Stack & Anor v Elster Metering Pty Ltd & Ors

[2005] HCATrans 445

[2005] HCATrans 445

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B21 of 2005

B e t w e e n -

GEORGE STACK

First Applicant

G S TECHNOLOGY PTY LIMITED

Second Applicant

and

ELSTER METERING PTY LTD (FORMERLY DAVIES SHEPHARD PTY LTD)

First Respondent

WOODPICKERS AUSTRALIA PTY LTD (FORMERLY DAVIES SHEPHARD (QUEENSLAND) PTY LTD)

Second Respondent

G S A INDUSTRIES (AUST) PTY LTD

Third Respondent

BRISBANE CITY COUNCIL

Fourth Respondent

Office of the Registry
  Brisbane  No B33 of 2005

B e t w e e n -

GEORGE STACK

First Applicant

G S TECHNOLOGY PTY LIMITED

Second Applicant

and

ELSTER METERING PTY LTD (FORMERLY DAVIES SHEPHARD PTY LTD)

First Respondent

WOODPICKERS AUSTRALIA PTY LTD (FORMERLY DAVIES SHEPHARD (QUEENSLAND) PTY LTD)

Second Respondent

G S A INDUSTRIES (AUST) PTY LTD

Third Respondent

Applications for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 23 JUNE 2005, AT 9.36 AM

Copyright in the High Court of Australia

__________________

MR A.VASTA, QC:   May it please the Court, I appear with my learned friend, MR D.G. ELIADES, for the applicants in each of the two matters.  (instructed by Fox Lawyers)

MS H.P. BOWSKILL:   If it please the Court, I appear on behalf of the first and second respondents.  (instructed by Blake Dawson Waldron)

MR A.C. ARCHIBALD, QC:   May it please the Court, I appear in each matter with my learned friend, MS C.M. KENNY, for the third respondent.  (instructed by Peter Black & Associates)

MR R.G. BAIN, QC:   May it please the Court, I appear for the fourth respondent in B21 with my learned friend, MR A.W. DUFFY.  (instructed by Brisbane City Legal Practice)

GLEESON CJ:   Yes, Mr Vasta.

MR VASTA:   Your Honours, you will have noted that the special leave questions posed in this application differ slightly from those posed in the application dealt with by this Court on 26 June 2002.  The questions in this application appear at page 167 of the application book.  Our submission is that these questions are of extreme importance in the area of patent law.  May I take your Honours to the application book at page 17 where at line 35 the primary judge observed:

The Act does not permit one of two or more co-inventors to obtain a patent to the invention to the exclusion of the other co-inventors.  Co-invention gives a right under s 15(1)(a) as co-inventor to the joint grant of letters patent.  Disputes as to entitlement and as to rights of co-inventors inter se are dealt with by other sections –

His Honour also makes a further observation at page 18.  At line 13 his Honour observed:

(a)      Stack was a co-inventor and not the sole inventor of the invention claimed in the provisional patent application PK2036 filed on 30 August 1990;

(b)      Grieves did not give up or assign his interest in the invention claimed in PK2036 to Stack or his entitlement to a grant of patent as co-inventor;

(c)      the authority of Stack, if any, from Grieves was to make the application filed on 30 August 1990 because Grieves and Stack did not then hold interests in a company which could apply for the grant of the patent the subject of PK2036;

(d)      the inventions and other intellectual property contained in the application filed on 30 August 1990 would be held by a company in which Grieves and Stack held interests when such a company was obtained.

Those observations were upheld by the Full Court.  If I may refer your Honour’s to page 87 where the observations of the Full Court appear at line 19:

Thus the question for determination is whether his Honour was correct in concluding that the Act does not authorise the grant of a patent to one of two or more joint inventors.  A perusal of the texts suggests that there has been little recent consideration of this point. 

The court further observed at page 91 that:

This brief examination of the historical position in England and the US demonstrates that Cooper J was correct in concluding that Stack was not entitled to a patent for the joint invention of himself and Grieves.  Each may have been entitled to a patent over his part (if it was otherwise patentable), while they both may have been entitled to a joint patent over the whole.  Neither was solely entitled to a patent over the total invention.

