Rolapak Australia Pty Ltd (ACN 006 220 748) v York, G.J

[1993] FCA 96

96 1993

JUDGMENT No. ........ ..,....... I ........ ....

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

B E T W E E N :

ROLAPAK AUSTRALIA PTY LTD fACN 006 220 7 4 8 1

Applicant

A N D :

GREGORY JAMES YORK

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COURT :	NORTHROP J	L
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PLACE :	MELBOURNE	RECEIVED	, ,
m:	4 FEBRUARY 1993
FEDERAL COURT OF

AUSTRALIA

PRINCIPAL

EX TEMPORE REASONS FOR JUDGMENT REQlmRv

I propose to make orders now and will give, very briefly, my reasons for making those orders.	i
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I will hear the parties.	F
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as to what other orders should flow therefrom.

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During the course of submissions this morning, I outlined the course of the application which was commenced on 7 April

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1992. It is sufficient to say that, for practical purposes, the application, the statement of claim and the particulars of

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infringement are all consistent with a normal action brought

face of it, it would appear thet the action should have been

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brought under the 1990 Act which came into operation on 30

April 1991. There was a defence and cross-claim filed in

relation to that application and particulars of objection

filed in support of the cross-claim for revocation of the

patent. Again, apart from one aspect of the matter, it can be

said that this was a normal type of defence and cross claim
and particulars of objection. The only unusual feature of the
cross-claim was that there was included in it, apart from the
claim for revocation of the patent, a claim based upon the
provisions of the Patents Act relating to threats resulting
from letters of demand written on 11 March 1992, 23 March
1992, and 1 April 1992, which were all preparatory to the .
issuing of proceedings on 7 April 1992.

by a patentee for infringement of patent rights. I put to one -

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side the question as to which Act is the relevant Act. On the

The cross-claim, based on the threats, appears to be

based upon s121 of the Patents Act 1952 or s128 of the 1990

m. Sections 128, 129 and 130 of the 1990 Act make it clear

that any action brought under s128 is to be used, as it were,
to force a patentee to take action to establish his patent
rights. The position is made very clear by what was said by
Dawson J in Avel Ptv Limited v Multicoin Amusements Pty

Limited (1970) 18 IPR 443 at pp453-454.

In those circumstances there must be some doubt as to the

appropriateness of including in the cross-claim as originally
filed, a claim based upon s121 or s128 of the Patents Act 1952
or 1990 as the case may be.

By a consent order made on 6 July 1992 the respondent was

given leave to file and serve an amended defence and cross- claim on or before 13 July 1992. That was done, and again, for practical purposes the defence was a normal type of

defence based upon the infringement action brought by the
applicant. It denies infringement and denies validity of the
patent. There was a cross-claim seeking revocation of the

patent. Included in the cross-claim was the claim based upon

the threats, and an additional claim based upon conduct
alleged to have occurred after the issue of the proceedings in
April 1992 in relation to letters written by the applicant to
customers of the respondent in relation to the dealing with

articles in alleged contravention of the patent. This claim

was based upon section 52 of the Trade Practices Act.
Thereafter, the applicant, by motion notice of which was dated
25 November 1992, sought orders that the paragraphs of the
amended defence and cross-claim be struck out for various
reasons. That motion came on for hearing before the Court on
30 November 1992. On that date, the respondents sought leave
pursuant to notice that two persons being the directors of the
applicant be added as cross-respondents in the proceedings and
that the respondent have leave to file a further amended

defence and cross-claim and further amended particulars of

objection.

The matter was adjourned to 7 December when the matter was discussed at some length. On 7 December the Court gave the respondent leave to amend its motion to include leave to

file and serve an amended defence and cross-claim and amended
particulars of objection; the applicant was given leave to
amend its motion and the whole matter was adjourned to 3
February of this year. Pursuant to that leave a number of
forms of amended defence and cross-claim and particulars of
objection were sought to be relied upon by the respondent and
in the final form the proposed further amended defence and
cross-claim are contained in an exhibit of Sharon Marie
Taylor, being SMT1, to her affidavit sworn 20 January 1993.
This is a lengthy document which includes, again, the
essential defence to an infringement action, denying
infringement, alleging invalidity of the patent, and also
cross-claims, as previously, but includes additional claims
based upon section 52 of the Trade Practices Act, what appears
to be fraud, and other cause of action against the company and
the two proposed added cross-respondents.

The matters argued covered a wide field. I put to one

side at the moment the question of the particulars of
objection to support the revocation cross-claim, but it is
necessary to determine the issue of whether it is appropriate
that there should be heard as part of these proceedings the
claims included in the cross-claim in relation to the threats

actions, constituted by the three letters referred to earlier,

the section 52 claims, the fraud claims, and the other claims

referred to in the cross-claim.

