Rescare Ltd v Anaesthetic Supplies Pty Ltd

[1992] FCA 205

IN THE FEDERAL COURT OF AUSTRALIA )

)

-NEW SOUTH WALES DISTRICT REGISTRY ) NO G156 of 1992

)

GENERAL DIVISION )

BETWEEN:  RESCARE LIMITED
Applicant

m:

Respondent

CORAM:	HILL J
PLACE :	SYDNEY
DATED :	27 MARCH 1992

EX TEMPORE REASONS FOR JUDGMENT

The applicant, Rescare Limited, the registered owner of Australian Letters Patent Number 560360, seeks interlocutory relief against Anaesthetic Supplies Pty Limited, the respondent. Particularly, it seeks an order that until further order the respondent be restrained from selling or offering for sale, letting for hire or offering for hire, any Respironics brand Continuous Positive Airway Pressure Devices. It seeks also an undertaking from the respondent that until the determination of the proceedings or further order, the respondent will keep full and proper accounts of all sales or letting for hire of a product referred to as the BIPAP breathing device.

The patent in question, which has a priority date of Edward Sullivan of the University of Sydney Medical School	24 April 1981, relates to an invention of Professor Colin
with application to the treatment of apnoea, sometimes referred to as snoring sickness. It is described as a continuous positive airway pressure device and is sometimes referred to as a nasal CPAP device.
The applicant became the owner of the patent by virtue of an assignment from Somed Pty Limited, which is said to have been the registered proprietor of the patent. The Sullivan nasal CPAP device involves the supply of normal filtered room temperature air by a blower through flexible tubing to a nose mask worn by the patient while sleeping. Air is exhausted from the mask through a restriction to maintain continuous positive pressure at the nostrils. It is claimed that the Sullivan CPAP device acts as a pneumatic splint keeping the airway open at all times and enabling the patient to breathe normally.
The patent itself is for a device for treating or November 1982. The patent as originally granted differed, snoring sickness. It appears to have been granted in October as will be seen, in some detail from the original provisional application. In its final form it makes a number of claims defining the invention. The first of these, which is relevant to the next 7 claims, describes the apparatus in the following terms :

". . . apparatus comprising: a nose piece

including a cavity adapted for insertion of a patient's nose therein and to be releasably sealingly attached to a patient's face in an airtight manner; inlet tubing connected to said nosepiece with an aperture providing fluid communications with said cavity, the inlet tubing being adapted to be connected to an air source; outlet means in fluid communication with and connected to, said inlet tubing proximate the region of said aperture and providing resistance to air flow therethrough so as to maintain in the region of said aperture air pressure slightly greater than atmospheric while air is passed therethrough throughout the breathing cycle of the patient whereby the patient will have administered to the nasal passages air of slightly increased pressure sufficient to maintain the nasal passages open throughout the breathing

cycle. "

Claim 9 is in the following terms:

"A method of treating snoring and/or obstructive sleep apnoea in a patient comprising: applying air through a nose piece at a pressure maintained slightly greater than atmospheric substantially continuously throughout the breathing cycle . "

The respondent presently manufactures two products relevant to the present dispute; the first is a product known as BIPAP which is a continuous positive airway pressure device which delivers air at two different pressure levels. It is sold for use for a number of respiratory conditions. It is, no doubt, capable of being used by patients suffering sleep

The other product in respect of the sale of which an injunction is presently sought is a nasal continuous positive airway pressure device and is referred to sometimes in the evidence as Sleep Easy and other times as the REMstar choice, although there was an earlier REMstar product which was a predecessor to the present product on sale. This product is more specifically sold for treatment of sleep apnoea.

There is no dispute between the parties as to the appropriate tests for me to apply in determining whether interlocutory relief should be granted, namely, that the applicant must show that there is an arguable issue to be tried and that the balance of convenience favours the grant of an injunction. As has been said on many occasions these are not two independent tests but each impinges on the other.

