Termguard Pty Ltd v Cornelius Alfred Venema

OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : Nos.763449, 750994 and 742381 in the name of TERMGUARD PTY LTD

Title: Termite-Proofing System

Action: Requests under section 32 of the Patents Act by CORNELIUS ALFRED VENEMA

Decision: Issued .
Abstract

On the evidence provided, V is not entitled to the grant of a patent in respect of any of the applications in issue.
In the somewhat unusual circumstances of this case, V claimed that:
·    the applications in issue were merely applications for “patents of addition” to patents held by him, thereby automatically establishing his entitlement to the applications in issue under section 15(1)(a); or
·    the terms of agreements V had entered into with the applicant established that rights in such applications for patents of addition would transfer to him pursuant to section 15(1)(b).
Found that the applications in issue did not fall within the scope of V’s patents and therefore did not constitute applications for “patents of addition” according to the meaning applied by V to that term, and nor was there any evidence that V had actually contributed, either solely or jointly with others, to the subject matter covered by the applications in issue. Furthermore, the terms of the agreements relied on by V were conditional upon him filing applications for “patents of addition” in his name, but did not prohibit another person, including the applicant, from filing any such applications in its own name.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application Nos. 763449, 750994 and 742381 in the name of Termguard Pty Ltd and requests under section 32 by Cornelius Alfred Venema

