act of chewing increases the surface area and may increase the rate of absorption of the active pharmaceutical ingredient (p 1, lines 10-12) and that chewable systems are also advantageous where it is desirable to make an active ingredient available topically (p 1, lines 13-14). It is said that palatability and “mouth feel” are important characteristics to be considered in providing such a chewable dosage form, but many pharmaceuticals and other active ingredients have a bitter or otherwise unpalatable taste or unacceptable mouth feel, due to the grittiness or chalkiness of the compound, or both (p 1, lines 18-22). It is stated: “These characteristics make it difficult to incorporate such active ingredients into the current state of the art for chewable dosage forms because the objectionable taste and/or mouth feel make it less likely to obtain compliance by the user” (pp 1-2).
The Patent Application states that several approaches have been tried in attempting to overcome these problems. Reference is made to compressed, chewable tablets, but these are said generally to “suffer from less than desirable mouth feel, i.e., chalkiness, grittiness, and a dry, powdery taste” (p 2, lines 3-21).
The Patent Application states that there have been attempts to coat compressed active particles in compressed tablets with oils or fats, but that these have certain disadvantages, and that “[a]ccordingly, the art field is in search of a process of manufacturing a soft chew whereby compression and subsequent product loss may be minimised or lessened” (p 3, lines 1-10).
The Patent Application also states that problems have been experienced delivering additives/active ingredients to organisms (ie, animals) because of palatability issues, and that “[a]ccordingly, the art field is in search of a method and/or composition of delivering an additive to an organism in a palatable format” (pp 3-4).
As these disclosures indicate, the emphasis in the Patent Application is on the palatability of the formulation.
A number of prior patents disclosing chewable dosage forms are referred to in the Patent Application (p 1, lines 16-17, p 4, line 4). The patent referred to and discussed at some length at p 4 is the patent referred to as Christensen in these reasons. It is stated that this product “is limited to an extrudate and not available in a tablet form of formulation”. (It is convenient to note at this point that an “extrudate” is something produced by extrusion, which typically refers to a process involving heat, pressure and mixing, where the substance is then pushed through a nozzle.)
Under the heading “Summary of the invention”, the Patent Application provides a series of so-called “consistory clauses” which describe the invention in terms that reflect the wording of the claims. The first of these reflects the wording of claim 1 (set out below). The following clauses include descriptions referable to some of the dependent claims.
The detailed aspects of the description follow. These include definitions of various terms, specification of various options for components and features for inclusion in the soft chew formulation, and a description of the processes used to make it. The expression “soft chew” is defined to mean and refer to an edible composition (p 7, lines 1-2). It is stated that the term “emulsifier component”, as used in the application, means and refers to “an emulsifier or emulsifiers, humectants and the like and is considered a liquid component, whether or not actually liquid” (p 9, lines 5-7). But, as Dr Pougnas points out in his first affidavit, emulsifiers and humectants perform different functions.
In connection with a description of embodiments containing a flavouring component, it is stated that a suitable source for an apple-molasses flavouring component is Pharma Chemie under a product name Sweet-Apple Molasses Flavoring, product code PC-0555 (p 12, lines 11-13). (It is convenient to note at this point that at all material times Pharma Chemie sold ‘proprietary’ flavouring components. The composition of these flavouring components was a trade secret of Pharma Chemie.) The description states that a preferred meat flavouring component is commercially available at Pharma Chemie as Artificial Beef Flavor, product code PC-0125 (p 12, lines 18-19). It is stated that: “A flavoring component is typically chosen based upon consideration related to the organism that will be ingesting the soft chew. For example, a horse may prefer an apple flavoring component, while a dog may prefer a meat flavoring component.”
The Patent Application states that various embodiments comprise an emulsifier component (p 13, line 8). It is stated that a suitable emulsifier component is glycerine, glycerine fatty acid ester, sorbitan monostearate, sucrose fatty acid ester, lecithin, polyethylene glycol (PEG), mixtures thereof, and the like. The description continues: “However, emulsifier components are well-known in the art field and any emulsifier component may be used. Generally, the amount of emulsifier component added may affect the stickiness of the soft chew” (p 13, lines 11-13).
Next, reference is made to a moisture component. It is stated that in an embodiment, a moisture component comprises about 0.0 percent to about 15 percent (p 13, lines 19-20). I note that the range is broader than that specified in claim 1 (between 5.0 and 7.5 percent wt). It is stated that in an alternate embodiment, a moisture component comprises about 5.0 percent to about 7.5 percent (p 13, lines 22-23).
The description next refers to an additive component, selected from the group “consisting of a pharmaceutical, a nutraceutical, a vitamin, a mineral and/or a filler that can be orally administered” (p 14, lines 1-3). (I note that claim 1 refers to a pharmaceutical for control of a parasite.) Exemplary pharmaceuticals, including ivermectin, fenbendazole and praziquantel, are then listed (p 14, lines 5-9).
After describing an embodiment of a process for forming a soft chew of the present invention, it is stated that, in a further embodiment, the process further comprises mixing an emulsifier component (p 16, lines 19-20). It is stated that the emulsifier component may be chosen to act as a humectant and/or a forming agent (p 16, lines 20-21). It would appear that the expression “forming agent” is used in the same sense as a binder. It is then stated that in an embodiment, a forming agent of choice is PEG. The description continues: “Moreover, depending upon the desired consistency of the soft chew, different molecular weight PEG may be utilized. In an embodiment, PEG 3350 is utilized. However, the PEG chosen is a matter of choice and the molecular weight may be higher or lower than 3350.”
The description refers to dough being formed into a soft chew of the present invention by a knockout (p 17, line 21). The expression “knockout” would appear to refer to a process whereby the soft chew is formed in a mould and then a “knockout” step removes the soft chew from the mould. Reference is made to suitable examples of forming machines. It is stated that a most preferred forming machine is the FORMAX machine manufactured by FORMAX Food Machines Mokena, Illinois (p 18, lines 3-5).
The description concludes with two examples (pp 20-28). Example 1a is described as “Equine Soft Chew”. This is a placebo as it does not contain an active ingredient. The ingredients, as set out at p 20, include Sweet Apple & Molasses Flavor (PC-0555) and PEG, NF 3350. The process used for mixing the components is described, including adding the wet granulation mix to a Formax FC machine (p 21, lines 16-17). A palatability study is described, with the conclusion that an embodiment of a soft chew of the present invention is palatable for a horse (p 23, lines 5-6). Example 1b is “Equine Soft Chew with Ivermectin”. Again, the ingredients are set out, the process for mixing the components is described and a palatability study is described, with the conclusion that an embodiment of a soft chew of the present invention, with an additive, is palatable for a horse. Example 2 is “Canine Soft Chew”. The ingredients, as set out at p 25, include fenbendazole granulation, praziquantel and ivermectin. The ingredients also include Artificial Beef Flavor (PC-0125) and PEG NF 3350. It is stated that a control soft chew was chosen for comparison of the palatability, namely the Interceptor 23 mg Flavor Tablet, prepared by Novartis Animal Health Co. This is described as a “direct compression product, 960 mg/tablet” (p 27). A palatability study is described, with the conclusion that the embodiment of the soft chew of the present invention “performed better than the control, was accepted at a greater percentage through free choice” (p 28).
The evidence indicates that the two examples are formulations developed by Pharma Chemie on behalf of Intervet Inc in the course of the Horse Project and the Dog Project.
The Patent Application contains 17 claims, the broadest of which is claim 1. The claims are in the following terms:
1.A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
2.The soft chew formulation according to claim 1 characterized in that the emulsifier is a polyethylene glycol.
3.The soft chew formulation according to claim 2 characterized in that the emulsifier is polyethylene glycol 3350.
4.The soft chew formulation according to any one of claims 1 to 3, wherein the soft chew formulation comprises between 0.1 to 50 percent wt of a flavouring component, between 5 to 60 percent wt of a starch component, between 5 to 75 percent wt of a sugar component and between 1 and 40 percent wt of an oil component.
5.The soft chew formulation according to any one of claims 1 to 4, characterized in that the pharmaceutical is selected from ivermectin, selamectin, milbemycin, fenbendazole, pyrantel pamoate, praziquantel, epsiprantel.
6.The soft chew formulation according to any one of claims 1 to 4, wherein the pharmaceutical is a macrolide anthelmintic.
7.The soft chew formulation according to claim 6, wherein the macrolide anthelmintic is ivermectin.
8.The soft chew formulation according to any one of claims 1 to 4, wherein the pharmaceutical is a benzimidazole.
9.The soft chew formulation according to any one of claims 1 to 8, comprising more than one pharmaceutical to control a parasite of a livestock or pet animal.
10.The soft chew formulation according to claim 9, comprising ivermectin, praziquantel and fenbendazole.
11.The soft chew formulation according to claim 9, comprising pyrantel pamoate and praziquantel.
