New England Biolabs Inc v F. Hoffman-La Roche AG

[2005] HCATrans 297

[2005] HCATrans 297

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S345 of 2004

B e t w e e n -

NEW ENGLAND BIOLABS INC

Applicant

and

F. HOFFMAN‑LA ROCHE AG

Respondent

Application for special leave to appeal

GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 29 APRIL 2005, AT 10.13 AM

Copyright in the High Court of Australia

MR J.T. GLEESON, SC:   May it please the Court, I appear with my learned friend, MR C. DIMITRIADIS, for the applicant.  (instructed by Blake Dawson Waldron)

MR D.K. CATTERNS, QC:   May it please the Court, I appear with my learned friend, MR S.C.G. BURLEY, for the respondent.  (instructed by Spruson & Ferguson)

GUMMOW J:   Yes, Mr Gleeson.

MR GLEESON:   Your Honours, the question we seek to raise is whether the plain English drafting of ‑ ‑ ‑

GUMMOW J:   Just let me understand the parameters of all of this.  What is the material?  If we go to page 72, assertions that Hoffmann-La Roche:

had engaged in serious misconduct by way of deliberate deception of the United States Patent Office and of the Patent Office in Australia.

MR GLEESON:   Yes, that material is found at pages 39 to 51 of the application book.

GUMMOW J:   That is a fraud or misrepresentation complaint, is it not?

MR GLEESON:   Yes, and the material is set out ‑ ‑ ‑

GUMMOW J:   Just looking at that in the broad, is that not better agitated before a court in a revocation suit under section 138?

MR GLEESON:   Your Honour, our point is ‑ ‑ ‑

GUMMOW J:   Do questions of credit get involved?

MR GLEESON:   Your Honour, our point is that if these amendments are allowed, their substantial purpose is to destroy that ground of revocation, because, if the amendment is allowed, the then patentee will say when we move to revocation, “We didn’t obtain anything in that specification by fraud.  The specification’s now clean.”  What has occurred in America is that the very same patent application has been found to contain ‑ ‑ ‑

GUMMOW J:   Have we got section 138 somewhere, of the Patents Act, in all this voluminous material?  It is 138(3), is it not?

MR GLEESON: It is section 138(3)(d).

GUMMOW J:   Have we got it in this material?

MR GLEESON:   No.  Your Honour, that says the court may revoke ‑ ‑ ‑

GUMMOW J:   That is called big firm overkill, I am afraid.

MR GLEESON:   Your Honour, what ‑ ‑ ‑

GUMMOW J:   Seeing the forest but you do not see the right tree.

MR GLEESON:   Your Honour, we accept that that material; namely, false statements which ‑ ‑ ‑

GUMMOW J:   What is the collection of words in 138(3), for my colleague’s and my benefit?

MR GLEESON:   Yes:

the court may, by order, revoke the patent . . . on . . . grounds –

including –

(d)      that the patent was obtained by fraud, false suggestion or misrepresentation.

GUMMOW J:   “fraud, false suggestion or misrepresentation”.

MR GLEESON:   So, your Honours, there are four elements to what we are putting.  The first is ‑ ‑ ‑

CALLINAN J:   Can that be done at any time?

MR GLEESON:   That can be done after the patent has been granted, but not before.

CALLINAN J:   By the court.

MR GLEESON:   By the court.

CALLINAN J:   And effectively at any time afterwards.

MR GLEESON:   Yes.  Your Honour, the four elements are these.  We submit first there were false statements in the application made knowing they were false.  Secondly, those statements were persisted in by the applicant in obtaining acceptance of the patent and in opposing – or in meeting our opposition proceedings ‑ ‑ ‑

GUMMOW J:   Now, just let us into this secret, too.  Are there pending proceedings in the United States involving this invention?

MR GLEESON:   Well, in the United States the patent has been declared unenforceable by reason of this conduct.

GUMMOW J:   In what sort of suit?

MR GLEESON:   In a suit ‑ ‑ ‑

GUMMOW J:   Because in the United States you can use it as a defence to an injunction application, can you not, brought on the Patent Office?  It is an “unclean hands” type argument. 