I will come back to that passage again for another point that we make.  Our respectful submission is that those statements are statements of principle.  They are incorrect and they require correction.  We say in the more recent documentation that was filed in the Court which included an excerpt from the latest Patents Office Manual of Practice and Procedure at 27.2.9, which is given to all patent attorneys, this obligation occurs:

Situations also arise where after grant the patentee wishes to identify further inventors . . . If, however, there is a request to add the name of the extra inventor as an extra patentee, it is most likely that the Stack case is applicable.  In this situation, submissions to the effect that the existence of the extra inventor/patentee was not known prior to the completion of a “due diligence” investigation does not establish the existence of a relevant clerical error that would justify changing the patentee to include the extra patentee.

So we say that the error of his Honour which was then perpetuated in the judgment of the Full Court is that there was a wrong reading of section 15(1) of the Act.  That appears in our supplementary application book, your Honours, at page 25.  If I could take your Honours to that and your Honours will see that:

Subject to this Act, a patent for an invention may only be granted to a person who:

(a)      is the inventor –

His Honour held that where you have two inventors the grant of the patent will be invalid if it is granted to only one or more, but if it is not granted to all, then it is invalid.  That is a necessary consequence of his Honour’s judgment which was confirmed by the Full Court. 

Now, we say that if you are reading it in that way, you are really reading the Act in this way, “Subject to this Act, a patent for an invention may only be granted to the person who was the inventor”, because if you were to apply section 23 of the Acts Interpretation Act and we look at what the situation would be if you have a number of inventors, then we would say that the section reads, “Subject to this Act, a patent for an invention may only be granted to persons who are the inventors”.  Whereas, the argument contended for by my learned friends in order to deny the grant of special leave would be that the Act should be read, “The patent for an invention may only be granted to the persons who are the inventors”.  We say that that is tantamount to importing into the words when the plural is associated with the statutory interpretation, the words “all of the inventors”, and that is not a permissible way in which to construe this statute. 

The section should not read “may only be granted to all of the persons who are the inventors” because we say that if that were permissible that would govern all of the categories of persons in (b), (c) and (d), and that is not a permissible method of statutory interpretation.  We say that the fallacy in the argument that all of the inventors must be grantees of the patent is demonstrated by the very argument that concerned whether or not there was sufficient evidence of an assignment by Grieves to Stack of his beneficial interest in the patent.

GLEESON CJ:   Mr Vasta, what has relevantly changed since the last occasion on which this Court refused a special leave application in this matter?

MR VASTA:   We have been granted a – they have succeeded in the appeal in respect of the standard patent 32815 of 1995 and that has been accepted by the Patents Office.  In addition, two divisionals of that patent have also been accepted by the Patents Office, with regard to the ‑ ‑ ‑

GLEESON CJ:   I had in mind particularly that one of the reasons, as I understand it, that special leave was refused on the previous occasion was that some aspects of the facts of the case made it an inappropriate vehicle to deal with the issue that you seek to raise.  What has changed in that regard?

MR VASTA:   Well, during the course of the argument Justice Gummow was interested in whether the standard patent may ultimately be issued to the applicants or some other persons who represent the applicants and we indicated that because continuation fees had not been paid, that that was subject to an appeal to the AAT and from there, there was an appeal.  We were denied the right to pay the continuation fees.  That went on appeal to Mr Justice Spender and ultimately we were able to pay those fees and to have the patent then restored.  It has been accepted.  The last time for the making of objections will be 14 July 2005.  So that was the main matter that the Court alluded to in relation to why perhaps utility may not have necessarily been demonstrated in relation to the subject matter of the present application.

We say that those matters have been taken care of.  What we say though is so important is that the definition of the inventor.  Could I then take your Honours to 91 again where at line 25 the Full Court observed:

Each may have been entitled to a patent over his part (if it was otherwise patentable), while they both may have been entitled to a joint patent over the whole.  Neither was solely entitled to a patent over the total invention.  It follows that they could not, by arrangement between them, create in Stack an entitlement to a patent, save to the extent that they created a relationship pursuant to which he satisfied either s 15(1)(b) or (c).  As we have observed, whatever agreement there was between them did not have that effect.

GLEESON CJ:   Now, it is those words “whatever agreement there was between them” that reflect this uncertainty that I mentioned, do they not?