12.A soft chew formulation for oral administration according to claim 1 and substantially as hereinbefore described with reference to any one of the examples and or figures.
13.A process for making a soft chew formulation according to any one of claims 1 to 12, said process comprising the steps of:
a.mixing a flavoring component, a starch component, a sugar component, an oil component, an emulsifier acting as a forming agent, and an additive into a dough;
b.heating the dough; and,
c.forming the soft chew with a knockout, such that the soft chew is not an extrudate.
14.A process for making a soft chew formulation said process according to claim 13, and substantially as hereinbefore described with reference to any one of the examples and or figures.
15.A soft chew formulation for oral administration made according to the process of claim 13 or 14.
16.Use of the formulation according to any one of claims 1 to 12 or 15 for the manufacture of a medicament for the control of internal parasites in livestock, pets and farm animals.
17.Use of the formulation according to any one of claims 1 to 12 or 15 for the manufacture of a medicament for the control of external parasites in livestock, pets and farm animals.
Claim 1 defines a soft chew formulation having the various features there set out. The organisms referred to include types of pets, farm animals and livestock. Claim 1 extends to a soft chew formulation comprising any pharmaceutical for the control of any parasite of any of a wide variety of domesticated animals having the identified classes of formulation components and features. The claim is, in effect, for a “delivery system”, to adopt a phrase used by Intervet in opening.
Claims 2 to 17 of the Patent Application are dependent on claim 1, in that they refer back to that claim and incorporate its features, for the purpose of defining the invention by reference to those and certain additional features which they set out.
In particular, claims 2 to 12 are dependent claims which, like claim 1, relate to soft chew formulations. They add various features relative to claim 1, such as by specifying ranges or options for particular components or ingredients. Claims 2 and 3 refer to PEG as the emulsifier. Claim 7 refers to ivermectin. Claim 10 refers to ivermectin, praziquantel and fenbendazole. Claim 12 is a so-called “omnibus” claim, being a claim defined by reference to any one or more of the examples or figures in the specification.
Claim 13 relates to processes of production of soft chew formulations of the kind earlier claimed, including specified steps. Claim 14 refers to the process described in claim 13 and the examples or figures. Claim 15 defines a soft chew formulation made by the use of such processes, and claims 16 and 17 are “Swiss type” claims that relate to the use of such formulations for the manufacture of a medicament for the control of parasites in animals.
Procedural matters
Merial’s notice of appeal was amended on a number of occasions. During closing submissions it was further amended to remove a number of grounds which it no longer pressed. The notice of appeal as so amended (titled fourth amended notice of appeal) contains two grounds of opposition, namely lack of entitlement and lack of inventive step. In closing submissions, Merial narrowed its lack of inventive step ground in the following way. In Merial’s outline of closing submissions, the lack of inventive step ground had been articulated as follows: “the alleged invention does not involve an inventive step because it was obvious in the light of the common general knowledge alone or when combined with the prior patent referred to as Christensen” (emphasis added). However, in oral closing submissions, senior counsel narrowed this ground by indicating that the words “alone or” could be treated as deleted.
During the course of the proceeding, Intervet was required to, and did, file a document setting out the matters it intended to raise in response to the allegation of lack of entitlement. This document contains five main propositions (set out in bold) and more detailed statements under each of those propositions. The five main propositions are:
(a)Intervet owns all of the rights in the invention the subject of the Patent Application by virtue of a written agreement between Pharma Chemie and Intervet;
(b)Intervet owns all of the rights in the invention the subject of the Patent Application by virtue of an implied term in the agreement between Pharma Chemie and Intervet;
(c)even if Merial proved that Pharma Chemie was entitled to part or the whole of the invention claimed in the Patent Application, the Court may still exercise its discretion to grant the patent;
(d)even if it were found that there is no discretion, or it was exercised against Intervet, Intervet could apply to amend the claims of the invention the subject of the Patent Application to address Mr Pieloch’s evidence;
(e)further or alternatively, Intervet could utilise other amendment and/or rectification procedures to obtain a granted patent.
The hearing

At the hearing, Merial led evidence from the following witnesses:
(a)Dr Jean-Luc Pougnas (a pharmaceutical expert);
(b)Ms Lydia Linfoot (a compounding chemist);
(c)Mr Mark Pieloch (the principal of Pharma Chemie at all material times, and one of the named inventors);
(d)Ms Susan Cady (the person at Intervet responsible for engaging Pharma Chemie in 2002/2003, and one of the named inventors);
(e)Dr Carl Johnson (who held the position of Director of Product Development and Regulatory Affairs – Pharmaceuticals at Intervet from June 2003);
(f)Mr Shane Walsh (a food science and manufacturing expert);
(g)Mr Thomas Kowalski (a lawyer acting for Merial in connection with the proceeding who gave expert evidence about US law);
(h)Mr Rodney Cruise (who gave evidence about intellectual property research);
(i)Mr Grant Fisher (a solicitor).
Neither Mr Cruise nor Mr Fisher was required to attend for cross-examination.
Intervet led evidence from the following witnesses:
(a)Mr John Surawski (a food science and manufacturing expert);
(b)Mr Matthew Blackburn (an independent expert on US law);
(c)Dr Karin Stumm (who holds the position, Patent Counsel, Intellectual Property Group Animal Health MSD – Office of General Counsel, at Intervet, based in Boxmeer, the Netherlands).
The following witnesses gave evidence by video-link: Mr Pieloch, Ms Cady, Dr Johnson and Mr Blackburn. In relation to the video-link evidence generally, the quality of the picture and the sound was very good, with no transmission issues. In relation to the cross-examination of Mr Pieloch (and the other witnesses examined by video-link), there were no difficulties of the kind referred to by Middleton J in Intervet International B.V. v Merial Inc [2016] FCA 1030 at [57].
Joint reports were prepared by the two experts dealing with the development of pet food products (Mr Walsh and Mr Surawski) and the two experts dealing with US law (Mr Kowalski and Mr Blackburn). The evidence of these experts was dealt with concurrently at the hearing, with some additional cross-examination taking place separately.
I make the following observations about the witnesses who gave evidence at the hearing:
(a)Mr Pieloch was, in my view, a very good witness. He was independent of both parties. He expressed himself clearly and demonstrated a mastery of the subject-matter of his evidence. He had a good recollection of the substantive matters about which he gave evidence. Where he could not recall something, he said so. His evidence is supported by a detailed letter he prepared close to the time of the relevant events, and by the contemporaneous documents. In light of these matters, I consider Mr Pieloch to be a reliable witness and accept his evidence. Where there is a difference between the evidence in his affidavits and his oral evidence during the hearing, I prefer the latter, as the affidavits were prepared by lawyers in their language rather than in Mr Pieloch’s own words.
(b)Ms Cady worked for Intervet Inc at the relevant time but now works for Merial. However, I do not think this affected the answers she gave in evidence. She made concessions during cross-examination which bolstered the credibility of her evidence. I consider her to be a reliable witness and accept her evidence.
(c)Dr Johnson worked for Intervet Inc at the relevant time but subsequently worked for Merial. However, I do not think this affected the answers that he gave in evidence. I consider him to be a reliable witness. He was not directly involved in the relevant events and therefore his evidence is less important than that of the other witnesses. To the extent that his evidence bears on the issues, I accept his evidence.
(d)Dr Stumm was not involved in the relevant events. Her evidence was directed to subsequent events; in particular, the searches Intervet has undertaken for relevant documents. I consider Dr Stumm to be a reliable witness and accept her evidence.
(e)Mr Kowalski, one of the expert witnesses on US law, was not an independent witness in that he has acted for Merial since 1997 and was involved in the preparation of Mr Pieloch’s affidavit evidence in this proceeding. I am concerned that this lack of independence may have affected his evidence; his presentation at times appeared to be an exercise in advocacy. I therefore generally prefer the evidence of Mr Blackburn, the expert retained by Intervet, to that of Mr Kowalski, to the extent that there were differences in their evidence.
(f)Dr Pougnas, Mr Walsh and Mr Surawski were very good witnesses, demonstrating a command of the material about which they gave evidence. Ms Linfoot’s evidence was of a confined nature and ultimately not of assistance in the resolution of the issues to be determined.
Lack of entitlement
The issue
The issue in relation to lack of entitlement may be briefly stated as follows. Merial contends that Intervet is not entitled to the grant of a patent for the alleged invention in the Patent Application on the basis that it does not derive title to the alleged invention from Mr Pieloch, who Intervet admits is an “actual inventor” of the alleged invention. Intervet’s primary contention in response is that there was a written agreement providing for the assignment of rights from Pharma Chemie to Intervet in any invention that resulted from the Horse Project and Dog Project. In the alternative, Intervet submits that a term is to be implied into the agreement or agreements between Intervet and Pharma Chemie providing for Intervet to own all intellectual property rights that arose during the course of the Horse Project and the Dog Project.