The applicant relies upon its patent, which is prima facie evidence of a monopoly.	It is a relatively old patent
by the respondent to challenge its validity. This is indeed a	and, at least until 1991, no attempt seems to have been made
significant matter and I was referred to the decision of the High Court in Beecham GrOuD Limited v Bristol Laboratories (1968) 118 CLR 618 at 626 and a decision of Gummow J in Martin Enaineerina Com~anv v Trison Holdinas Ptv Limited (1988) 81 ALR 543 at 547, both of which emphasise its significance.
' In the latter case, G m o w J detailed the principles that should be applied to an application for interlocutory injunctive relief for alleged infringement of a patent where the question of validity is, as in the present case, put in issue. His Honour pointed to the requirement that the court must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case pending the resolution of the uncertainty. In so doing, no doubt, the fact that the patent is one of long standing and not until recently the subject of challenge will have a particular significance and indeed, on the facts of Beecham's case in the High Court it was found to be decisive.
The respondent alleges in these proceedings that the patent is invalid. It submits that the device in question lacks inventiveness; it submits also that it lacks novelty. There were tendered before me two articles upon which the respondent relies in support of a submission that the prior
art requires the conclusion that the patent was invalid.
Alternatively, the respondent submitted, the provisional application differed markedly from the letters patent ultimately granted, so that if there were the necessary novelty or inventiveness to be found in the ultimate patent, there had, between the date of the provisional specifications and the date of grant, been prior publication by Professor Sullivan in an article which he CO-authored and which was published-on 18 April 1981, prior to the grant of the patent. It was also submitted that c1.9 of the patent was invalid and in this respect the argument centred largely upon Professor Sullivan's article.
The respondent submitted also that there was no infringement by either of the two products sold by the respondent. In this connection, the respondent pointed to cl.1 of the patent specifications, which I have already set out and, in particular, submitted that the mask, which was interchangeably used in both of the respondent's products, did not infringe the specification because the outlet means was not in fluid communication with and connected to the inlet tubing as required in the patent specification. It is, of course, inappropriate for me to comment on the validity of these submissions in the course of an interlocutory proceeding, particularly as the respondent has had little time to put on any evidence and, I am told, a considerable amount
of scientific evidence will ultimately be tendered.
It is sufficient to note that clearly enough the applicant has an arguable case and that there are substantial issues between the parties which will need to be resolved at a trial. This was really not a matter of dispute between the parties.
On the question of the balance of convenience, however, the applicant submitted that the respondent, to the extent that it suffered damage by reason of the injunction, could rely upon the usual undertaking as to damages, which was proffered. There was no suggestion that the respondent was other than a company of some substance and confidential evidence put before me as to sales and expenditure on the product clearly revealed that substantial marketing attempts had been made and sales of the applicant's product secured.
The respondent undertook, if no injunction were granted, to keep accounts of all sales made by it and, no doubt, such an undertaking would extend to the keeping of a record of customers who had approached it for potential sales. Again, there was no suggestion that the respondent was other than a company of substance and evidence was put before me of its undertakings in the United States and here.
At the heart of the urgency of the present matter lies the fact that the Thoracic Society's annual conference is due to be held in Canberra commencing tomorrow and continuing until 2 April 1992. According to the evidence, up to 100 of the principal physicians who may be responsible for prescribing to their patients the use of the CPAP device will be present at that conference.
Both of the parties propose, subject to the order of the court, to exhibit and solicit sales at that conference. In the case of the respondent, it proposes to exhibit and solicit sales for both of the two products I have mentioned. The respondent has proposed an undertaking that in the event that it were ultimately unsuccessful in the proceedings, it would notify all attendees that it was not entitled to sell the particular product. A further conference is being held in May, in Victoria, for the State Health Intensive Care Society, and since it is impossible for a final hearing in the matter to be resolved by then, the same problem will no doubt arise at that conference.
If no injunction were granted but the applicant were to succeed at the hearing, the respondent would have to account for any profits made by it on sales which occurred before the ultimate injunction was granted. No doubt the court could require disclosure to the applicant of the names
that effect were given. If the applicant was ultimately to of prospective clients in the event that no undertaking to fail in the present proceedings, but an injunction were to be granted on an interim basis now, there would obviously be potential sales lost to the respondent. On the other hand, those potential sales can, of course, as the applicant submits, be compensated for by an undertaking as to damages.