MR VASTA:   The court considered that his Honour was correct that, whatever it was, it did not reflect a situation that came within (b) or (c).  That is what they said.  But, your Honours, what is overlooked in this is that when you are looking at the definition of the inventor, what the Full Court is really saying is that if you have a situation where the evidence was sufficient to give to Stack an assignment by Grieves so that he could come within (b) or (c), he would have to come within (c) of the Act, which appears at page 25 of the supplementary material, because he “derives title to the invention from the inventor”.

So there has to be a concession that the inventor in that case is Grieves.  One cannot escape that particular conclusion.  Grieves must be the inventor in that case.  So that the inventor in 15(1)(a) must be Stack.  Stack is the inventor.  Grieves is the inventor.  If they are saying that the evidence was not sufficient for Stack to be classed as say a trustee by an assignment, then if the evidence was sufficient, then he could only derive title, how?  By an assignment under (c) by Grieves who must be classified as the inventor.  That really does indicate that our interpretation of section 15 is correct.

What we say is that if, for example, you have 10 inventors and eight of them are just not interested in proceeding to apply for a patent to exploit the patent and two of them apply, then if the patent issues to those two, people in the situation of our opponents could come along and say, while they did not have the patent issued to all of the inventors, it is invalid, it is incapable of being cured because it is a nullity and the nullity really goes to the very root title and any assignment that is made from that time onwards is of no effect because you cannot pass on any better title than you yourself had.  We say that that cannot be the law.  It does not reflect the philosophy behind the Patents Act and we say that it creates a terrible amount of uncertainty and we say that that is not the way in which the Act should be interpreted.  It is a very simple exercise in statutory interpretation.

We say that the court erred in that very fundamental error and that error permeated then through the orders that his Honour made in making the declarations in revoking the patent and so on.  We say that in those circumstances this Court should correct that very fundamental error in principle and we say further that if there is a patent which issues to a particular person and there is some other person who may claim some proprietary interest in the patent, the machinery within the Patents Act affords to them the means whereby they can have the patent corrected.  But what his Honour ruled is that when it issues to persons other than all of the inventors, the issue is in fact a nullity, incapable of being cured under any of the provisions of the Act.  That cannot be, with respect, the way in which the law operates.  It ought to allow the patent to remain valid and to change the register in the ways in which the various sections of the Act indicate.

We say that it would not be singularly uncommon phenomenon for a number of inventors to be responsible for an invention and only one or more of them choosing to apply.  The reason why only some of them apply may be quite irrelevant.  It may be that there is an agreement between the co‑inventors.  It may be that such an agreement may involve the creation of a constructive trust.  But until those persons come along and say, “I claim a proprietary interest in the patent”, it is really no business of anybody, particularly somebody whom we accuse of infringing our patent, to say it is invalid because there should have been some other person who was entitled to the patent.

The law cannot force inventors to apply for a patent and at the same time ought to allow those who want to apply and to exploit the patent to do so.  We say that that reasoning shows a fundamental flaw in the way in which the Act should be interpreted.  We say that if it were otherwise none of the inventors could be capable of enjoying the fruits of their endeavours in inventing the particular invention.  We say that some of the sections, sections 32, 33 and 36, which talk about eligible persons and interested parties and so on can put their case, and there are a number of forms of redress.

We say that is a fundamental question, but we say in the alternative that we should succeed in this application on a second special leave question, and that question is posed in the alternative.  Again, could I take your Honours to page 17 of the application book where his Honour says at line 47:

Stack, in his statement, said:

“4.      On 30 August 1990 a provisional patent application was filed for an invention entitled ‘Water Meter Assemblies’.  Alan Grieves and I were the inventors of the inventions contained therein.

GLEESON CJ:   Thank you, Mr Vasta.  Yes, Ms Bowskill.

MS BOWSKILL:   Your Honours, the submissions on behalf of the first and second defendants are largely those contained in my written outline.  In addition, we would, with respect, adopt the written submissions on behalf of the third and fourth respondents.  I do not wish to go to any great degree on the points made in my written outline but merely to draw attention to a couple of issues.  Your Honours will be aware that in dismissing the previous application for special leave her Honour Justice Gaudron made the comment that – and this appears at page 128 of the application book:

the utility of an appeal at this stage is not clear.  Moreover, the merits of the application are impaired by the imperfect resolution of a range of factual and other disputes, some of which are still pending in other proceedings.