In considering these issues, I will proceed on the assumption that Pharma Chemie was the employer of Mr Pieloch and that, as a consequence, it was entitled to any relevant rights of Mr Pieloch. Merial did not make any detailed submissions to the contrary. I will also proceed on the assumption that, if there was an assignment of relevant rights from Pharma Chemie to Intervet Inc, then Intervet Inc has assigned or could assign such rights to Intervet. Merial did not make any detailed submissions to the contrary. The parties generally approached the matter on the basis that no distinction needed to be made between Intervet and Intervet Inc.
Applicable principles
As is apparent from the text of s 59(a) of the Patents Act, a ground of opposition is made out if the applicant for the patent is either:
(a)not entitled to a grant of a patent for the invention; or
(b)entitled to a grant of a patent for the invention but only in conjunction with some other person.
In either case, a ground of opposition leading to the refusal of the patent application is made out. This reflects the principle, which is well established by the case law, that where there is more than one inventor of an invention, an applicant’s title must be derived from each of them, because a patent cannot be granted to only one of two or more inventors or the successor in title of such a person: see Stack v Davies Shephard Pty Ltd (2001) 108 FCR 422 at [13], [21] per Whitlam, Sundberg and Dowsett JJ.
The concept of entitlement is dealt with in s 15 of the Patents Act, which relevantly provided that a patent for an invention may only be granted to a person who (a) is the inventor; (b) would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or (c) derives title to the invention from the inventor or a person mentioned in (b). In University of British Columbia v Conor Medsystems, Inc (2006) 155 FCR 391, Emmett J said (at [37]) that s 15 specifies no formalities as being necessary for an applicant to be effectively the assignee of the invention from the inventor; s 15 specifies no formalities as being necessary for the derivation of title to an invention from an inventor or from a person who, on the grant of a patent, would be entitled to have the patent assigned; and, while an assignment in writing may be preferable, in order to avoid difficulties of proof, an assignment might be effected orally or may even be implied from the conduct of the parties. See also at [54] per Stone J, and at [101] per Bennett J. See also Speedy Gantry Hire Pty Ltd v Preston Erection Pty Ltd (1998) 40 IPR 543 at 550 per Emmett J. In the University of British Columbia case, Emmett J also said (at [39]-[40]):
39… Patents are the creature of statute, and rights in relation to patents, and inchoate rights in relation to inventions that might be the subject of a patent, must depend upon the statute under which their existence is recognised. If the statute treats an invention, or the right to apply for a patent in respect of the invention, as something that is capable of assignment, alienation or disposition, it is necessary to recognise any juridical act or conduct that might give effect to such an assignment, disposition or alienation.
40It may not take very much to constitute an act or conduct that constitutes such an assignment, disposition or alienation or that gives rise, by implication, to such an assignment, alienation or disposition …
It appears to be common ground that, where the basis for derivation of title is an agreement governed by the law of another country, regard is to be had, at least to some extent, to the proper law of the contract.
Findings of fact
In this section of these reasons, I make findings of fact in relation to the lack of entitlement issue, based on the affidavit and oral evidence and documentary evidence.
The period January 2002 to July 2003
At all relevant times, the Intervet group (of which Intervet and Intervet Inc were members) was owned by Akzo Nobel NV. During the period 2001 to 2002, the Intervet group business underwent integration with Hoechst Roussel Vet, which Akzo Nobel NV had acquired in 1999. The Intervet group was acquired by Schering Plough in 2007, and the animal heath activities carried out by the Intervet group business were integrated into the existing animal health business of Schering Plough.
In 2002-2003, the Intervet group’s research and development activities in the United States (other than those of Ms Cady) were carried out by Intervet Inc at a site in Millsboro, Delaware. Intervet Inc’s legal team and patent department were also located in Millsboro, Delaware.
In 2002-2003, Ms Cady worked at an office in Flemington, New Jersey, near the former research and development site of her former employer, Hoechst Roussel Vet. Ms Cady’s role included overseeing the development of formulations for potential commercialisation. Ms Cady did not have a laboratory at the office where she worked. She therefore arranged to have work done by others, outside the company. She had a staff of one or two assisting her with the oversight of external work.
At all relevant times, Pharma Chemie was based in Syracuse, Nebraska and Mr Pieloch was the sole owner of the company. Pharma Chemie had about 30 staff and carried on a number of distinct businesses; five of these were related to companion animal health and one was related to human health. By 2002, Pharma Chemie had developed special flavours for animal products, which it considered to be ‘proprietary’ technology; the flavours were protected as trade secrets rather than by way of patents. Pharma Chemie’s major ‘selling point’ was that it could produce products that were highly palatable for animals. Pharma Chemie manufactured private label supplements that were sold under other companies’ names. Pharma Chemie was sometimes engaged by companies to help them develop a formulation. It was also sometimes engaged to manufacture a formulation that another company had already developed.
In early 2002, Ms Cady contacted Mr Pieloch in relation to the development of formulations for animals. They had worked together before on other projects. Later in these reasons, I refer to Mr Pieloch’s letter dated 6 October 2003. It is convenient to note at this point that in the 6 October 2003 letter, Mr Pieloch stated:
In early 2002, Susan Cady contacted me to ask if Pharma Chemie had the ability to develop a palatable “Soft Chew” dosage form for companion animals – dogs, cats, or horses. I had told her that Pharma Chemie did possess the palatable “Soft Chew” technology to develop for Intervet a palatable “Soft Chew” product, that would use one or two Pharma Chemie flavor bases as follows:
Artificial Powdered Beef Flavor: PC-0125 for dogs and cats
Sweet Apple and Molasses Flavor: PC-0555 for horses
Susan Cady from Intervet asked that I prepare a development proposal for Intervet … to develop an Ivermectin Soft Chew for Horses, which I did on January 16, 2002. Pharma Chemie received approval for this project from Intervet via fax on January 28, 2002.
During cross-examination, Mr Pieloch adopted the account of matters contained in his letter dated 6 October 2003. He also said in relation to Ms Cady’s request in early 2002:
Her request was just like all previous requests that I had worked with her for all the previous years. We would take our existing technology and incorporate their active ingredient or active ingredients to produce a commercially-viable product and that’s what we did.
I accept the evidence of Mr Pieloch set out in the previous paragraph and the description of the initial approach by Ms Cady set out in his letter dated 6 October 2003. This evidence was not contradicted by Ms Cady and is consistent with the contemporaneous documents, including the development proposal for the Horse Project and the product development report dated 29 April 2002 for the Dog Project, referred to below.
Ms Cady said during cross-examination that she contacted Mr Pieloch because he had flavours that were very palatable for animals. She also said that Mr Pieloch was willing to work with all of the animal health companies with formulations so that they would use his flavours; once a company used his flavour in its formulation, the company would buy the flavour commercially as long as that product was sold, as there would be no substitute for it. I accept this evidence.
On 16 January 2002, Pharma Chemie provided a proposal to Intervet Inc for (what became) the Horse Project. The proposal (a two-page document) is in evidence. The proposal was accepted by Ms Cady on behalf of Intervet Inc on 24 January 2002 and a copy of the accepted proposal was faxed to Mr Pieloch at Pharma Chemie on 28 January 2002. The proposal described the project as: “Development of an Ivermectin Soft Chew for Horses”. The proposed cost was $40,000 to $148,000. The “Development Plan” for the project, as set out in the proposal, was as follows:
This project has as a goal the development of an Ivermectin Soft Chew for Horses, each Soft Chew containing one specific strength of Ivermectin per Soft Chew. This development project will be divided into five different stages as follows.
The first stage included installation, training and qualification of a Formax F6 Forming Machine and a Texture Technologies Texture Analyzer. As set out in the proposal, this stage included the following work:
Preparation of exploratory formulas incorporating the “Chewable Flavor Tablets” technology into Ivermectin Placebo Soft Chews for Horses. This stage will involve the preparation of a minimum of 20 test formulas to “debug” the new equipment to produce acceptable Soft Chews for Horses. Numerous formulas and processing factors will be evaluated during this stage of development.
The Horse Project was carried out by Pharma Chemie during 2002-2003. As noted above, the proposal for the Horse Project refers to a Formax machine. Ms Cady said during cross-examination that Intervet bought the Formax machine and installed it in Mr Pieloch’s facility; when the work was finished, the machine was brought back to Intervet. I accept this evidence.