These matters give rise to difficult questions as to

whether, in the circumstances, good causes of action are
disclosed, but in my opinion it is undesirable that those
matters should be included in the present proceedings. This
is not a case which, in my opinion, the Court should exercise

any of its powers under 06 of the Federal Court Rules to add

as parties the two directors. It is not appropriate, in my

opinion, that the complicated questions of whether there are good causes of action should be determined in the absence of hearing evidence as to what precisely are the claims against them and evidence to support the claims. This is not a case where any statute of limitations has any application at

present. This is a case where the respondent, if so advised, can commence proceedings in this Court based upon the threats constituted by the letters and based upon s52 of the Trade

Practices Act and based upon fraud and negligence and other claims as appear to be included in the cross-claim. The cost of so doing, in my opinion, would be far less than the costs incurred in keeping these matters as part of these proceedings pursuant to leave granted to join additional parties and to give leave to amend accordingly. This is so even though, as counsel for the respondent said, he would not urge that the matters be heard together but that the issues raised by these cross-claims should be heard after the main issue of infringement and validity had been determined.

It was argued strongly that problems arise and unfair

burdens are placed upon a respondent who is forced to defend infringement actions in circumstances where it is clear that the application must fail, but nevertheless a respondent is

forced to incur large amounts of costs defending those actions

but is not in a position to recover the full extent of those

costs from the unsuccessful applicant seeking to enforce

monopoly rights under the patents law. I do not need to

decide any questions on that matter at the present time. In

my opinion the far better course would be to refuse the
motions for joinder of parties and amendment of the defence
and cross-claim, but at the same time making it clear that the
respondent can commence proceedings to claim under those
provisions, and that a practical course would be to defer the
further hearing of those new proceedings pending the outcome
of the proceedings for infringement and validity of the

patent. The respondent would not suffer any great loss by

such a course. The infringement proceedings would be able to
proceed in the normal way. The question of the validity-of
the patents could also be determined in the normal way and
that matter could proceed much more expeditiously and less
expensively than having to worry about the other unresolved
aspects of the case, which are still part of the present

proceedings.

Implicit in what has been said is that, in my opinion,

the existing defence and counter-claim, and in particular the
counter-claim, insofar as the allegations contained in

paragraphs 11 to 23 of the cross-claim are concerned, should

be excluded, and in this regard the motion by the applicant

seeking that they be struck out should be acceded to, but at
the same time I make it clear that in striking out those
paragraph from the cross-claim I am expressing no opinion as
to whether they disclose a cause of action or not. Likewise,
in refusing to grant leave to the respondent to rely upon the
additional cross-claims in the proposed amended cross-claim, I
am expressing no opinion as to the validity of the claims so
made.

These orders will result in the fact that the respondent

will be free to commence proceedings, if so advised, based
upon those claims and, as I indicated earlier, the outcome of
those proceedings should then depend upon whether the
applicant succeeds in its claim of the infringement of the

patent. If other proceedings are commenced, it would be,

unwise, I think, to insist on them proceeding or to insist on

the Court determining whether they should be struck out or

. not, in the absence of hearing evidence to support the claim, and on an interlocutory basis.

At the same time it is important that the pleadings in relation to the defence to the action itself and the cross- claim insofar as it is based upon the claim for revocation of

the patent should be allowed to be continued. In this regard,
the paragraphs 1 to 10(b) of the further amended defence
appearing in exhibit SMT1, are in a different form to those
appearing in the amended cross-claim which has already been
filed and is before the Court.

Problems arise in relation to paragraphs 4B and 4C of the

proposed defence. To a large extent, it is fair to say that

in their present wording paragraphs 4B and 4C do not comply
with the Federal Court Rules, in particular 011, in relation
to the form of a pleading being a statement in brief form of
the material facts upon which the pleader relies. To some
extent, it appears that what is being sought to be raised is
the framework for an argument that in the present case the
complete specification being based upon provisions contained
in s51 of the Patents Act 1952, when in law it could not be,
constituted prior publication and could constitute grounds for
the revocation of the letters patent relied upon by the
applicant.

In their present form, in my opinion, paragraphs 4B and

4C are embarrassing and leave should not be granted to include

those in the defence. At the same time it is appropriate that
the respondent should be given leave to amend the defence as
already filed to include in it allegations, in a proper form,
to support the issue sought to be raised based upon s51 of the
Patents Act, and leave is given to do that.

Leave to file the amended cross-claim is refused, and the

existing cross-claim, insofar as it relates to the revocation
issue only, will continue. I have indicated already that I
have struck out the other parts of the existing cross-claim.