As I pointed out to counsel for the applicant, if an injunction were granted so that the only party selling at or through conferences was the applicant, there would be great difficulty in determining which of those sales would have gone to the respondent had no injunction been granted and which would have gone to the applicant. Further, particularly where conferences are promoted at which a particular product will be of interest to attendees, there is much to be said for the view that the more aggressively each party markets those products the greater will be the ultimate sales to the community.
This may be of some significance in a case such as the present where the items in question have more than mere commercial interest but must be seen in the wider context of health care. The applicant submits that the development and sale of its CPAP product constitutes its only business, whereas the sale by the respondent of its two products is but
applicant says that it has gone to considerable trouble and one of a number of businesses in which it engages. The
expense to get acceptance in the market-place in Australia and that permitting the respondent to enter that market and sell products which are, prima facie, in breach of the patent, would cause considerable damage to the applicant and also cause its development to lose momentum.
' I was referred also by the respondent to discretionary matters which I take into account in determining whether or not to grant, at this stage, an injunction. The respondent pointed out that the two products, the BiPAP and the predecessor of the present REMstar product, had been advertised at a conference held two years ago. The BiPAP product had been advertised at a series of conferences held since that date in Australia by the Intensive Care Society and other groups. I should say that, to the extent that the device the subject of the patent is to be seen as merely the mask irrespective of application, it is clear enough that that mask has been on sale for some considerable time without action having been taken by the respondent.
It is certainly true that the product, so far as it relates to sleep apnoea, has not been sold in Australia until the sale of a small number of units in very recent times. In a submission directed at persuading me that the applicant had
sat on its rights and therefore should not be granted interlocutory relief, I was taken to correspondence which made
it clear that threats of legal proceedings had been made by the applicant as early as January 1991. These, however, had been the subject of initial undertakings on the part of the respondent not to sell the specific product, the subject of that correspondence, and in the event no proceedings were necessary because the respondent at that time had no commercial interest, apparently, in selling a product for sleep apnoea when there was a danger of patent infringement proceedings being taken against it.
Its greater enthusiasm now appears to be the result of its being offered an indemnity by the American supplier of the product. The respondent points out also, that as at April 1991 the applicant knew that the REMstar product for sleep apnoea was being tested in a hospital in Australia and must therefore have known that that product would ultimately, once approved, be sold in Australia.
I do not think, however, that the evidence as it is before me suggests that the applicant should be disentitled from relief merely because of its knowledge in 1991, which has to be seen in the context of the discussions that took place between the parties and bearing in mind that, at the time, it appeared that there was no commercial likelihood of the respondent actually marketing the product.
The court presently expects that a final hearing of the case between the parties can be short-tracked and to this end I have set a timetable which, provided it is complied with, should see a final hearing of the matter in the month of June. This is also a relevant matter in considering the balance of convenience, because the longer the period of time that elapses between an application for interlocutory relief and a final hearing, the greater the damage that might be sustained by the applicant.
As matters presently stand, it can be expected that the whole matter between the parties will be substantially resolved in approximately three months. Taking into account the various submissions of both sides which I have outlined, it seems to me that the balance of convenience lies in favour of not granting an injunction at the present stage, but rather, in allowing the parties to sell, and of course service, existing units pending the expeditious resolution of the disputes between them.
In reaching this conclusion, I take particular account not only of the two conferences that will intervene between the present time and the ultimate resolution of the issue between the parties, but also of the public benefit that may arise in the sales of products designed for use in alleviating, albeit not curing, a disorder which may be
potentially fatal. Accordingly, I do not propose, at this stage, to grant interlocutory relief.

The respondent is to give the following

undertakings:

1.    that proper records and accounts be kept to enable an accounting of profits to be taken; and

2.    that it keep a record of names, addresses and other contact information concerning all customers who seek information from it and who supply that information to it, so that in the event that an injunction be granted, that information can be passed on to the applicant who, as a result, will be able to make use of those contacts.

I certify that this and the
preceding twelve (12) pages
are a true copy of the Reasons
for Judgment herein of his Honour

Mr Justice Hill.

Associate: Y d d L

Date: 27 arch 1992

Counsel and Solicitors	Mr D. Catterns & MS J. Baird
for Applicant:	instructed by Barker Gosling
Counsel and Solicitors	Mr A. Muratore instructed by
for Respondent:	Freehill Hollingdale & Page
Dates of Hearing:	27 March 1992
Date Judgment Delivered:	27 March 1992