It is our submission, your Honours, that in the three years since that first application for special leave was heard nothing has changed.  There have been no developments in this or any other proceeding which would now render an appeal of any more merit or any greater utility than was the case in June 2002.  There is an overview of the proceedings in the affidavit of Mr Pascarl which appears at pages 214 to 215 of the application book.  In these pages Mr Pascarl deals with what has happened with these applications firstly up until the first special leave application and then, starting from page 217 of the application book, what has happened since then.

If I could just summarise that, your Honours.  The significant steps that have occurred are, firstly, the decision of Justice Cooper of 30 March 2004 which appears at page 229 of the application book.  That decision, your Honours, disposes of any issues in relation to the first petty patent which was the subject of Justice Cooper’s decision of 15 September 1999 and the Full Court’s decision.  Secondly, in relation to the Brisbane City Council and the State of Queensland, Justice Cooper found that the applicants were estopped from arguing that they were entitled to the second petty patent and that to allow any proceedings to proceed in relation to the second petty patent would amount to an abuse of process.

Importantly, your Honours, that decision has not been the subject of an appeal.  Secondly, there have been developments in relation to the standard patent application which are dealt with in Mr Pascarl’s affidavit at paragraphs 20 to 31, application book pages 218 to 220.  Significantly though, your Honours, the conclusion of the proceedings in relation to the payment of continuation fees in relation to the standard patent application has no bearing on the matter the subject of this appeal.  There was no question of a section 15 entitlement issue in those proceedings.  The patent request has in fact been amended to now name Mr Stack and Mr Grieves as the inventors and, thus, any decision of this Court in relation to the construction of section 15 will have no utility in relation to the standard patent application.

That leaves then, your Honours, the second petty patent which is the subject of proceeding Q46 of 2000.  That is an appeal by the applicants from a decision of the delegate of the Commissioner of Patents refusing to extend the term of the second petty patent on the basis that the first applicant was not entitled.  That proceeding does therefore raise this issue of entitlement, however, there have been no substantive steps taken in that proceeding since the last application for special leave.  This results in the unsatisfactory state of the evidence remaining exactly the same as it was three years ago.

Your Honours, before Justice Cooper on the hearing of the motion that led to the judgment dated 30 March 2004 the applicant submitted that Q46 of 2000 was the vehicle by which they would be able to bring this issue of entitlement back before this Court.  That appears at page 247 of the application book.  This has not occurred.  Instead, what the applicants have done is to bring the very same application back before this Court attended by the very same impairments and imperfections as to the resolution of factual issues.

It is my submission, your Honours, that was envisaged by the Court on the last occasion was that the door would be left open for a subsequent application for special leave in circumstances where perhaps in other proceedings the factual findings on important issues, in particular, concerning the agreement or relationship between Mr Stack and Mr Grieves and the agreement or relationship between Stack and Grieves and GS Technology, in circumstances where factual findings could be made in those proceedings which would enable this Court, if it thought fit, to properly deal with the construction issue.  That has simply not occurred.  There has been no resolution of those factual issues. 

Your Honours, it appears, in my submission, from paragraph 22 of the applicant’s submissions in reply, which appears at application book page 208, line 30, that in effect the applicants are seeking an advisory opinion from the Court on the question of construction of section 15 which may then be applied at a separate trial on new and different evidence of the entitlement issue in relation to the second petty patent.  The reason I say that, your Honours, is that the trial before Justice Cooper was run on a certain basis.  Justice Cooper described that as a tactical decision made by the applicants.  It led to the evidence before Justice Cooper being left in a confused and unsatisfactory state.

The applicants then made a second attempt at a subsequent notice of motion leading to the decision of Justice Cooper in May 2000 to put on further evidence dealing with the factual matters that were left unsatisfactorily.  Justice Cooper rejected that and there has been no appeal from that refusal to allow additional evidence in, and nothing has been done in relation to Q46 of 2000.  In my submission, your Honours, for these and the other reasons advanced in my written outline, the application for special leave ought to be refused.

GLEESON CJ:   Thank you, Ms Bowskill.  Yes, Mr Archibald.

MR ARCHIBALD:   If the Court pleases, in our submission, whatever the quality of the supposed special leave questions, the case remains an unsuitable vehicle for consideration of such questions.  As has been pointed out in the written submissions and reiterated by our learned friend in her oral submissions, central to the consideration of the matters raised by the applicants is the supposed agreement that existed in some shape or form between Stack and Grieves before the time of the making of the application for the standard patent.

