Richwood Creek Pty Ltd v Williams
[2010] FCA 196
•11 February 2010
FEDERAL COURT OF AUSTRALIA
Richwood Creek Pty Ltd v Williams [2010] FCA 196
Citation: Richwood Creek Pty Ltd v Williams [2010] FCA 196 Parties: RICHWOOD CREEK PTY LTD v DANNY LEE WILLIAMS File number: QUD 177 of 2009 Judge: SPENDER J Date of judgment: 11 February 2010 Catchwords: INTELLECTUAL PROPERTY – patents – appeal from a decision of the delegate of the Commissioner – whether applicant was the assignee of patent under a patent assignment deed – whether rights in an invention vested in a party to a contract of service with the inventor Legislation: Patents Act 1990 (Cth) ss 15, 59, 60(4), 160 Cases cited: Fine Industrial Commodities Ltd v Powling (1954) 71 RPC 253 cited
Spencer Industries Pty Ltd v Collins (2003) 58 IPR 425 referred toDate of hearing: 11 February 2010 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 32 Counsel for the Applicant: Mr DJ Campbell SC Solicitor for the Applicant: Winchester Young & Maddern Counsel for the Respondent: There was no appearance for the Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 177 of 2009
BETWEEN: RICHWOOD CREEK PTY LTD
Applicant
AND: DANNY LEE WILLIAMS
Respondent
JUDGE:
SPENDER J
DATE OF ORDER:
11 FEBRUARY 2010
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The Opposition be dismissed.
2.Respondent pay the costs of the appellant, of and incidental to the appeal, and of the Opposition proceedings before the delegate of the Commissioner.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 177 of 2009
BETWEEN: RICHWOOD CREEK PTY LTD
Applicant
AND: DANNY LEE WILLIAMS
Respondent
JUDGE:
SPENDER J
DATE:
11 FEBRUARY 2010
PLACE:
BRISBANE
REASONS FOR JUDGMENT
This is an appeal from a decision of G.M. Cox, a delegate of the Commissioner of Patents (the Commissioner), given on 26 June 2009 at Canberra. The decision of the delegate of the Commissioner of Patents is reported: Richwood Creek Pty Ltd v Williams (2009) 82 IPR 385. The appeal is brought pursuant to s 60 (4) of the Patents Act 1990 (Cth) (the Patents Act).
That section provides:
60Hearing and decision by Commissioner
(1)Where the grant of a standard patent is opposed, the Commissioner must decide the case in accordance with the regulations.
(2)The Commissioner must give the applicant and the opponent a reasonable opportunity to be heard before deciding a case.
(3)The Commissioner may, in deciding a case, take into account any ground on which the grant of a standard patent may be opposed, whether relied upon by the opponent or not.
(4)The applicant, and any opponent, may appeal to the Federal Court against a decision of the Commissioner under this section.
The powers of the Federal Court on such an appeal are set out in s 160 of the Patents Act:
160Powers of Federal Court
On hearing an appeal against a decision or direction of the Commissioner, the Federal Court may do any one or more of the following:
(a) admit further evidence orally, or on affidavit or otherwise;
(b)permit the examination and cross-examination of witnesses, including witnesses who gave evidence before the Commissioner;
(c) order an issue of fact to be tried as it directs;
(d) affirm, reverse or vary the Commissioner’s decision or direction;
(e)give any judgment, or make any order, that, in all the circumstances, it thinks fit;
(f) order a party to pay costs to another party.
The opposition to grant of a standard patent is a consequence of the provisions of s 59 of the Patents Act.
Section 59 provides:
59Opposition to grant of standard patent
The Minister or any other person may, in accordance with the regulations, oppose the grant of a standard patent on one or more of the following grounds, but on no other ground:
(a) that the nominated person is either:
(i) not entitled to a grant of a patent for the invention; or
(ii)entitled to a grant of a patent for the invention but only in conjunction with some other person;
(b) that the invention is not a patentable invention;
(c)that the specification filed in respect of the complete application does not comply with subsection 40(2) or (3).
The delegate of the Commissioner decided that Danny Lee Williams’ rights in respect of the patent vested, under s15 of the Patents Act, “to Norkres Pty Ltd,” and that Richwood Pty Ltd and Norkres Pty Ltd were persons entitled under s 15 of the Patents Act.
Section 15 provides:
15Who may be granted a patent?
(1)Subject to this Act, a patent for an invention may only be granted to a person who:
(a) is the inventor; or
(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 paragraph (b); or
(d)Is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).
