Re Electric and Musical Industries Ltd's Patent

[1949] HCA 62

79 C.L.R.]OF AUSTRALIA.

643

[HIGH COURT OF AUSTRALIA.]

In re electric AND MUSICAL INDUSTRIES LIMITED’S

PATENT.

Patent—Expiration of term—Extension—Loss suffered hy reason of war—Re-grant

H. C. OF A.

—Form of order—Patents Act 1903-1946 {No. 21 of 1903—No. 38 of 1946), 1949.

s. 84 (6).

Melbotjene,

The applicant was granted letters patent in England as from April 1933

Oct. 20.

for a term which expired in April 1949, in respect of a system of circuits for

Sydney,

use in television receivers and transmitters. It applied rnider s. 84 (6) of

Dee. 16.

the Patents Act 1903-1946 for an extension of the term of the corresponding

convention patent in Australia on the ground that, by reason of the war, it had

Webb J.

been denied the opportunity of exploitiog the patent in Australia. It appeared from evidence adduced by the applicant that immediately before the war the applicant was in a position to supply television broadcasting equipment, both transmission and receiving, manufactured in accordance with the patent; nothing could be done to expedite the development of television broadcasting in Australia until the Government had set up a television broadcasting transmitter; no transmitter had been erected at the outbreak of war, and it was improbable that a licence could have been obtamed for a transmitter on a commercial basis ; on the outbreak of war security require­ ments prevented the establishment of a commercial television service in Australia ; towards the end of the war consideration was given to the estab­ lishment of commercial television in Australia in the post-war period, and it was decided to introduce it as a Government-controlled monopoly, in the initial stages at least, as soon as practicable after the war; and, although tenders had been received for erecting the required transmitting stations, it would be impossible to introduce this system as a commercial proposition until towards the end of 1951.

Held that the term of the patent should be extended by way of re-grant

for seven years from the date of the expiration of the original patent.

Form of order in Ex parte Celotex Corporation; In re Shaw’s Patents, (1937) 57 C.L.R. 19, at pp. 25, 26, followed as to conditions imposed on the re-grant.

G44HIGH COURT

[1949.

H. c. or A. Originating

Summons.

This was an application by Electric and Musical Industries Ltd. In he ^îider s. 84 (6) of the Patents Act 1903-1946 for the extension of the

Electric term of a convention patent.

The facts appear in the judgment

AND

hereiiTuler

Musical ^lereunaer.

Industries

Patent.

applicant.

Adam, for the Commissioner of Patents.

Cur. adv. vult.

Dec. 16.

Webb J. delivered the following written judgment:—

This is an application by way of originating summons under s. 84 (6) of the Patents Act 1903-1946 asking that the term of a con­ vention patent relating to a system of circuits to be used in television receivers and transmitters which was granted in the United Kingdom be extended on the ground of war loss. The effective date was 13th April 1933, and the patent expired on 13th April 1949. Any extension therefore must be by way of re-grant. Before dealing with the facts it is desirable to make a short statement of the law applicable.

Sub-section (6) provides that the Court may have regard solely to the loss or damage suffered by the patentee by reason of hostilities between His Majesty and any foreign State. It does not apply if the patentee is a subject of such State or is a company the business of which is managed or controlled by such subjects or is carried on wholly or mainly for the benefit or on behalf of such subjects. As pointed out by Williams J. in Gillette Industries Ltd. v. Commis­ sioner of Patents (1), the Court may in the exercise of its discretion have regard to other matters which the Court takes into account under s. 86 (l)-(5) upon an apphcation by petition to extend a patent on the ground that the patentee has been inadequately remunerated by his patent. But generally the Court confines its attention to the question whether the patentee has suffered loss or damage by reason of the hostilities. In what is known as the Rhone Case (2) Sargant J. described an apphcation of this kmd as one for an extension by way of quasi-substitution. He said the Court was empowered to take into account the fact that part of the original term had been rendered ineffective by reason of the war, and was empowered to give a substitutional term in heu of the inefiective term. In In the Matter of Letters Patent granted to von Kantzow (3) a similar view was taken by Lord Simonds.

(1) (1943) 67 C.L.R. 529, at p. 531.(3) (1944) 61 R.P.C. 109.

(2) (1921) 39 R.P.O. 27.

79 C.L.R.]OF AUSTRALIA.

645

Where as in this case there are connected foreign patents the Court should consider the effect that the war has had on the patentee’s remuneration under the foreign patents. If there has

In

re

been a gain in profits under these patents due to the war this can

Electric

AND

be set-off against the loss and damage in respect of the Austrahan

Musical

patent (See Gillette Industries Limited v. Commissioner of Patents (1)).

Industries

Ltd.’s

Evidence of a reduction in output and of sales may be sufficient Patent.

where profits on sales have not increased.