There remains for consideration the question of the

particulars of objection. During the course of submissions it

became clear that the further amended particulars of objection

which form part of the exhibit SMTl have some deficiencies
within themselves which were adverted to during the course of
the hearing but it appears that the parties should be able to
rectify those deficiencies to an extent where a document can
be prepared by the respondent which would be a compliance with
the requirements of the Patents Act, in relation to revocation
proceedings.

I make it clear I am expressing no view as to the correct construction and application of the transitional provisions of the 1990 Act contained in section 233 of the Patents Act 1990, and in particular, subsection ( 4 ) , dealing with the revocation of patents which were in existence prior to the 1990 Act

coming into operation. Those matters may need to be
considered further after Full Court has given its judgment in

the matter of Mirabella v Philli~s, which was referred to

during the course of the arguments.

In the circumstances, the respondent should have leave to

amend the particulars of objection, and in particular
paragraphs 2 and 3 need complete re-writing. In their present
form, in my opinion, they are not proper particulars of
objection. Difficulties may arise in relation to paragraph

(2) because some of the facts there are not in the knowledge

of the respondent and all that can be given are those
particulars of which the respondent has knowledge. Dates are
required or can be given, as far as paragraph 4(b) is

concerned. There may be some time required in order for that

to be done. And as far as 4(c) is concerned, questions as to
the priority date will need to be clarified but leave is given
and I will discuss later the time within which that is to be
done.

During the hearing of the motions and later discussions,

questions were raised as to whether this matter should be
referred to mediation pursuant to the provisions of the

Federal Court Act. There is not much evidence before the

Court on this matter but the impression I have is that the respondent, being an individual carrying on business under a trade name, could be placed in a very awkward position as far as costs are concerned if the matter does progress through the normal course and that this is a case where, in view of the matters which have been raised as to the priority date, a mediation may be able to resolve the issue or at least narrow the issues between the parties. I propose therefore to order that the matter be referred to mediation.

In the light of the orders I have made in relation to the

striking out of part of the cross-claim and the refusal to
grant the relief sought in relation to the amended cross-
claim, and having regard also to the leave being granted to
file the amended particulars of objection, and the proposal to
refer the matter to mediation, questions arise as to what
other orders should be made now. The matter should go to
mediation as soon as practicable to enable the District
Registrar to deal with any matters which might be required.

It must be remembered that matters before the mediator are all

on a "without prejudice" basis. The District Registrar can

refer the matter back to the Court at any time. It is also a

case where normally parties or officers of parties are
requested to be present so they at least have some knowledge
of what is going on.

Some time will be required to deal with all those matters and it is noted that this is a case where the matter should be heard and determined as soon as practicable but, in my

opinion, this can be done by mediation as a first step.

The Court makes an order that the question of the

liability, that is the infringement and revocation, be tried

as a question separate from the question of damages.

Orders made accordingly.

In substance, the applicant has succeeded in its motions. The respondent has succeeded partially in that he obtained leave to amend his defence and cross-claim and also particulars of objection; but that was an indulgence sought by the respondent. Normally, in a case of this kind, the applicant should be entitled to its costs of its motions and the respondent should be required to pay the applicant's costs of his motions because of the indulgence being granted to him. In these circumstances, it is ordered that the respondent pay the applicant's costs of the applicant's motions and of the respondent's motions and that order includes within it the

costs reserved by the order made on 7 December 1992.

As far as the costs are concerned, I have indicated that the applicant is entitled to its costs of all the motions but in addition to that, counsel has sought an order under 062 r3 of the Federal Court Rules, that those costs be taxed

immediately and that in addition that they should be paid forthwith. In support of that submission, counsel relied essentially on the long delay which has resulted, essentially,

from the problems the respondent has had in getting his

pleadings in order.	In my opinion, that of itself is not
sufficient reason to make an order under 062 r3.	That

provision is designed to apply where a completely
unmeritorious claim is brought or it can be shown that a claim

is brought for the purposes of itself delaying or embarrassing

the opposing party. On the facts of this case neither of

those two features, in my opinion, is present.

The respondent has had difficulties. The respondent has

been granted the indulgence of having another attempt at
getting his pleadings in the proper form and to that extent,
has succeeded on his motions. He has failed on other aspects
of his motions but I have made no ruling as to whether the
claims made in them are valid or not. In my opinion, this is
not an appropriate case for the exercise of the discretion to
make an order under 062 r2. The normal provisions will apply
that the applicant's costs of these motions are to be taxed
and paid by the respondent. According to the-rules that will

not be done until after the application has been determined.

I certify that this and the preceding eleven (11) pages are a
true copy of the Ex Tempore Reasons for Judgment of the

Honourable M r Justice R.M. Northrop.

Associate:

Date: a m& - 1