Also in 2002, Intervet Inc engaged Pharma Chemie to carry out the Dog Project. The evidence does not include a project proposal of the type described above in relation to the Horse Project, but it does include several product development reports in relation to the Dog Project. Three of these, which were annexed to Dr Stumm’s affidavit dated 24 June 2016, are dated 29 April 2002, 23 September 2002 and 23 July 2003. Some additional reports were tendered during cross-examination. In the product development report dated 29 April 2002, the objective is described as follows:
To determine the commercial feasibility of developing a Ivermectin / Praziquantel / Fenbendazole (I/P/F) Soft Chew for dogs. The I/F/P Soft Chew product should be a highly palatable product in dogs with palatability equal to or greater than Novartis’ Interceptor Flavor Tablets. To accomplish this objective, Pharma Chemie will develop a highly palatable canine chewable tablet incorporating Pharma Chemie’s Artificial Powdered Beef Flavor (Product Code PC-0125). Pharma Chemie’s Artificial Powdered Beef Flavor is a highly aromatic and palatable flavour concentrate for use in dogs.
The section of the document headed “Development Plan” included the following description of stage one of the project:
Preparation of exploratory formulas incorporating the “Chewable Flavor Tablets” technology into I/P/F Placebo Soft Chews for dogs. This stage will involve the preparation of a minimum of twenty (20) different formulations of test products. Once these formulations are produced, the best four formulations will undergo palatability testing in dogs. …
Mr Pieloch estimated that Pharma Chemie was paid approximately $300,000 for the Horse Project and the Dog Project. I accept this evidence.
The period August 2003 to October 2003
On 13 August 2002, the First US Provisional Application was filed. Mr Huron, Ms Cady and Mr Pieloch were named as the inventors. The document indicates that it was prepared by the Akzo Nobel Patent Department, Intervet Inc, Millsboro, Delaware. The document was signed by William P Ramey III (Mr Ramey), a patent attorney working at Intervet Inc. The title of the invention is “Novel Compositions and Processes for Delivering an Additive”. There were six claims. Claim 1 was: “A Cookie comprising a starch component, a sugar component, an oil component, and an additive”. The section dealing with the background to the invention stated that chewable dosage forms for drug delivery were well known to pharmaceutical technology; chewables had found wide acceptance for delivery of medication to dogs; however, no such product existed for horses. The specification included an example which was a placebo experiment in relation to horses.
On 16 December 2002, the Second US Provisional Application was filed. Mr Huron, Ms Cady and Mr Pieloch were named as inventors. The title was the same as the First US Provisional Application. It was prepared by the Akzo Nobel Patent Department, Intervet Inc, and signed by Mr Ramey on behalf of Intervet Inc. There were 12 claims. Claim 1 was: “A soft chew comprising a starch component, a sugar component, an oil component, and an additive”.
On 13 August 2003, the PCT Application was filed. The application claimed priority to the First US Provisional Application and the Second US Provisional Application. The applicants (for all designated States except US) were Akzo Nobel and Ms Cady. Mr Huron was named as the inventor/applicant (for US only). Mr Ramey was named as the agent. The title of the invention was: “Compositions and process for delivering an additive”. There were 17 claims. Claim 1 was in the following terms:
A soft chew comprising a flavoring component of between about 0.1 to about 50 percent, a starch component of between about 5.0 to about 60 percent, a sugar component of between about 5.0 to about 75 percent, an oil component of between about 1.0 to about 40 percent, and a first additive wherein the moisture content is less than about 15 percent and wherein the soft chew is formed by knockout, the soft chew is not an extrudate.

Ms Cady accepted during cross-examination that she agreed to be named as an inventor on the First and Second US Provisional Applications and the PCT Application and that she signed an inventor’s declaration in relation to those applications. However, neither her affidavit nor oral evidence contained any description of scientific work done by her in relation to the alleged invention.
On 22 August 2003, Mr Ramey wrote to Mr Pieloch. A copy of the letter is in evidence (forming part of Ex A38). The letter was in the following terms:
Dear Mark,
As I informed you in our telephone conversations, enclosed is a copy of a declaration attached to the specification and a separate copy of the specification for a patent application covering the soft chew technology. Please review the specification and sign the declaration, express mailing it back to my office at the address below within five days of receiving this letter. Should you have any questions, please feel free to contact me at 302 933 4034.
Sincerely,
[signed]
William P. Ramey III
(Emphasis added.)
A question arises as to which specification was enclosed with Mr Ramey’s letter dated 22 August 2003, that is, whether it was the First US Provisional Application, the Second US Provisional Application or the PCT Application. I discuss this issue below.
I note that Mr Ramey described the patent application as covering “the soft chew technology”. As discussed below, Mr Pieloch expressed himself (both in his evidence and in the letter dated 6 October 2003, referred to below) in similar terms.
On or about 16 September 2003, Wendy Marsh (Ms Marsh), a lawyer at McKee, Voorhees & Sease, PLC, acting for Pharma Chemie, and based in Des Moines, Iowa, sent a letter of that date to Mr Ramey. The letter was headed “Re: Patent Application Entitled: ‘Novel Compositions and Processes for Delivering an Additive’”. The letter was in the following terms:
Dear Mr. Ramey:
Our firm represents Pharma Chemie Inc. (“Pharma Chemie”) with respect to its intellectual property matters. Mark Pieloch recently forwarded us your letter of August 22, 2003 for response.
It is our client’s position that Pharma Chemie invented the soft chew technology as described in the above-referenced patent application in 1992, and continued its work on the technology through the 1990’s and into the new millenium [sic]. All of the work on this technology was completed prior to Pharma Chemie’s entry into the Manufacturing and Supply Agreement with Intervet in 2002. Pharma Chemie also invented the manufacturing procedure described in the patent application cited above, and provided Formax with this information well prior to its entry into the development agreement with Intervet in 2002.
Pharma Chemie is therefore the owner of the technology described in the above-referenced patent application, not Intervet. For this reason, Mr. Pieloch will not agree to sign the Declaration and Power of Attorney for this application. In fact, our client has already taken steps to patentably protect its own improved soft chew invention unrelated to its contract with you.
Our client has provided us with a copy of the Pharma Chemie/Intervet Inc. 2002 Manufacturing and Supply Agreement. This Agreement relates to the joint development of a veterinary pharmaceutical product that includes the Pharma Chemie soft chew and Flavor Base proprietary technology. It does not, however, confer ownership of the soft chew technology to Intervet. Instead, paragraphs 1.4 and 9.3 provide that only veterinary pharmaceutical product “developed and manufactured by Intervet Inc., which incorporates the [Flavor Base] and which Intervet Inc….will market and sell worldwide” shall be assigned to Akzo Nobel NV. Neither Pharma Chemie nor Intervet’s patent applications require the inclusion of the Flavor Base, nor is there evidence that the claimed products will be marketed and sold worldwide by Intervet. For these reasons, Intervet cannot claim ownership of the subject matter of either of these applications.
We trust this resolves the matter and that you will rethink whether you are legally entitled to file on technology not invented by your folks. Please feel free to contact me with any questions.
Very truly yours,
[signed]
WENDY K. MARSH
(Emphasis added.)
The Manufacturing and Supply Agreement referred to in the letter is not in evidence. Despite extensive searches by Intervet, it cannot be located. During cross-examination, Mr Pieloch said he could not recall the Manufacturing and Supply Agreement referred to in Ms Marsh’s letter. I note that the letter states in the fourth paragraph that the agreement “relates to the joint development of a veterinary pharmaceutical product that includes the Pharma Chemie soft chew and Flavor Base proprietary technology”. On the basis of this description, I infer that the agreement referred to as the Manufacturing and Supply Agreement related to the development projects referred to in these reasons as the Horse Project and the Dog Project (rather than to some other subject matter such as the manufacture and supply of the flavouring components). I note also that in the last sentence of the second paragraph, the letter refers to “the development agreement”. This would appear to be a shorthand description of the Manufacturing and Supply Agreement referred to earlier in that paragraph (rather than a reference to a different agreement), thus supporting the inference that the agreement related to the development projects referred to in these reasons as the Horse Project and the Dog Project.
In the third paragraph of the letter, Ms Marsh stated that her client had already taken steps to patentably protect its own improved soft chew invention. During cross-examination, Mr Pieloch said that, notwithstanding his view that the soft chew technology could be readily produced by people skilled in the art, he did file a patent application after discussing the matter with Ms Marsh. He said that the application was refused by the United States Patents and Trademarks Office (USPTO) on the basis that people skilled in the art would easily be able to produce it. I note that in the penultimate paragraph of the letter, Ms Marsh referred to “either of these applications”. This would appear to be a reference to Intervet Inc’s patent application and the application filed by Pharma Chemie (rather than indicating that Mr Ramey had sent Mr Pieloch copies of two patent applications).