BACKGROUND

Patent application 750994 was filed by Termguard Pty Ltd (hereafter the applicant) on 18 December 1997 claiming priority from provisional application PO4257 filed on 18 December 1996. Application 750994 was advertised accepted on 8 August 2002. On 7 November 2002 Cornelius Alfred Venema filed a notice of opposition to application 750994. A statement of grounds and particulars was filed on 7 February 2003 and subsequently amended under regulation 5.9.
Patent application 763449 was filed on 28 March 2002 as a divisional application of application 742381 which claims priority from provisional application PO1694 filed on 16 August 1996. Application 763449 was advertised accepted on 24 July 2003.
Mr Venema filed a notice of opposition to application 742381 on 3 April 2002 followed by a statement of grounds and particulars on 3 July 2002. Application 742381 was also opposed by Altis Pty Ltd on 2 April 2002. On 5 June 2003 Mr Venema (hereafter the requestor) filed a request under section 32 claiming that application 742381 should proceed to grant in his name alone.
The requestor repeated this claim in respect of applications 750994 and 763449. The parties were given an opportunity to file evidence in support of their respective claims to entitlement. The requestor asked that he be allowed to rely on the same evidence for all three section 32 requests. Consequently, and with the agreement of both parties, the Commissioner directed that:
· Any evidence filed in relation to the section 32 requests by Cornelius Alfred Venema on any of applications 763449, 750994 or 742381 (hereafter the applications in issue) be deemed to be also filed in relation to his section 32 requests on the remaining applications in issue;
· The section 32 requests on the applications in issue be heard together; and
· The opposition proceedings involving applications 750994 and 742381 be deferred pending the outcome of the section 32 proceedings.
The evidence in support filed by each party was exchanged as was the evidence they filed in response to the supporting evidence.
On 27 February 2004 the applicant requested that Bradley Mann, the requestor and Philip Hannay be summoned to appear before the Commissioner for cross-examination. On 3 March 2004 the requestor made a similar request in respect of Phillip Baden Hearse. Mr Mann is named as the sole inventor on applications 742381 and 763449, and co-inventor along with Messrs Hannay and Hearse on application 750994. The summonses were issued as requested.
At the further request of the requestor the Commissioner issued a notice requiring the production of the original of the document comprising exhibit PH-4 of Mr Hearse's evidence in support. On 2 April 2004 the applicant advised that Mr Hearse was unable to comply with the notice since the original was not in his possession. The requestor did not dispute the validity of this reason for non-compliance.
On 31 March 2004 the applicant filed a request to serve further evidence which was granted without objection. The requestor did not provide any responding evidence but did, however, successfully request the Commissioner to issue a notice requiring the production of the original of the document comprising exhibit RHB-11 of the further evidence.
The original was produced at the hearing of the section 32 requests which took place in Canberra on 14 and 15 April 2004. The applicant was represented by Mr Richard Wilenski of counsel, assisted by Mr Richard Baddeley, patent attorney of Watermark. The requestor was represented by Mr Maurice Morrisey and Mr Allan Colton of counsel, assisted by Mr Geoff E Habel and Mr Andrew Campbell, patent attorneys of Collison & Co.
SUBJECT MATTER
The applications in issue are all directed to the same subject matter, namely, termite proofing sub-floor areas of buildings by employing pipe systems for infusing insecticide into adjacent ground.
This means of termite proofing is disclosed in Australian patents 583405 and 630228 (hereafter the original patents) wherein the pipe system comprises primary and secondary sub-systems of pipes laid beneath a waterproof sheet above which a foundation slab is laid. The primary pipe sub-system comprises a network of pipes regularly spaced throughout the floor area, with at least some of the pipes lying adjacent the foundation slab. The secondary pipe sub-system is located outwardly of the perimeter of the foundation slab. Each of the pipe sub-systems is in flow communication with at least one pipe extension having an end accessible from above ground and closed by a removable closure cap.
The pipes of both sub-systems are perforated by apertures along their lengths so that when insecticide is injected into the respective pipe extension it flows through the apertures and infuses the ground adjacent the building foundation slab.
Although effective this system is relatively expensive and the applications in issue seek to provide a cheaper alternative.
Claim 1 of application 742381 is in the following terms:
"A pipe system for termite-proofing a structure having a slab foundation being a monolithic or infill/footing slab foundation forming a barrier to termites and including:
(a) a perimeter discharge pipe extending around an external perimeter of said slab foundation, said perimeter discharge pipe having apertures of suitable size and spacing to enable insecticide to be infused into adjacent ground when said perimeter discharge pipe is charged with insecticide;
(b) a filler point assembly for connecting said perimeter discharge pipe to a source of insecticide;
wherein, the perimeter discharge pipe is the sole discharge pipe in said pipe system and said filler point assembly is enclosed within a childproof trap and is physically disconnected from said source of insecticide except when charging of said perimeter discharge pipe is required."
Claim 2 introduces a second perimeter discharge pipe which extends around an inner perimeter of the foundation slab and with the external perimeter discharge pipe is connected to the source of insecticide by the filler point assembly.
Claim 1 of application 763449 reads:
"A pipe system for termite proofing a sub-floor area of a structure having a foundation penetrated by at least one penetration, comprising:
(a)   a primary tube system comprising at least one tube located substantially at or adjacent to the perimeter of the building;
(b)   a secondary tube system comprising at least one tube adjacent to at least one penetration; and
(c)    means for charging both the primary and secondary tube systems with insecticide;