(2)A patent may be granted to a person whether or not he or she is an Australian citizen.
The delegate held that Richwood Creek Pty Ltd alone was not entitled to the grant of a patent and, for that reason, the opposition to the grant of the patent was established and the application was refused.
The Commissioner held that an Opposition action under s 59 did not allow a change of nominated person. Accordingly, Norkres Pty Ltd could not be recorded as a nominated person pursuant to the present action. The Commissioner held that because there was, in the delegate’s view, a contract of service between Williams and Norkres Pty Ltd at the time the invention was conceived, the rights in the invention vested in Norkres Pty Ltd pursuant to s 15(1)(b).
In fact, even if there was a contract of employment, a term of which was that Williams was employed to invent, the rights of the employee to the invention did not rest in the employer “pursuant to s 15(1)(b)”. As Spencer Industries Pty Ltd v Collins (2003) 58 IPR 425 and Fine Industrial Commodities Ltd v Powling (1954) 71 RPC 253 establish, if the employment relationship suggests that the invention concerned was made in the course of the employment or, in other words, it was something that it was the employee’s job to invent, then the invention vests in the employer, not by virtue of statute, but by common law and equitable principles.
In Spencer Industries Pty Ltd v Collins, at [67], Branson J approved the statement of the delegate in that case as follows:
The decision of the delegate (Spencer Industries Pty Ltd v Collins (2002) 54 IPR 434) includes the following statement of the relevant principles (at 442-3):
“Employers’ rights in the inventions of employees are not governed by statute but by common law and equitable principles which clearly show that in the absence of any express contractual obligation there is no rule that an invention made by an employee is inevitably the property of the employer. It is instead necessary to determine whether the employment relationship suggests that the invention concerned was made in the course of employment or, in other words, whether it is something it was the employee’s job to invent. The law applying in these situations has been summarised in Fine Industrial Commodities Ltd v Powling (1954) 71 RPC 253 as follows:
“The law relating to the position of officers or employees who make an invention affecting the business of the company which they serve is well settled. The principles applicable are stated in Worthington Pumping Engine Co v Moore (1902) 20 RPC 41; British Reinforced Concrete Co v Lind (1917) 34 RPC 101; and Triplex Safety Glass Co v Scorah [1938] Ch 211; [1937] 4 All ER 693; (1937) 55 RPC 21. The mere existence of a contract of service does not in itself disqualify the officer or employee from taking out a patent for an invention made by him during his term of service, even though the invention may relate to subject matter germane to, and useful for, his employers in their business, and even though the employee may have made use of his employer’s time and servants and materials in bringing his invention to completion, and may have allowed his employer to use the invention while he was in their employment. But all of the circumstances must be considered in each case. It is very material to see what is the nature of the inventor’s position in regard to the business, and it may be a term of his employment, apart altogether from any express covenant, that any invention or discovery made in the course of the employment of the employee in doing that which he was engaged and instructed to do during the time of his employment, and during working hours, and using the materials of his employers, should be the property of the employers and not of the employee, and that, having made a discovery or invention in the course of such work, the employee becomes a trustee for the employer of that invention or discovery, so that as a trustee he is bound to give the benefit of any such discovery or invention to his employer.”
It is plain that the delegate of the commissioner was confronted with inconsistent evidence and, further, evidence of doubtful reliability. For instance, the delegate concluded, at [116]:
This has been a very difficult case to decide, primarily due to the nature of the evidence. I have concluded that Williams and Mueller are co-inventors [,] that … there was insufficient evidence to show that Kreskas was also an inventor and that Williams assigned his rights to Richwood. Norkres was entitled to be a nominated person under s 15 as the entitlement rights flowed by force of contract of service from Williams. Consequently, Richwood and Norkres are persons entitled under s 15.
It seems that sense can only be given to this passage if “Mueller” is substituted for “Williams” in the reference to the assignment of his rights to Richwood. Further, it is incorrect to say that any entitlement in Norkres was as a consequence of s 15.
The delegate said, at [67]:
The evidence of the nature of Williams’ employment is merely declaratory. I note that apart from receiving moneys from Norkres for his employment, there appear[s] to be no documentary evidence of the purpose of Williams’ employment. There does not appear to be any contractual arrangement in existence.
Further, at [69], the delegate said:
There are a number of emails that seem contradictory and point to Norkres not being the beneficial owner.
And the Commissioner then gives examples.