On or about 22 September 2003, Mr Ramey filed in the United States a petition under 37 CFR §1.47. The application cited the serial number for the PCT Application, filed on 13 August 2003, and described the invention as “Novel Compositions and Processes for Delivering an Additive”. The document stated that the applicants were filing the petition “for an inventor who refuses to sign”. It was stated that Mr Pieloch, a joint inventor, had refused to execute a declaration for the above application. A statement of relevant facts followed. This referred to the filing of the First US Provisional Application by Mr Ramey in August 2002 and stated: “Through due diligence and a reasonable inquiry, during the drafting of the application, Mr Ramey determined that the inventorship consisted of Sebastien Huron, Susan Cady and Mark Pieloch. Mr Ramey spoke with each inventor about the application being filed …”. It was then stated that: at or about the one year anniversary for claiming priority, the applicants’ attorney (Mr Ramey) filed the PCT Application; the applicants were able to obtain the signatures of all the inventors except Mr Pieloch; Mr Ramey communicated with Mr Pieloch about signing the declaration; Mr Pieloch responded that he would need to check with his attorney; on 22 August 2003, Mr Ramey sent a certified letter to Mr Pieloch, requesting that he review the patent application accompanying the letter, sign the declaration and return the signed declaration within five days of receipt; as at 22 September 2003, a signed copy of the declaration had not been received by the Akzo Nobel Patent Department or Mr Ramey. An accompanying declaration of Mr Ramey, dated 22 September 2003, also stated that, as at that date, neither Mr Pieloch nor his attorney had attempted to communicate. No reference was made to Ms Marsh’s letter dated 16 September 2003. It is not clear on the evidence whether it had been received by 22 September 2003.
On or about 20 October 2003, Ms Marsh on behalf of Pharma Chemie sent another letter to Mr Ramey. The letter was headed: “Re: Patent Application Entitled ‘Novel Compositions and Processes for Delivering an Additive’; Copies of Petition Under 37 CFR §1.47 Filed with Patent and Trademark Office” and was in the following terms:
Dear Mr. Ramey:
Our client forwarded us the above-referenced petition for an inventor who refuses to sign. As explained in our letter of September 16, 2003, Mr. Pieloch will not sign the Declaration and Power of Attorney for this application since Pharma Chemie, not Intervet, invented its subject matter.
We note in your petition and sworn statement that was apparently submitted to the PCT that, as of September 22, 2003, neither Mr. Pieloch nor his attorney had attempted to communicate with you. However, this statement is obviously not true in view of our September 16th letter. We trust you will be promptly informing the U.S. receiving office of this communication.
Since Intervet did not invent the subject matter of the above-referenced patent application, any U.S. patent application filed by Intervet on this technology (if one has not been filed already) will be unpatentable under 35 U.S.C. §102(f). Attached please find evidence proving Mark Pieloch as the inventor of the soft chew formulation described in your application. The active ingredients of the formulations have been blacked out, but not their concentrations, so you can readily ascertain the concentrations of inactive ingredients, including the “starch component”, “sugar component”, “oil component”, and a “first additive” whereby the moisture content is less than about 15%. If a U.S. application is (or has already been) filed, under 37 C.F.R. §1.56, you will be obligated to disclose this evidence to the Patent Office as it is all material to the patentability of the Intervet application. Please note that this information must be treated as confidential according to the terms of the confidential disclosure agreement of the parties dated October 16, 2001, except for purposes of meeting your duty of disclosure under Rule 56.
Very truly yours,
[signed]
WENDY K. MARSH
(Emphasis added.)
Ms Marsh’s letter attached a four-page letter from Mr Pieloch to her dated 6 October 2003, together with an eight-page summary of the attachments to that letter and 19 attachments. The subject of Mr Pieloch’s letter was: “Collaborated Documentation of Pharma Chemie’s Soft Chew Product Development Activities from 1992-2002”. The first paragraph of the letter stated in part:
This letter with its numerous attachments is just a small sampling of documentation that is being provided to you to document the fact that the “Soft Chew” technology was developed not by Intervet in 2002, but was well developed by Pharma Chemie in numerous forms starting in 1992 and continuing to this day.
Mr Pieloch’s letter contained a chronological summary of certain matters and then stated (at p 3):
Thus, I have attempted to present a chronological history of collaborated “Soft Chew” product development activities, which clearly shows that Pharma Chemie possessed the “Soft Chew” technology prior to any development work being undertaken by Pharma Chemie for Intervet in the spring of 2002.
Mr Pieloch’s letter also referred (on p 3) to “Intervet’s US Patent Application, Serial Number: PCT/US03/25358”, which is the number for the PCT Application, and made some observations about the patent application. Mr Pieloch was cross-examined extensively on the attachments to his letter dated 6 October 2003. I refer to this evidence later in these reasons.
The evidence does not include any response from Mr Ramey or Intervet Inc to Ms Marsh’s letters dated 16 September 2003 and 20 October 2003. Based on the evidence as a whole, it is to be inferred that no response was sent. Despite extensive searches by Intervet, no response letter has been produced. Further, as discussed below, in 2005 Intervet Inc filed documents with the USPTO which referred specifically to Ms Marsh’s letter dated 20 October 2003 and the enclosed documents. Those filings did not refer to any letter in response. Had a response been sent, it is likely that it would have been referred to as well.
As noted above, there is a question whether the specification enclosed with Mr Ramey’s letter dated 22 August 2003 was the First US Provisional Application, the Second US Provisional Application or the PCT Application. The headings to Ms Marsh’s two letters state that the patent application is entitled “Novel Compositions and Processes for Delivering an Additive”. That is the title of the US Provisional Applications; the title on the PCT Application is slightly different, namely “Compositions and Process for Delivering an Additive”. This may suggest that one or both of the US Provisional Applications was sent to Mr Pieloch (and passed on to Ms Marsh) rather than the PCT Application. However, for the following reasons, I think it is clear that the PCT Application was provided by Mr Ramey to Mr Pieloch (and provided by Mr Pieloch to Ms Marsh). First, on page 3 of Mr Pieloch’s letter dated 6 October 2003, he referred to “Intervet’s US Patent Application, Serial Number: PCT/US03/2538”. Notwithstanding the reference to a US patent application, the reference to the serial number of the PCT Application suggests that a copy of the PCT Application was provided to Mr Pieloch. During cross-examination, Mr Pieloch was taken to the First US Provisional Application, the Second US Provisional Application and the PCT Application. He said he did not recall which of these he looked at in 2003. In re-examination, he was taken to page 3 of the 6 October 2003 letter (which, as noted above, referred to Intervet’s US patent application, serial number PCT/US03/25358). Mr Pieloch said that he believed Mr Ramey sent him the PCT Application and this is where he obtained this number. Secondly, Ms Marsh’s letter dated 20 October 2003 (set out in [78] above) stated in the third paragraph that evidence was attached “proving Mark Pieloch as the inventor of the soft chew formulation described in your application”. In reference to that evidence, Ms Marsh stated: “…so you can readily ascertain the concentrations of inactive ingredients, including the ‘starch component’, ‘sugar component’, ‘oil component’, and a ‘first additive’ whereby the moisture content is less than about 15%”. These are elements of claim 1 of the PCT Application, indicating that she was in possession of that application. Further, I note that the statement of relevant facts in Mr Ramey’s petition dated 22 September 2003 refers to sending the proposed declaration to Mr Pieloch after referring to the filing of the PCT Application, which is consistent with Mr Ramey having sent Mr Pieloch the PCT Application. For these reasons, I think it is clear that the PCT Application was provided by Mr Ramey to Mr Pieloch. The use of the title of the US Provisional Applications in the headings on Ms Marsh’s letters is explicable on the basis that Mr Ramey used that title in the documents he provided, such as the petition dated 22 September 2003 and the declaration and power of attorney for patent application.
On 28 October 2003, Mr Ramey on behalf of Intervet Inc or Akzo Nobel NV filed a petition under 37 CFR §1.425 with the US Receiving Office for the Patent Cooperation Treaty in connection with the PCT Application. (It appears from this petition that the earlier petition, dated 22 September 2003, was dismissed as moot because an actual inventor had been left off the original request.) The 28 October 2003 petition was generally in similar terms to the earlier petition. The petition stated that a joint inventor, Mr Pieloch, had “refused to execute a declaration for the above referenced application”. It stated that “As of September 22, 2003, a signed copy of the declaration has not been received by the Akzo Nobel Patent Department or Applicants’ attorney”. The petition did not refer to Ms Marsh’s letters dated 16 September 2003 and 20 October 2003.
Whether Pharma Chemie had already developed the soft chew technology
It is convenient to deal now with the scope of the Horse Project and the Dog Project and whether or not Pharma Chemie had already developed the soft chew technology described in the relevant patent applications before it was engaged by Intervet Inc to carry out those projects. The expression “soft chew technology” was not given a precise meaning in the evidence, but the general tenor of the evidence was that it refers to the know-how to produce an oral formulation with a soft and chewy texture. Both Mr Pieloch and Ms Cady were directly involved in the engagement of Pharma Chemie by Intervet Inc to carry out the Horse Project and the Dog Project. I will deal first with Mr Pieloch’s evidence as he had a much more detailed recollection of the relevant events. Unless otherwise indicated, I refer to the evidence Mr Pieloch gave during cross-examination.