MR GLEESON:   No, it is not that, your Honour.  It is in our supporting materials at tab 11.  It is a suit – at tab 11 we have the District Court decision, and at page ‑ ‑ ‑

GUMMOW J:   The opening words are not very encouraging:

At a case management conference on December 9, 2003 ‑ ‑ ‑

MR GLEESON:   Your Honours will see on page 7 the findings of the inequitable conduct, and the finding at the foot of the page that “These misstatements . . . were material and made with the intent to deceive”.  On page 8 ‑ ‑ ‑

GUMMOW J:   Well, the bottom of page 2, “defendant requests that the court again hold unenforceable the ‘818 patent’ for inequitable conduct”.

MR GLEESON:   And that is what was done on page 8, yes.  So, your Honour, we agree that if we could make out that case that would provide a ground for revocation.  That is the very thing we are trying to preserve.

GUMMOW J:   Resistance to an injunction, I suspect.

MR GLEESON:   Potentially so, your Honour.  The difficulty is this.  That when one looks at the pre-grant procedures in the Act it is, firstly, not obvious that you can rely upon this conduct as a ground to prevent the patent being granted.  There is no clear provision in the acceptance provisions or the opposition provisions that this is a ground.  Therefore, there is a strong likelihood – and it is the position currently taken by the Commissioner, “I will ignore this material for all purposes and I will allow a patent to proceed to grant.”  We submit that section 104 raises a question of purpose ‑ ‑ ‑

GUMMOW J:   Is there not a problem of time running out as well, if these preliminary matters are stretched out?  The time for the ceiling? Or it gets too late, anyway?

MR GLEESON:   We would submit no, your Honour.  If I can just try and put it in a nutshell, the problem is this.  At the moment the Commissioner will not, and says he cannot, take this material into account as a reason to refuse grant.  He will proceed to grant.  Secondly, the very purpose we would ‑ ‑ ‑

GUMMOW J:   It strikes me the Commissioner is not a very appropriate forum to thrash out a complaint of this sort between litigants of this nature at this stage.

MR GLEESON:   Your Honour, we are seeking to do it before the Federal Court.

GUMMOW J:   It was on appeal from the Commissioner.

MR GLEESON:   On appeal from the Commissioner.

GUMMOW J:   We understand what you say about that, that it gets new legs.

MR GLEESON:   Your Honour, the question we would wish to put forward is one of purpose.  We submit that the purpose for the amendment, the very purpose – its whole raison d’être is to remove the material from the specification which contains the fraud and therefore defeat our revocation application when it is properly brought after grant.  Now, your Honour, we have at least English authorities virtually in point – and I will hand your Honours a copy in a moment – which say that if the purpose of the amendment application is to remove statements which were deliberately deceptive statements, a court would be very loathe in its discretion to allow that amendment.  Your Honour, that has been said ‑ ‑ ‑

GUMMOW J:   The English Act is differently framed, unfortunately, is it not?

MR GLEESON:   I am sorry, your Honour?

GUMMOW J:   Is not the UK Act differently framed?

MR GLEESON:   These were statements made on the 1949 English Act, which was relevantly similar to the 1952 Act and, we submit, similar for this purpose.  If I could hand your Honours a copy ‑ ‑ ‑

CALLINAN J:   Mr Gleeson, you want to ventilate in the High Court.  You have already said what the issues are:  discretion and amendment.  You want to ventilate that in the High Court.

MR GLEESON:   What we want to ventilate in the High Court, your Honour is the right to be able to ventilate those matters in the ‑ ‑ ‑

CALLINAN J:   In a certain proceeding, whilst acknowledging that other proceedings are available, which would achieve exactly the same result and would not take up the time of this Court.

MR GLEESON:   Your Honour, our very point is that those other proceedings most probably will not be available to us if this amendment is allowed.

GUMMOW J:   Courts do not very often say, “Oh, gee, there might be a fraud there.  We can’t go in.”  Particularly when there is a public grant of a monopoly.

MR GLEESON:   Your Honours, could I hand your Honours a case which we consider to be very close in point.  It is Justice Lloyd-Jacob in Parry‑Husband’s Application decided in 1965 under the 1949 ‑ ‑ ‑

GUMMOW J:   In the Appeal Tribunal.