Webb J.

As to the period of extension the Court has regard to the provisions in sub-s. (5) that where the patentee has been inadequately remun­ erated by his patent he may be granted an extension not exceeding five years, or in exceptional cases, ten years. In In the Matter of Smith’s Patents (2) Sargant J. said that although the main element in determining whether a case is exceptional is the merit of the invention as such he would not attempt to define or limit the jurisdiction to determine what was an exceptional case. He referred to two cases in which an exceptional case was not rested on the special merit of the invention. One related to the construc­ tion of sluice gates and the other to sewerage. Each invention was such that it could be used only from time to time in a small number of cases and involved a very large expenditure. In In the Matter of MacLaurin’s Patent (3) Lord Murray said that the case must be exceptional and not the merit; that merit would be an important factor ; but that all the circumstances had to be considered. In Perry and Brown’s Patents (4) Luxmore J. stated three classes of exceptional cases : (1) where the invention displays exceptional ingenuity and is useful to the public ; (2) where it has sufficient merit to warrant an extension and is of exceptional benefit to the public ; and (3) where it is inherently of such a character that it must take longer than usual to get it on the market. Somewhat similar views were expressed by Vaisey J. in In the Matter of Letters Patent granted to Moore (5) and in In the Matter of Letters Patent granted to Israel Pomieraniec (6).

But there are further matters to be considered on an application for extension, including the lapse or expiry of a connected foreign patent or patents. In In re Semet and Solvay’s Patent (7) the Privy Council held that where the prolongation of a patent would place the people of the United Kingdom at a disadvantage in competition with the subjects of a foreign State, that fact must militate strongly against its extension, but that the question whether the disadvantage

(1) (1943) 67 C.L.K., at p. 533.(6) (1946) 64 R.P.C. 5.

(2) (1922) 39 R.P.C. 313, at p. 322.(6) (1947) 65 R.P.C. 33.

(3) (1929) 47 R.P.C. 14, at p. 21.(7) (1895) A.C. 78, at p. 82.

(4) (1930) 48 R.P.C. 200, at p. 213.

646HIGH COURT

[1949.

H.C. OF A. ought to outweigh the patentee’s rights to a renewal on other

1949. grounds was one of degree to be determined according to the special circumstances. In Kettering and Chryst’s Patents (1)

In re

ElectricANDTomlin J. made a re-grant of a patent expire with the foreign

patent.

The absence of an attempt to manufacture the articles in

Musical

Industries

Australia is also a consideration {Rhone’s Case (2)).

■

As to the facts of this case : as already stated the patent relates

Patent.

Webb J .to a system of circuits to be used in television receivers and trans­

mitters which enable the picture to be transmitted so as to be really a picture and not a blur at the receiving end. Electrical signals are generated representative of the light intensities of elementary areas of the scene transmitted. These signals extend over a wide . frequency band ranging from direct current up to many thousands of cycles per second. The direct current and low frequency com­ ponents of the signals represent slowly changing variations in the Hght intensity. If these components are not present at a receiver the picture is reproduced with an incorrect background brightness and is a distortion of the original. A cathode ray scans the fluor­ escent screen of the transmitter and releases the current for trans­ mission to the receiver. That current goes through many amplifi­ cations and in the course of so doing the direct current, the signal, is abstracted. But without it there is no background brightness on the screen of the receiver. By means of the particular circuit described in this invention the direct current component is re­ inserted in the signal before it reaches the receiver.

This patent was included in a patent pool with other British patents. The pool was formed by companies which owned or controlled many patents for licensing the radio trade of Great Britain to manufacture and seU radio broadcast receivers, radio gramophones and television receivers. These patents were included in licenses granted by the applicant and other companies. From 1st October 1939 to 1st May 1946 only thirteen television receivers were sold. During the year before the war 3,941 were sold. During the seven months ended 31st December 1946, 2,000 were sold, during 1947, 9,950 and during 1948, 44,503. The manufacture of these receivers ceased almost immediately on the outbreak of war.

Television broadcasting ceased on the outbreak of war because of military necessity. The only transmitter was at the Alexandra Palace in London. Television broadcasting would have enabled enemy aircraft to pick up signals at a considerable distance and would have enabled hostile action against London. The patent

(1) (1924) 42 R.P.C. 507.

(2) (1921) 39 R.P.C. 27.

79 C.L.R.]OF AUSTRALIA.

647

could not have been exploited in any country engaged in hostilities ;

and so there were no manufactures and no profits during the war.

In Austraha, under the Wireless Telegraphy Act 1905-1936, the operation of a transmitter of any kind required a licence from the

Electric

Postmaster-General but it was unlikely that any licence would have m^^cal

been granted.