(a)Mr Pieloch said on several occasions during his evidence that his company, Pharma Chemie, had developed “soft chew technology” before being approached by Intervet in 2002. For example, he said, in reference to his letter dated 6 October 2003 and the attachments to that letter:
I thought the documentation I provided was more than sufficient, showing that myself, Mark Pieloch, and my company, Pharma Chemie, developed initial soft chew technology long before Intervet ever contacted us. That was the reason why Susan Cady contacted me to develop a soft chew dosage form for them because we had the technology. We had the know-how. Same thing for developing a chewable tablet dosage form. We had the technology. We had the know-how. We produced hundreds of companion animal health products using that chewable tablet technology. We had other NADA products approved using that chewable tablet technology and so, when Susan Cady contacted me, she was contacting me because she knew I had the expertise.
(b)Further, Mr Pieloch said:
I was not paid by Intervet to develop the dosage form. I was paid by Intervet to incorporate their active ingredients using our soft-chew technology.
(c)Mr Pieloch said that Intervet wanted Formax as their equipment of choice and so Pharma Chemie had to experiment with the new Formax machine, as previously he had had experience with other manufacturers’ equipment.
(d)Mr Pieloch said on several occasions that, because he considered the soft chew technology to be pre-existing technology and readily known to people skilled in the area, he was “shocked” by Intervet’s patent application (being the application sent to him by Mr Ramey in August 2003). For example, he said:
I can tell you I was totally shocked by Intervet saying that they were going to patent the soft chew technology … [W]e started developing it in 1992 and had continuously worked on it for 10 years and actually had it already perfected and then Intervet approached me. We did the work for them as they had requested and then, out of nowhere, they sent us this patent application which, to me, was totally bogus. It’s a perfect example of a large corporation trying to steal the technology of a small business and that can happen in the United States and it can happen anywhere in the world.
(e)Mr Pieloch said that he called Ms Cady after receiving the patent application from Mr Ramey, and she said she was also shocked but it was beyond her hands as it was another department. (Mr Pieloch was not challenged on this evidence and Ms Cady did not give evidence as to whether or not she said this.)
(f)Mr Pieloch said that, although he is not a lawyer or patent attorney, in his view the patent application sent to him by Mr Ramey “as it was written showed that they were basically taking my soft [chew] technology and were trying to patent it”.

I now turn to consider what information, if any, fell within s 7(3) of the Patents Act. It was contended by Merial that Christensen fell within s 7(3)(a) as a “single piece of prior art information” being “information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, [and] regarded as relevant”. Christensen constituted “prior art information” as it was information that was part of the “prior art base”, being information in a document that was publicly available (in or out of the patent area) as at 13 August 2002. The question, then, is whether it was information that the skilled person could, as at 13 August 2002, be reasonably expected to have ascertained, understood and regarded as relevant. I have concluded, above, that the person skilled in the relevant art is a person or notional research team combining expertise in pet food development and pharmaceutical formulation. Mr Walsh stated in his first affidavit that (if he had been carrying out the development task described in his affidavit) he would have had access to the current pet technology in the field; as a matter of course, he would have had patent searches done for products that were similar to the product he had been asked to create; he would look at the patents and patent applications revealed in those searches and would see what could be used from them, and also see whether there might be any formulations or processes that would need to be avoided; he would have asked a specialist patent searcher to conduct patent searches. Mr Walsh also stated in his first affidavit that he was asked to describe the patent searches that he would have undertaken before 13 August 2002 as part of the development process described in his affidavit. He set out the search terms he would have used for initial searches. These included “semi-moist”. He described his interactions with Mr Cruise (who conducted the searches) and the abstracts he reviewed. Mr Walsh stated that, after he reviewed the abstracts, he identified the results which he thought were relevant to formulating a soft chew product. The annexed list of such abstracts included the patent referred to in these reasons as Christensen (the title of which is “semi-moist oral delivery system”). Mr Walsh stated that he found Christensen to be of particular interest; and that this patent provides a formulation for a soft chew for delivering active ingredients. It is apparent from Christensen that it describes a soft chew formulation for delivery of an active ingredient: see column 1, line 51 (“soft chewable oral delivery system”); column 5, last line (“in a chewable form”) and claims 1 and 23 (“soft and chewy texture”).
Mr Surawski said during cross-examination that conducting searches of literature was something that he had done before August 2002; it was something that a scientist would do on a regular basis, in order to seek out information needed. He said that, quite often, he would not actually carry out the search himself but would ask a specialist to do so. He accepted that scientific publications and patents were potentially useful sources of information on matters of the kind discussed in his affidavit. He accepted that he would have used the term “semi-moist” as a search term. In relation to Christensen, Mr Surawski said that he would reasonably expect Christensen to have turned up in a search if he was searching patent literature before August 2002. Mr Surawski stated in his affidavit, in relation to Christensen, that while he may have initially identified this document to be relevant had it been in a list of search results, on reading the document more completely it did not provide anything new or outside of what he already knew, and he would not have considered it further as a result. In particular, he stated that it does not say anything about animal palatability, which in his view would be a major concern. He said during cross-examination: “I guess my reaction to this would have been I know all this and I know how to do it better; that’s the way I would – having read that”.
On the basis of the evidence of Mr Walsh and Mr Cruise, I find that Christensen is a document that the skilled person could, before the priority date, be reasonably expected to have ascertained, understood, and regarded as relevant. I accept the evidence of Mr Walsh and Mr Cruise, summarised in [171] above, as regards searches. It is likely that Christensen would have been ascertained had those searches been carried out. I accept Mr Walsh’s evidence, set out in [171] above, that he would have considered Christensen to be of particular interest to the development task described in his affidavit. Notwithstanding Mr Surawski’s evidence that he would not have considered it to be telling him anything he did not already know, I conclude that the skilled person would have regarded Christensen as relevant, as it describes a soft chew formulation for delivery of an active ingredient. I note that the Delegate reached the same conclusion.
Whether the alleged invention was obvious
Under s 7(2) of the Patents Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in light of the common general knowledge (as it existed in the patent area before the priority date of the relevant claim), whether that knowledge is considered separately or together with the information mentioned in s 7(3). (As explained in [41] above, it is unnecessary in the present case to consider the common general knowledge separately from the s 7(3) information.) I have concluded, above, that the person skilled in the relevant art is a person or notional research team combining expertise in pet food development and pharmaceutical formulation. The common general knowledge has been set out above. I have also concluded, above, that Christensen constitutes information as described in s 7(3).
Both parties approached the question whether the invention was obvious on the basis of the reformulated “Cripps question” as discussed in Alphapharm. Merial submitted that this formulation is not the only test for assessing obviousness, but its written closing submissions were largely framed in terms of the reformulated Cripps question.
Consistently with the approach of the parties, I will address obviousness on the basis of the reformulated Cripps question as discussed in Alphapharm. As adapted to the facts and issues in the present case, the question may be expressed as: would the skilled person or notional research team, at 13 August 2002 and in all the circumstances, which include the common general knowledge considered together with Christensen, directly be led as a matter of course to try the invention in each claim in the expectation that it might well produce a useful alternative to or better formulation than the prior art?
The primary witnesses in relation to obviousness were Dr Pougnas, Mr Walsh and Mr Surawski. Each of them was asked to address how they would have gone about a notional development project. The task was not expressed in the same terms in each case. Dr Pougnas was asked to assume that he had been asked to develop a soft chew medicament for animals using only knowledge that he had before 13 August 2002. To similar effect, Mr Walsh was asked to explain how he would have gone about developing a soft chew formulation for delivery of an active ingredient to animals before 13 August 2002. However, the question posed for Mr Surawski used the words “semi-moist” rather than “soft chew”. He was asked to consider how he would have gone about producing a semi-moist product if it were being used for the purpose of delivering a veterinary active ingredient to an animal, had he been asked to do so before August 2002. Although none of the experts was a proxy for the skilled person or notional research team described in [157] above, the evidence given by each expert in relation to the notional development project is nevertheless of assistance.
One of the aspects of the evidence which is worth noting is that the evidence does not make clear whether there was a problem with existing soft chew medicaments and, if so, what the problem was. As noted above, soft chew formulations for the delivery of an active ingredient to animals were already on the market as at 13 August 2002. The products referred to in the evidence were Heartgard, a palatable soft chew product for heartworm which delivered active ingredients, and the Exelpet Ezy-dose intestinal all wormer, a semi-moist chew product for delivering intestinal worming active ingredients. It may be inferred that the Exelpet product was also palatable, this being an essential feature of such a product. The evidence does not make clear whether there was a problem with those products and, if so, what the problem was. It is true that the Patent Application describes a problem (in general terms, achieving palatability and acceptable mouth feel in circumstances where the active ingredient may have an unpalatable taste or unacceptable mouth feel), but the evidence does not establish that this was a problem with existing formulations.