MR GLEESON:   Yes, under the 1949 Act.  If I could direct your Honours straight to page 386, between lines 17 and 33.

GUMMOW J:   Just a minute.  The sentence beginning, “As the evidence”?  Is that it?

MR GLEESON:   Yes.

GUMMOW J:   Thank you.

MR GLEESON:   What we wish to do is to prove before the Federal Court what is referred to here as the former possibility, which is deliberate intention to deceive ‑ ‑ ‑

GUMMOW J:   Prove before the Federal Court.

MR GLEESON:   Yes, on the appeal.

GUMMOW J:   Yes.

MR GLEESON:   And if we prove that, then to take up the comment that it could not be a correct exercise of judicial discretion to excuse that conduct and allow the amendment.  What is said at lines 30 to 34 is our very case:

I entertain no doubt that so long as the possibility of a deliberate intention to mislead is not removed by sworn testimony, allowance of amendments, which would apparently destroy a potential attack upon the validity of the specification when granted, is not justified.

Your Honour, Justice Callinan, that is the essence of our point.  It is not just we want to do now what we could do later.  The time at which we have to do it is now.

GUMMOW J:   The trouble is the legislation does not appear to contemplate that, and that is what the Federal Court has held.

MR GLEESON:   Your Honour, the legislation ‑ ‑ ‑

GUMMOW J:   We were asking you about the global picture, as it were, to get a view of, colloquially, what is going on.

MR GLEESON:   Your Honour, the legislation we have in our bundle at tab 1 – in section 104 on page 79 of the reprint, we submit the legislation does contemplate this because the essential controversy thrown up by this section is whether an amendment should be allowed.  That controversy includes the critical question under subsection (1) ‑ ‑ ‑

GUMMOW J:   “Subject to the regulations”, subsection (3).  Is that not one?

MR GLEESON:   Subsection (3) says where there is a power to amend subject to conditions, that is “subject to the regulations”.  Your Honour, in terms of the controversy, it is ‑ ‑ ‑

GUMMOW J:   Likewise subsection (1), “subject to and in accordance with the regulations”.

MR GLEESON:   Yes.  And, your Honour, what has happened in the Federal Court, which is quite significant, is that all judges there have said the controversy is the same controversy defined by the Act in the regulations, whether looked at administratively or judicially.  What has not happened so far is any attempt to construe the regulations to see whether they apply only at the administrative stage of the matter.  Your Honours, the regulations say the Commissioner will go through certain ways of deciding the matter administratively.  He must prepare a report.  If his report is not adverse he must move to the next stage.  He must allow an opposition.

GUMMOW J:   The scheme of this legislation for a long while now has been to get these matters decided administratively in hopefully a fairly shorthand fashion.  Unless the Commissioner goes off the rails and is interfered with by the Federal Court, to leave these more difficult issues to be thrashed out in a revocation suit.

MR GLEESON:   Your Honour, the scheme of the legislation from as early as ‑ ‑ ‑

GUMMOW J:   I know you say it is no different.

MR GLEESON:   No, your Honour, from as early as Sly in this Court, which is in tab 14 of our bundle.  It is a decision of this Court in 1962, a decision on the 1903 Act.  The scheme has always been that there is a discretion, and that is found on page 640 in the judgment of Justice Menzies at about point 4, where his Honour said:

There is, however, clearly enough a discretion to disallow an amendment . . . The conduct of the person seeking to amend is something to be taken into account ‑ ‑ ‑

GUMMOW J:   What was the conduct there?

MR GLEESON:   The conduct here, I think, involved a question of ambiguity, your Honour, that the amendments would still create ambiguity, and that is seen further down the page.  Your Honour, there are two steps we put for your consideration.  The first ‑ ‑ ‑

GUMMOW J:   There were textual problems.

MR GLEESON:   Your Honour, the first step is, is there an ability in the Federal Court to consider the question of purpose of the amendment and consider the conduct of the applicant?  We would submit that has been the law in Australia and in England, consistently so.  The second is, in our case, where the purpose seems to be to defeat the ground of revocation, is that a matter we are permitted to have taken into account?  What has occurred in the Federal Court, your Honours – it is in the application book in the judgment most starkly at the top of page 89, and in fact the whole of the previous paragraph – is that the court has construed the matter before the Federal Court through the eyes of what it says is the Act and the regulations.  The regulations in turn purport to confine the steps the Commissioner will go through; they do not purport to confine the court.