Paragraph 70, unsatisfactory as it may be as to its terms, suggests a finding that because Williams was under a contract of service to Norkres, his “rights vested under s 15 to Norkres.”
Paragraph 70 states:
However, the conduct of the parties as seen through the evidence of the emails points to vesting of the ownership in the Hemi supercharger to Norkres and that Kreskas and Williams seem content with this arrangement. Therefore, given the nature of the relationship and the tasks that Williams’ was charged with, it seems reasonable to conclude that Williams was under a contract of service so that Williams’ rights vested under s 15 to Norkres.
In [71], the delegate acknowledged:
… it remains unclear what the respective roles of the parties was intended to be. However, the pattern of behaviour exhibited by the parties with respect to the IP [intellectual property] suggests Richwood was left to run the IP with Norkres paying for the specific engine build.
Further, there was evidence before the Commissioner from the patent attorney responsible for the application for the preparation and lodgement of the Australian provisional patent which, after lodgement, became number 2005901452. Mr Clifford Lance Carew says that in about February 2005 he was requested to advise and assist Danny Lee Williams in the preparation and lodgement of an Australian Provisional Patent which after lodgement became number 2005901452.
The statutory declaration of Mr Carew proceeds:
4.Over the following approximately twelve months, through my discussions with the Opponent [Danny Lee Williams] and Andrew Mueller, I became aware of Andrew Mueller’s involvement in the invention. I was instructed in March of 2006 to lodge an Australian Patent Application Specification (which was given the number AU2006/202679) on behalf of the Applicant, Richwood Creek Pty Ltd, and the inventors, Danny Lee Williams and Andrew James Mueller.
5.During all of my discussions and dealing with the Opponent and Mr Mueller, no mention was made by either of them of a Mr Tom Kreskas, Norkres Pty Ltd or ELKO anything, having any involvement in the invention.
Mr Carew also says that, at the request of Andrew Mueller, he prepared a patent assignment document and forwarded to Andrew Mueller under cover of a letter dated 7 November 2005.
There was in evidence before the delegate a patent assignment, between Danyl Lee Williams and Andrew James Mueller each as an assignor, and Richwood Creek Pty Ltd as the assignee.
The first recital of that patent assignment recites:
AThe Assignors are entitled to be registered as the owner of the pending patent application identified in the Schedule (the “Patent”).
And the assignment is as follows:
1.The Assignors hereby assign to the Assignee their entire interest in the Patent, including:
(a)its rights, if any, to sue for any infringement of the Patent which took place prior to the date of this Assignment, or which takes place prior to recordal of this Assignment; and
(b)its rights, if any, to apply for and obtain other patents claiming priority from or otherwise based on the Patent.
The assignment document is executed by Danyl Lee Williams, Andrew James Mueller and by Richwood Creek Pty Ltd.
It is significant that Norkres Pty Ltd did not seek to assert any entitlement to the patent by being a party to the Opposition proceedings, or by asserting that it, as employer of Danny Williams, was entitled to a proprietary interest in the patent. It is also important that Danny Williams did not assert personally before the commissioner any entitlement in the patent. His case before the Commissioner was that Mr Mueller was not a co-inventor, a contention which the delegate rejected; that Tom Kreskas was a co-inventor, a contention which the delegate rejected; and Mr Williams also submitted that:
…by virtue of s 15(1)(b), Norkres would be entitled to be a nominated person and that the current nominated person Richwood is not entitled.
Mr Williams was properly served, not only with the Notice of Appeal, but also with the written outline of submissions by the appellant, and has chosen, deliberately in my view, not to appear and not to seek to maintain his opposition to the grant of a standard patent to Richwood.
That conduct is highly relevant, in my view, particularly having regard to the deficiencies in the evidence identified in the delegate concerning the status of Mr Williams as an employee of Norkres, and the inconsistency of that contention with the assertions and recitals in the patent assignment deed.
On the entirety of the evidence before me, and pursuant to the powers of the Federal Court in s 160 of the Patents Act, the decision of the Commissioner to uphold the Opposition is reversed.
The order of the Court is that the Opposition be dismissed.
Notwithstanding that the Commissioner made no order as to costs below, it seems to me, given the entirety of the history of the matter and the arguments that were advanced by Mr Williams below, and the orders that I have made in respect of the disposition of this appeal, it is appropriate to order that the respondent pay the appellant’s costs of and incidental to the appeal, and of the Opposition proceedings before the delegate of the Commissioner.
I certify that the preceding thirty-two (32) numbered paragraphs is a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Associate:
Dated: 8 March 2010
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