Further, as noted above, Christensen describes a soft chew formulation for delivery of an active ingredient. Apart from the substitution of a moulding or forming process for an extrusion process (about which there is evidence that the invention in the Patent Application represents an improvement) it is unclear on the evidence whether the invention in the Patent Application represents an improvement over Christensen. Indeed, this point was made by a line of questioning of Merial’s witnesses. It was put to Dr Pougnas during cross-examination that he would not have been motivated to modify Christensen because the examples in Christensen were shown to work. He questioned this initially. It was put to him (by reference to the statement in the last line of column 5 of Christensen) that the examples in Christensen produced a chewable form. He accepted this. Dr Pougnas was taken to the statement (at column 6, lines 12-15) that an “effective oral delivery system in which the texture and stability of the product and activity of the active ingredient is controllable, is the result”. He accepted that there was no reason to suspect that the examples did not achieve what the patent stated they would achieve. Similarly, it was put to Mr Walsh during cross-examination that Christensen “is telling you basically that that process works to produce a chewable form”. He accepted this. However, I do not think the witnesses’ acceptance of these propositions necessarily entails a negative answer to the reformulated Cripps question.
Claim 1 of the Patent Application is as follows:
A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
The formulation is a combination comprising:
(a)a flavouring component;
(b)a starch component;
(c)a sugar component;
(d)an oil component;
(e)an emulsifying agent that acts as a forming agent,
wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, and the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
The inclusion of a flavouring component in the combination is unremarkable. All the experts said they would include this if carrying out the notional development task. The second, third and fourth ingredients referred to above are ingredients described in Christensen. The first three components described at the foot of column 1 of Christensen are:
(a)starch;
(b)fat or oil;
(c)sugar.
The combination also includes “an emulsifying agent that acts as a forming agent”. It was explained in the affidavit evidence of Dr Pougnas and in the joint report of Mr Walsh and Mr Surawski that, in each of the applications described in the Patent Application, as the formulation does not include water, this ingredient acts only as a forming agent (or binder) and not as an emulsifier. I note that there may be a theoretical possibility that in other applications, not described in the Patent Application, an emulsifier may be needed. But all three experts proceeded in their evidence on the basis that the component “an emulsifying agent that acts as a forming agent” was to be treated simply as a forming agent, and I adopt the same approach. Based on the expert evidence, the inclusion of a forming agent is something that would occur as a matter of course. Thus I am satisfied that the skilled person or notional research team would directly be led as a matter of course to try the combination of ingredients set out in [181] above in the expectation that it might well produce a useful alternative to or better formulation than the prior art.
The claim requires the moisture content to be between 5.0 and 7.5 per cent. The evidence of Dr Pougnas and Mr Walsh was to the effect that this is the approximate range they would be aiming for in a soft chew product. Mr Surawski targeted a higher moisture content, but this flowed from the way in which the development task was formulated in his case (in terms of semi-moist rather than soft chew) and his view that a semi-moist formulation would have a moisture content in the order of 18 to 21 per cent. On the basis of Dr Pougnas and Mr Walsh’s evidence, I am satisfied that the skilled person or notional research team would directly be led as a matter of course to target a moisture content in the order of 5.0 to 7.5 per cent.
The formulation described in claim 1 is “formed by knockout” and “is not an extrudate”. This represents a difference from, and improvement on, Christensen. The last stage of the process described in Christensen is an extrusion process. There was agreement between the experts that a moulding or forming process would be preferable (and would have been considered preferable as at 13 August 2002) because this process achieves better consistency of dosage of the active ingredient. On the basis of this evidence, I am satisfied that the skilled person or notional research team would directly be led as a matter of course to try a moulding or forming process in the expectation that it might well produce a useful alternative to or better formulation than the prior art.
Taking the elements of claim 1 as a whole, I am satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try the combination and features set out in claim 1 in the expectation that it might well produce a useful alternative to or better formulation than the prior art. Expressed in terms of s 7(2), I am satisfied (and clearly so) that the invention in claim 1 would have been obvious to a person skilled in the relevant art in light of the common general knowledge as it existed in Australia before 13 August 2002, when that knowledge is considered together with Christensen. (I note that the Delegate reached a different conclusion on this issue, but the evidence before the Delegate on lack of inventive step was different.)
Turning to claims 2 and 3, these are as follows:
2.The soft chew formulation according to claim 1 characterized in that the emulsifier is a polyethylene glycol.
3.The soft chew formulation according to claim 2 characterized in that the emulsifier is polyethylene glycol 3350.
I discussed the common general knowledge in relation to PEG in [170](p) above. I found that the common general knowledge (pertaining to pharmaceutical formulation) included knowledge of PEG and its properties, but not knowledge of its use in a moulding process for an oral formulation.
Mr Pieloch’s evidence, referred to in [84](b) above, was that PEG was one of the ingredients that gave the dosage form softness. However, it was not suggested by either party that he was a proxy for the skilled person or notional research team (who is to be treated as having available the common general knowledge in Australia). Dr Pougnas’s evidence in his first affidavit was to the effect that, if he were carrying out the notional development task, he would have adopted a moulding process and, in this connection, would have used meltable materials such as PEG, being a hydrophilic polymer with a relatively low melting point: see the extract from his first affidavit set out in [170](p) above.
Christensen does not mention PEG. In commenting on Christensen in his second affidavit, Dr Pougnas said:
Further, as decreasing water content is a primary concern in the field of pharmaceutical formulation, it would be a routine approach to identify Christensen and apply methods to reduce water in the composition it describes. Alternatively, hydrophilic polymers, such as PEG, are another type of ingredient which I would have considered to replace the water added in Example 1 of Christensen (which is 10% of the ingredients by weight). I expect this would achieve a better texture for a soft chew than the texture described in Example 1.
Dr Pougnas said during cross-examination that based on his knowledge, when an API is water sensitive, the solution is to remove water. Dr Pougnas said that there were a whole range of alternatives that he could have used to replace the water. It was put to Dr Pougnas that there was no reason why he would look at the Christensen patent and think that he would replace some of the water with PEG. He responded (in the context of example 1 in Christensen): “The reason is that there is the [starch], the oil and for controlling the bubbly appearance due to this leakage. A way to manage this would be to introduce a polymer”. It was put to him that the way to manage the oil in example 1 was to follow example 2, 3, 4 or 5. Dr Pougnas responded that he was aware that oil was a main component for obtaining a soft texture and better softness.
Mr Walsh did not refer to PEG in his first affidavit; it was not an ingredient that he would have considered if carrying out the notional development task. As noted above, Mr Surawski said that he knew of PEG but had never had any cause to use it or even to look at it as a product in pet foods.
On the basis of the evidence presented in this case, I am not satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try PEG in the expectation that it might well produce a useful alternative to or better formulation than the prior art. Dr Pougnas’s evidence did not contain, to my mind, a satisfactory explanation as to why he would have considered PEG in addressing the notional development task. It would be different if, for example, there had been evidence that the common general knowledge included that PEG imparted softness and evidence that, for that reason, the skilled person or notional research team would have tried PEG in the expectation that it might well produce a useful alternative or better formulation. That would provide a logic for trying PEG. However, in the absence of such a rationale, I am not persuaded that the skilled person or notional research team would be directly led as a matter of course to try PEG in the expectation that it might well produce a useful alternative or better formulation. Further, there are two reasons for hesitation before accepting that the steps Dr Pougnas would have undertaken indicate the steps that the (uninventive) skilled person or notional research team would have undertaken. First, it may be that Dr Pougnas is ‘too inventive’ to be considered a proxy for the (uninventive) skilled person or notional research team. Dr Pougnas is named as the inventor on at least 13 patents and accepted during cross-examination that he could be described as inventive. Secondly, as noted in [170](p) above, in response to questioning during cross-examination as to whether he would have selected PEG, Dr Pougnas said that he and his team had conducted some experimental works at the time he was at Virbac, but he could not disclose more. That particular research project, not forming part of the common general knowledge, may explain why he would have considered PEG.

Expressed in terms of s 7(2), I am not satisfied (or at least, not clearly satisfied) that the invention in claims 2 and 3 would have been obvious to a person skilled in the relevant art in light of the common general knowledge as it existed in Australia before 13 August 2002, when that knowledge is considered together with Christensen. The claims are therefore taken to involve an inventive step.
I turn now to claim 4, which is dependent on each of claims 1 to 3. Insofar as this claim is dependent on claim 2 or 3, it follows from the above that the claim is taken to involve an inventive step. Insofar as claim 4 is dependent on claim 1, and not on claim 2 or 3, the affidavit evidence of Dr Pougnas establishes that the ranges in claim 4 are very large; if making a formulation that contains a flavouring component, starch component, sugar component and oil component, it would not be difficult to fall within each of the claimed ranges. I note also that the specific ranges provided for the particular components listed in claim 4 correspond to or encompass the ranges given for key components in Christensen.