So the matter has been wrongly narrowed, we submit, by reference to a failure to read the regulations.  The regulations simply say if you are the Commissioner, you go through a step of preparing a report.  If the report is not adverse, you advertise.  If there is an opposition, you hear the opposition, and it can only consider one matter, and then you go to allow the amendment.

Your Honour, they are the regulations, and they do not purport to say that the Federal Court should go through the same process, nor could they, because the task of the Federal Court is not to find error in that decision of the Commissioner.  It is to look at the matter through judicial eyes and decide, should the amendments be allowed?  The reason that we provided the material in the bundle was to show that consistently through the 1903 Act and the 1952 Act the court has had a power to consider these very matters on appeal, and there was no intention in bringing in the 1990 Act to remove those questions from the court’s consideration.

Your Honour, we put at tab 3 the explanatory memorandum, to show that there was no such intention.  In tab 4 we have the 1952 Act.  Your Honour will be familiar with that Act, that that Act created a system where you would apply for leave to amend, there would be a reporting process, it was in the Act there, as opposed to the regulations.  Ultimately, there would be an opposition, there would be an allowance and there would be an appeal.

Your Honour, the significance we contend the matter has is this.  Firstly, most probably this destroys our right to bring the matter in revocation proceeding.  We certainly have no undertaking from the respondent, nor could they give us one, but in their submissions very candidly they say at page 115 in paragraph 31:

No substantial injustice arises if an incorrect statement in a specification is corrected, so that the specification as granted tells the truth.

So it is quite clear what the groundwork is.  They will say in the revocation, “We have lost our ground.”

GUMMOW J:   Would they?  We will hear in a minute about that.

MR GLEESON:   And that, we submit, is directly inconsistent with the decision we have handed you in Parry-Husband’s Case.  So that is the first significance for our position ‑ ‑ ‑

GUMMOW J:   Yes, that is the decision of a single judge, albeit Justice Lloyd‑Jacob, in another country, in another time.  Now, what is this point they make in their paragraph 33 about 21 August 2007?  Page 115.  What do you understand that complaint to be about?

As a matter of justice between the parties, the Respondent notes that any patent granted on the present application would expire on 21 August 2007 . . . It is unclear whether a patent can be sealed after the end of its term (that is, in effect, to expire immediately with effect at some earlier date).  This is a consideration in favour of allowing the patent to proceed to grant, with the Applicant’s rights to revoke the patent preserved.

MR GLEESON:   Your Honour, if this is an error which has destroyed our ground on revocation, that, we submit, is a matter that needs preserving.  Your Honours should also be aware that these parties are in fact back before the Federal Court pursuing their own appeals from the opposition on the area they lost on.  So they are not rushing to grant.  They are proceeding with those matters further.  But, your Honour, the three matters are our loss of our right of revocation, the more general question of whether purpose and discretion ‑ ‑ ‑

GUMMOW J:   Or what you say is your loss of right of revocation, yes.

MR GLEESON:   The more general discretion of purpose, question of purpose and discretion in section 104, and more generally across the Trade Marks Act, the Designs Act and this Act, on each occasion where one has this structure of an administrative decision subject to regulations ‑ ‑ ‑

GUMMOW J:   The light is on, Mr Gleeson.  You had better get on.  What is the third point?

MR GLEESON:   And then a judicial – the point applies across those other Acts as well with similar force.  If your Honours please.

GUMMOW J:   Thank you.  Yes, Mr Catterns.

MR CATTERNS:   May it please the Court.  Just if I may deal with a couple of matters raised by the Court.

GUMMOW J:   What do you say is the substance of this point that relies on Justice Lloyd-Jacob?

MR CATTERNS:   The English court under the 1949 Act, as our court under the 1952 Act, had an express discretion, and our court has a discretion under section 105, but the Commissioner does not under 104, whereas she did under the old Act.  So that is the change under this Act.  Section 104 now gives a much broader range of documents that can be amended.  We respectfully agree with what ‑ ‑ ‑

GUMMOW J:   Not just applications for a grant.