The apphcant suggests a good reason for this, Industries

Ltd.’s

namely, to prevent exploitation of the pubhc by selhng television Patent.

receiviog sets at high prices when the quality of the transmission

Webb J.

would fall short of the desired standard. Television had been operating in England since 1936 and it is suggested that the Enghsh experience was against private exploitation of television trans­ mission in Austraha before the war. During the war it could not have been allowed for security reasons. The Australian Broad­ casting Act 1942 required a hcence for television transmission which

was not likely to be granted.

'

The position is summed up in the affidavit of Sir Ernest Thomas Eisk as follows : (1) Immediately before the war the apphcant was in a position to supply television broadcasting equipment, both transmission and receiving, manufactured in accordance with the patent; (2) nothing could be done to expedite the development of television broadcasting in Austraha until the Government had set up a television broadcasting transmitter; (3) no transmitter had been erected at the outbreak of war and it was improbable that a hcence could have been obtained for a trans­ mitter on a commercial basis ; (4) on the outbreak of war security requirements prevented the estabhshment of a commercial tele­ vision service in Austraha ; (5) towards the end of the war considera­ tion was given to the estabhshment of commercial television in Austraha in the post-war period and it was decided to introduce it as a Government-controlled monopoly, in the initial stages at least, as soon as practicable after the war ; and (6) although tenders have been received for erecting the required transmitting stations it will be impossible to introduce this system as a commercial proposition until towards the end of 1951.

The apphcant submits that for reasons directly connected with the war the whole of the war hfe of the patent, which it claims is nine years and seven months, has been lost and it seeks an exten­ sion for that period.

There is no opposition to the extension, but counsel for the Commissioner of Patents, without contesting any of the facts and admitting that a case of war loss had been made out, submitted that there was a difficulty in suggesting any particular period of extension. He said it was a moral certainty that even if there had been no war

648HIGH COURT

[1949.

H. C. OF A. Government would have prohibited the exploitation of the

patent in Australia until Parhamentary Committees had investi­ gated and reported on the form of transmission, and that ten years

In

be

Electeic

might have been spent in exploring the possibilities of television

AND

Musicalafter its introduction in the United Kingdom ; so that the patentee Industbies could not have exploited his patent during the whole of the war

IVvte’nt period. He mentioned that America had not reached the stage of

commercial exploitation when war broke out.

He pointed out that,

M'ebb J.

the English patent had been extended for six years, that is until 13th April 1955. The reason why the English patent was extended for six years does not appear. It so happens that the duration of actual hostilities was six years, that is, from September 1939 until September 1945. However, as already observed, television was on a commercial basis in the United Kingdom from 1936 until war broke out. During the year before the war nearly four thousand

receiving sets had been sold.

But for the war it is safe to assume

there would have been considerable production and sales from 1939

onwards.

This is evident from the large production and sales from

the middle of 1947 to the end of 1948. These figures must, I think, have been taken into consideration in calculating the period of extension of the Enghsh patent. We are without any such guidance in Austraha. But it is reasonable to conclude, as the commissioner concedes, that the war was the occasion of loss in Austraha also. If the war did nothing more it postponed the period during which the Government would pursue its investigations of television with a view to formulating a pohcy. The period of postponement was not necessarily limited to the period of actual hostihties; but included the substantial period for winding up the war, during which television would not be likely to be given any priority of considera­ tion.

I have come to the conclusion that there are exceptional circum­ stances which warrant an extension beyond five years. It seems to me that this patent falls within the classes of exceptional cases defined by Luxmore J. in Perry and Brown’s Patents (1).

However, as counsel for the applicant conceded, before anything could have been done with this patent in Austraha it would have been necessary to set up a television transmitter and allowance should be made for that at least.

I have come to the conclusion that there should be a re-grant of this patent for seven years from the date of expiration of the original, that is, 13th April 1949.

(1) (1930) 48 R.P.C. 200.

79 C.L.E.]OF AUSTRALIA.

649

The grant will contain the conditions imposed by Dixon J. in

Ex parte Celotex Corporation ; In re Shaw's Patents (1) that is to

say that no action or other proceedings shall be commenced or

prosecuted and no damage shall be recovered either in respect of Electric

any infringement of the patent which has taken place after the date mumcal

of the expiration of the original term and before the date of this

Ihdestries

order, or in respect of the sale, use or employment at any time here- intent.

after of any article actually made in that period in accordance with Webb J.

the invention covered by the patent.

Order that there he a re-grant of letters patent No. 17139/34 for the term of seven years from the expiration of the original, that is from \?>th April 1949, subject to the conditions contained in the above judgment, and that applicant pay the costs of the commissioner.

Sohcitors for the apphcant: Madden, Butler, Elder and Graham. Sohcitor for the Commissioner: G. A. Watson, Crown Solicitor

for the Commonwealth.

E. F. H.

(1) (1937) 57 C.L.R. 19, at pp. 25, 26.