On this basis, insofar as claim 4 is dependent on claim 1, and not on claim 2 or 3, I am satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try the combination and features set out in claim 4 in the expectation that it might well produce a useful alternative to or better formulation than the prior art. Expressed in terms of s 7(2), I am satisfied (and clearly so) that the invention in claim 4 (insofar as it is dependent on claim 1, and not on claim 2 or 3) would have been obvious to a person skilled in the relevant art in light of the common general knowledge as it existed in Australia before 13 August 2002, when that knowledge is considered together with Christensen.
Claims 5 to 8 are dependent claims which include reference to specific pharmaceuticals. Insofar as each of these claims is dependent on claim 2 or 3, it follows from the above that the claim is taken to involve an inventive step. Insofar as each claim is dependent on claim 1 and not on claim 2 or 3, it may be inferred that the pharmaceuticals were available to the skilled person or notional research team and that the inclusion of the particular pharmaceutical in the soft chew formulation would have been a routine matter. On this basis, insofar as claims 5 to 8 are dependent on claim 1 (and not claim 2 or 3), I am satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try the combination and features set out in the claim in the expectation that it might well produce a useful alternative to or better formulation than the prior art.
Claim 9 is a soft chew formulation according to any one of claims 1 to 8, comprising more than one pharmaceutical to control a parasite of a livestock or pet animals. Insofar as claim 9 is dependent on claim 2 or 3, it follows from the above that the claim is taken to involve an inventive step. Insofar as the claim is dependent on claim 1 and not on claim 2 or 3, it may be inferred that the inclusion of more than one such pharmaceutical in the soft chew formulation would have been a routine matter. On this basis, my conclusion in relation to this claim is the same as for claims 5 to 8.
Claims 10 and 11 are dependent on claim 9 and specify a particular combination of named pharmaceuticals. Insofar as each of these claims is dependent on claim 2 or 3, it follows from the above that the claim is taken to involve an inventive step. Insofar as each claim is dependent on claim 1 and not on claim 2 or 3, the evidence does not deal with the obviousness or otherwise of these combinations of named pharmaceuticals. In these circumstances, I am not satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try the combination and features set out in claims 10 and 11 in the expectation that it might well produce a useful alternative to or better formulation than the prior art.
Claim 12 is the so-called “omnibus” claim, based on the examples in the specification. Each of the examples contains PEG. I reach the same conclusion in relation to this claim as claims 2 and 3, for the same reasons.
Claim 13 is dependent on claims 1 to 12. The manufacturing process claimed in claim 13 involves mixing each of the claimed components, heating them, and forming a soft chew using a knockout. A process including each of those steps was part of the common general knowledge. Indeed, it was the preferred process of Dr Pougnas, Mr Walsh and Mr Surawski.
On this basis, insofar as claim 13 is dependent on claim 1 (and not claim 2 or 3), I am satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try the combination and features set out in the claim in the expectation that it might well produce a useful alternative to or better formulation than the prior art. On the other hand, insofar as claim 13 is dependent on claim 2 or 3, I am not so satisfied.
Claim 14 is based on the examples in the specification. Each of the examples contains PEG. I reach the same conclusion in relation to this claim as claims 2 and 3, for the same reasons.
Claim 15 is a soft chew formulation for oral administration made according to the process of claim 13 or 14. As claim 14 refers to the process of claim 13, it would seem that claim 15 is in substance, at least for present purposes, to be treated in the same way as claim 13. I refer to my conclusion and reasons in relation to claim 13, above.
Claims 16 and 17 are “Swiss type” claims that relate to the use of formulations according to any one of claims 1 to 12 or 15 for the manufacture of a medicament for the control of parasites in animals. The use of the formulations as so described was part of the common general knowledge.
On this basis, insofar as claims 16 and 17 are dependent on claim 1 (and not claim 2 or 3), I am satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try the combination and features set out in the claims in the expectation that it might well produce a useful alternative to or better formulation than the prior art. On the other hand, insofar as claims 16 and 17 are dependent on claim 2 or 3, I am not so satisfied.
It follows from the above that the ground of lack of inventive step is made out in relation to claim 1; is not made out in relation to claims 2, 3, 10, 11, 12 and 14; and is partially made out in relation to the balance of the claims.
Conclusion
For these reasons, I have concluded that the lack of entitlement ground is made out. In light of that conclusion, it was not necessary to determine the lack of inventive step ground. However, I have done so for the sake of completeness, and have concluded that this ground is partially made out. I will make orders to the effect that the parties file an agreed minute of proposed orders to give effect to these reasons or, if they cannot agree, that each party file and serve a minute of proposed orders to give effect to these reasons together with a short outline of submissions in support of those proposed orders.

I certify that the preceding two hundred and eight (208) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.
Associate:
Dated: 25 January 2017

File number:	VID 399 of 2015
Judge:	MOSHINSKY J
Date of judgment:	25 January 2017
Catchwords:	PATENTS – appeal under s 60(4) of the Patents Act 1990 (Cth) – entitlement – where opponent contended that applicant for patent did not derive title to alleged invention from inventor – where invention described in patent application was a soft chew formulation for administering an anti-parasite pharmaceutical to certain animals – whether opponent clearly established lack of entitlement PATENTS – appeal under s 60(4) of the Patents Act 1990 (Cth) – inventive step – obviousness – where opponent contended that alleged invention lacked an inventive step – person skilled in the relevant art – the common general knowledge – information mentioned in s 7(3) of the Patents Act – whether applicant clearly established lack of inventive step
Legislation:	Evidence Act 1995 (Cth), s 140 Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) Patents Act 1952 (Cth), s 100(1)(e) Patents Act 1990 (Cth), ss 7, 15, 18, 40, 59, 60(4) Patents Amendment Act 2001 (Cth)
Cases cited:	Abraxis Bioscience, Inc v Navinta LLC, 625 F 3d 1359 (Fed Cir 2010) Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 Allegheny Steel & Brass Corp v Elting, 141 F 2d 148 (7th Cir 1944) AstraZeneca AB v Apotex Pty Ltd (2015) 323 ALR 605 Baltimore & Ohio R Co v United States, 261 US 592 (1923) Banks v Unisys Corp, 228 F 3d 1357 (Fed Cir 2000) Bd of Trustees of the Leland Stanford Junior University v Roche Molecular Systems, 563 US 776 (2011) Bldg Innovation Indus, LLC v Onken, 473 F Supp 2d 978 (D Ariz 2007) Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232 Commissioner of Patents v Sherman (2008) 172 FCR 394 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 EI Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd (2003) 128 FCR 392 Enzo Apa & Son, Inc v Gaepag AG, 134 F 3d 1090 (Fed Cir 1998) F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 Gilson v Commissioner, Docket No 3801-78, 1984 Tax Ct Memo LEXIS 228 (US TC Aug 21, 1984) Hercules, Inc v US, 516 US 417 (1996) Intervet International B.V. v Merial Inc [2016] FCA 1030 Kaiser v Millard Lumber, Inc, 25 Neb 943; 587 NW 2d 875 (1999) Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 235 CLR 173 Mellon Bank, N.A. v Aetna Business Credit, 619 F 2d 1001 (3rd Cir 1980) Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157 SiRF Tech, Inc v Int’l Trade Comm’n, 601 F 3d 1319 (Fed Cir 2010) Speedy Gantry Hire Pty Ltd v Preston Erection Pty Ltd (1998) 40 IPR 543 St Paul Fire & Marine Ins Co v Indemnity Ins Co of N Am, 32 NJ 17; 158 A 2d 825 (1960) Stack v Davies Shephard Pty Ltd (2001) 108 FCR 422 Standard Parts Co v Peck, 264 US 52 (1924) Teets v Chromalloy Gas Turbine Corp, 83 F 3d 403 (Fed Cir 1996) United States v Dubilier Condenser Corp, 289 US 178 (1933) University of British Columbia v Conor Medsystems, Inc (2006) 155 FCR 391 Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262
Date of hearing:	29, 30 and 31 August and 1, 2, 5 and 6 September 2016
Date of last submissions:	8 September 2016
Registry:	Victoria
Division:	General Division
National Practice Area:	Intellectual Property
Sub-area:	Patents and associated Statutes
Category:	Catchwords
Number of paragraphs:	208
Counsel for the Appellant:	Mr C Dimitriadis SC with Ms C Cunliffe
Solicitor for the Appellant:	Ashurst Australia
Counsel for the Respondent:	Ms K Howard SC with Mr CH Smith
Solicitor for the Respondent:	Spruson & Ferguson Lawyers

JUDGE:	MOSHINSKY J
DATE OF ORDER:	25 JANUARY 2017