The evidence in relation to that matter remains in exactly the same state today as it was in at the time at which this Court considered the matter on the previous occasion.  It is evident from our learned friend’s submissions, including their reply submissions, that what they seek to do is to gainsay in part the factual conclusions of the primary judge and in other respects to seek to rely upon what they say are reasonable inferences from the findings that the primary judge made.  Any consideration by this Court of the supposed questions will inevitably, in our submission, require embarking upon some estimation of the evidence on those points and that evidence remains in the same unsatisfactory and confused state as it was at the time at which the Court heard the first special leave application in June 2002.  Thus, in our submission, so far as the vehicle point is concerned, nothing has changed. 

So far as utility is concerned, if anything, the utility has diminished.  For what was looming in mid‑2002 as the possibility that the entitlement questions would infect the standard patent application, it is now the position that the applicants contend that that application is no longer attended by any issue in relation to the entitlement question for, as has been explained, that application is now made on the footing that both Stack and Grieves are the applicants.  Hence, any resolution of the entitlement question on the first petty patent cannot throw light on or guide the parties in relation to their rights in respect of the standard patent application which, if it were to proceed to grant, would dominate the relationship between the parties and dominate the rights of the patentee.

In relation to the second petty patent, it is the contention of the applicants that if they get to the point at which there is consideration as to the entitlement of the applicant for that patent, fresh evidence is able to be called.  Accordingly, if that contention is sustained, the determination of entitlement in relation to the second petty patent would not depend upon the material that would be before this Court when it considered the matter in relation to the first petty patent.  So for those reasons, in our submission, the application should be refused.

GLEESON CJ:   Thank you, Mr Archibald.  Yes, Mr Bain.

MR BAIN:   Your Honours, we adopt, with respect, the oral and written submissions which have been advanced by our learned friend, Ms Bowskill, and our learned friends, Mr Archibald and Ms Kenny.  We mention that anything which I could now say would only be repetitious of something they have said or something which is already in our written outline.  So unless we can specifically assist your Honours, we do not feel the need in light of the argument this morning to address your Honours beyond what is already in the written outline.

GLEESON CJ:   Thank you, Mr Bain.  Yes, Mr Vasta.

MR VASTA:   Your Honours, what is said is that there is no utility in relation to this application.  Well, your Honours, we see that the two divisionals which have been filed as a result of the matter which we won on appeal after the AAT denied us are identical in terms, according to the affidavit material, to the two petty patents.  Ultimately, when we applied we applied to have them in the names of Stack and Grieves because that was the law as it existed at the time.  But to say that there is no utility when in fact the damages in respect of the respondents’ use of that patent amount in the uncontroverted evidence of Mr Miles to 23 million is hardly a tenable proposition.

There is, indeed, if this special leave application is denied, no ability in us to be able to redress the wrong that has been occasioned as a result of these petty patents having no particular owner, the two divisional ones which mirror exactly those two petty patents, later on being issued to Stack and Grieves, but we have no redress in respect of these two petty patents which on the authority of this Court had no owners but which have been exploited without any compensation.  We say that any argument that this matter has no utility and that it does not have widespread ramifications on the interpretation of section 15 are untenable arguments.

GLEESON CJ:   This Court refused an application for special leave to appeal on 26 June 2002 in circumstances where the applicant on that occasion sought to raise precisely the same question as is sought to be raised in the present application.  On that occasion the Court indicated that it was not clear that there was any utility in an appeal, having regard to the other litigious circumstances, and that the suitability of the case as an appropriate vehicle for determining the issue that the applicant seeks to raise was impaired by the imperfect resolution of a range of factual and other disputes, some of which were still pending in other proceedings.

Since then there has been no clarification of the factual issues that were referred to by the Court on that occasion and the litigious history of the matter since 26 June 2002 has not increased the apparent utility of a grant of special leave.  In those circumstances we consider that the case remains an inappropriate vehicle to deal with the issue of law sought to be raised by the applicant and we are not persuaded that the interests of justice require a grant of special leave to appeal.  The application is dismissed with costs.

AT 10.11 AM THE MATTERS WERE CONCLUDED