MR CATTERNS:   No, everything including notices of entitlement, notices of claim to priority, translations.  So there is a much broader range of things that the Commission may allow amendment of, but we respectfully submit there is no discretion there now, whereas under both of the old Acts there was an express parallel discretion, expressly in the Act, between the Commissioner’s right of discretion, whether or not to grant an amendment, and that of the court.  So we respectfully submit that his Lordship’s reasons would be apposite in a case under 105 now, where the court does have a discretion.

I think your Honour considered that in a case our learned friend and I were in, the Rest Care Case, the amendments there.  That is when the court is directing the amendments.  By section 112 ‑ ‑ ‑

GUMMOW J:   For example, in the course of an infringement suit.

MR CATTERNS:   Yes.  Your Honour, by section 112, when there is a suit for revocation or infringement then amendments can only be dealt with by the court under 105.  But the general position, we submit, under 104 ‑ ‑ ‑

GUMMOW J:   You say it is much tighter.

MR CATTERNS:   Yes, and one cannot see the ‑ ‑ ‑

GUMMOW J:   It is advisedly tighter because of the potentially greater, but more trivial, if I can use that word, reach of the subject matter.

MR CATTERNS:   Yes.  Precisely.  Also for the reason that your Honour put to our friend, namely, that the Commissioner is not an appropriate forum to resolve matters of this kind.  Now, our learned friends – just as we do not concede that the ground will be open, they do not concede that the ground will be closed, because they will say that the ground of revocation on a false suggestion is not sterilised when we come to our revocation case, because they will say this specification was accepted – went through the crucial stage of acceptance, with the alleged false suggestion in it.  They will say that is incurable and, therefore, the patent has been obtained on a false suggestion ‑ ‑ ‑

GUMMOW J:   At the moment, it seems to me that might be right, if they could make out their case, but, given the nature of these giants, you do not want to concede anything.

MR CATTERNS:   Well, no, your Honour, but also because the question of 21 August ’07 is, as the Court knows, the terms “20 years from application”, the 20 years will expire on 21 August ’07, which would have us in very unchartered waters.

GUMMOW J:   What is this invention for?

MR CATTERNS:   It is the use of a particular enzyme of the bacterium thermus aquaticus, in creating a Polymerase chain reaction, which is highly significant in bio-tech, if I could just use that shortly.  The alleged false suggestion relates to one of the examples which, in the text of the patent, it combines two experiments, but the past tense is used, giving an impression that it was a single experiment that was done.  That is what the argument is about.  We respectfully submit that the purpose of trying to remove what our friend says is a false suggestion is not an improper purpose.

The new way our friends put their case, which we have no difficulty attempting to deal with, is to say this is not a discretion in the sense of the separate question that was asked, or, indeed, in the sense of the special leave questions our friends propound, but there is a discretion because a number of different considerations built up through section 104.  We respectfully submit that is misconceived.  There are discrete decisions made at different stages of section 104 onwards.  I wonder if your Honours would mind looking at it?  In our friends’ bundle, it is at page 79 of the print.

Now, as we understand it, the way our friends now put their crucial argument is that under 104(1) we have got to make out a case for leave establishing that we are one of the two purposes specified there, or another lawful purpose.  But the Court can see what the subsection says is:

leave to amend the relevant patent request . . . or any other file document, for any purpose –

and the regulation corresponds to that, including “removing a lawful ground of objection”.  Whether or not we come within that does not matter because, we submit, we obviously come within the words “for any purpose”.  But (1) allows a person to apply subject to the regulations, and the regulations provide for the mode of application and so on, and provide that the Commissioner must look at whether or not you have complied with the prescribed form and so on.

So that is a distinct decision that the Commissioner makes.  That is in accordance with subsection (2), where the Court will see that the phrase used is mandatory, “must consider and deal with the request in accordance with the regulations.”  Subsection (3) is irrelevant.  It allowed the imposition of conditions.  As far as our researches show, that was never done and it has now been repealed.  Then there is a provision that people may “oppose allowing an amendment”.  As his Honour Justice Emmett noted, regulation 5.3(4) says the only ground on which a person can oppose an amendment is section 102, and that is the provision which requires you to – perhaps if your Honours would not mind looking at it briefly.  The two principal requirements are that, under 102(1), an amendment:

is not allowable if, as a result of the amendment, the specification would claim matter not in substance disclosed in the specification as filed.

The second requirements are (2)(a), claim broadening.  So you are not allowed to amend after acceptance if, as a result of the amendment, a claim would fall outside the earlier scope, or (2)(b), “the specification would not comply with subsection 40(2) or (3)”.  There is an exception to the stringency of those requirements under 102(3) in the very rare case of a clerical error or an obvious mistake, which takes us back, if your Honours please, to 104(5), where we return to mandatory language:

The Commissioner must not allow an amendment that is not allowable under section 102.

We respectfully submit that those provisions, taken with the regulations, which there is clearly power to make, can finally ‑ ‑ ‑

GUMMOW J:   You say that locked out this complaint at the level of the Commissioner?

MR CATTERNS:   Yes.

GUMMOW J:   But it is then said against you that it can get in in the Federal Court on this so-called appeal under section 104(7).

MR CATTERNS:   Yes, your Honour, and that is the matter dealt with comprehensively by the Full Court, where their Honours derive from the legislative history, but also these provisions that the discretion, so to speak, is co-extensive, or the lack of discretion – the jurisdiction is co‑extensive, and that has always been the case.  Under the old Acts, as I submitted, there was parallel ‑ ‑ ‑

GUMMOW J:   Well, there would not be much point in going through the Commissioner in 104(5) if you could have a completely fresh ballpark when you got to the Federal Court.

MR CATTERNS:   Is your Honour referring to an opponent?

GUMMOW J:   Yes.

MR CATTERNS:   Yes, well – but you can cut it off at the pass in an opposition by saying to the ‑ ‑ ‑

GUMMOW J:   Why would you bother going to the Commissioner?  You would run dead and then put everything in when you got the Federal Court that you could not put in before the Commissioner.

MR CATTERNS:   Well, your Honour, some people do do that, not bother to oppose and wait for – just in general oppositions.  That is what people do, not even on the ground of obviousness, say.  But, your Honour, one can cut an amendment off at the pass in the office by saying to the Commissioner, “This amendment broadens the claims” or “This amendment is based on a matter not disclosed in the specification as filed.”  They are the crucial grounds.  Or “This amendment gives rise to a section 40 problem.”  So that is why such oppositions do occur. 

The other part of this case – remembering that this was a separate question – dealt with section 40 matters, and his Honour has held that we succeeded in those and we did not fall foul of section 102.  That part of the case is so far, so to speak, waiting for this part of the case to be dealt with.  May I just remind your Honours what the separate question was.  It appears at page 2; it is question 3.  It is:

whether this Honourable Court has a discretion to refuse to allow an amendment request under s 104(1) of the Patents Act 1990 (Cth) in an appeal against a decision of the Commissioner of Patents . . . on the grounds set out in Exhibit 1A –

which was our friends’ so-called inequitable conduct assertion.  Again, we have no difficulty meeting it, but the case was fought both before his Honour Justice Emmett and the Full Court on the basis that the Commissioner did not have a discretion but the court had a broader discretion. 

We respectfully submit that matter was dealt with by the Full Court, and there is no doubt.  Our learned friends have shifted their ground, rather, and, again, as I say, we can meet it by submitting that we have really got to

make good the purpose within 104.  We respectfully submit that is hopeless because the purposes include any purpose.  May it please the Court.

GUMMOW J:   Yes thank you, Mr Catterns.  Yes, Mr Gleeson.

MR GLEESON:   Your Honours, two matters.  One is that that is a question of law, whether “purpose” means any purpose whatsoever or a purpose that is proper and lawful under the Act.  Secondly, your Honour drew attention to section 104(5).  The opponent is confined before the Commissioner.  You are only allowed to raise one ground.  You are not so confined when you come before the court.  If your Honours please.

GUMMOW J:   There are insufficient prospects of success in an appeal to warrant a grant of special leave in this matter.  Accordingly, special leave is refused with costs.

We will adjourn to reconstitute.

AT 10.47 AM THE MATTER WAS CONCLUDED