wherein each of the tube systems comprise tubes perforated along a substantial portion of their length by a plurality of apertures of such size and spacing that insecticide flows through the apertures and infuses the adjacent ground."
Typically, the penetrations take the form of a plumbing pipeline but could be a load bearing member or pier in a suspended slab or wooden floor construction or the like.
In addition to the aforementioned network of perforated pipes, the termite proofing system according to application 750994 includes a physical barrier for blocking termite access through gaps which form through soil movement between the foundation slab and slab penetrations. The barrier may comprise an adsorbent material such as a geotextile impregnated or otherwise treated with insecticide. Alternatively, a passive barrier such as a collar may be utilised.
THE EVIDENCE
Evidence in Support
The supporting evidence filed by the requestor comprises:
·    a statutory declaration made by Bradley Paul Mann on 8 September 2003;
·    an affidavit made by Philip Hannay on 4 September 2003;
·    an affidavit made by David Ferguson Clarke on 5 September 2003; and
·    a statutory declaration made by Cornelius Alfred Venema on 9 September 2003 together with exhibits CAV1 to CAV6
The supporting evidence filed by the applicant consists of:
· a statutory declaration made by Richard Hiram Baddeley on 5 September 2003, together with exhibits RHB-1 to RHB-3; and
· a statutory declaration made by Phillip Baden Hearse on 19 December 2003, together with exhibits PH-1 to PH-17
Evidence in Response
The evidence in response filed by the requestor consists of a second declaration made by Mr Mann on 6 February 2004, together with exhibits BM 1 to BM 4.
The responding evidence filed by the applicant consists of a second declaration made by Mr Baddeley on 10 November 2003, together with exhibits RHB-4 to RHB-10. The exhibits comprise copies of various Australian patent documents, including the applications in issue and the original patents.
Further Evidence
The further evidence filed by the applicant consists of:
· a third declaration made by Mr Baddeley on 31 March 2004, together with exhibit RHB-11; and
· a statutory declaration made by William John Matheson on 6 April 2004.
Cross examination
All summoned witnesses except Mr Hannay were called to give evidence.
BACKGROUND TO THE DISPUTE
The requestor is the owner of the original patents which were licensed to the applicant through its predecessor in title, Termite Proofing Installation Services Pty Ltd (hereafter TPIS), in September 1994. He states that he subsequently developed various improvements to the termite proofing systems under licence, including those made the subject of the applications in issue. This account of events is corroborated by the supporting evidence of Mr Mann, the applicant’s national technical manager, who states that
“Pursuant to that agreement and other contractual arrangements between Termguard and Mr Venema the later [sic] acted as consultant to the former. This was a formal arrangement until the end of 1995 and after that I worked informally with Mr Hannay and Mr Venema and sought their advice in attempting to devise improvements to the delivery of the termiticide under the patented system.”
Mr Mann goes on to say
“Those improvements derived from Mr Venema’s consultancy work with the company and his work with and advice to me … were implemented into the Termguard Pty Ltd pest control systems … and application nos 742381, 750994 and 763449 currently in the name of Termguard Pty Ltd were additions or improvements to the two patents in the name of Mr Venema. The Termguard Pty Ltd patents and patent applications incorrectly named myself as inventor or co-inventor.”
Mr Hannay, the managing director of the company Termguard (Northern New South Wales) Pty Ltd (hereafter TNN), confirms that the applicant’s termite proofing systems were “finalised by Bradley Mann and myself” but were “based entirely on the concepts of Mr Venema”.
Exhibit CAV2 is a copy of a Heads of Agreement between a number of parties, including the requestor and TPIS. Clause 4 of the agreement states:
“It is hereby agreed that any patents of addition relating to either of the existing patents hereafter applied for in the name of the [requestor] shall be subject to these Heads of Agreement and to the Licensing Agreement of 18th April 1994 both of which shall apply mutatis mutandis to any such patents of addition and to the incme [sic] from sales utilising same.”
which, according to the requestor, attests to the fact that any patent applications deriving from the original patents were to be filed in his name as licensor. In attempting to substantiate this claim, the requestor refers to exhibit CAV3 which is a copy of a letter dated 22 June 1997 sent to him by David Arundell the business manager and director of the applicant at the time (hereafter the Arundell letter). The Arundell letter states that provisional application PO1694 “for a patent of addition to Patent No 583405” had been filed in the name of the applicant without the authorisation of the requestor, and to “formalise the matter” encloses a Deed of Variation and Assignment for the requestor’s perusal.
A copy of the deed is purportedly exhibited as CAV4. Exhibit CAV5 is said to be a copy of an amended deed forwarded to the requestor with a letter dated 29 July 1997 from the legal firm of Fiocco Hopkins Nash (hereafter the Fiocco letter). The Fiocco letter requests that any response to the matters it raises be directed to Mr Wilenski who, as stated earlier, is representing the applicant in the present proceedings. Both versions of the deed include an undertaking that the provisional application filed by the applicant would be withdrawn. The requestor asserts that neither version of the deed was executed with the result that he is entitled to have the applications in issue proceed in his name.
Mr Hearse was a director of the applicant between 25 July 1995 and 15 January 2001. He states that in April 1996 he assigned to Mr Mann the task of designing a chemical pipe termite proofing system that would utilise the foundation slab as a partial barrier and avoid the shortcomings of the so-called "Ultimate" termite proofing systems disclosed by the original patents. The system designed by Mr Mann applied insecticide only at "critical areas" of a building structure including the perimeter edges and foundation slab penetrations. This system became known as the "Perimeter and Penetrations Retreatment System" or "PRS" which Mr Hearse understands to be the subject matter of applications 742381 and 763449.
A later development arose from industry concerns that due to the variance of moisture content in clays the foundation slab could separate from the adjacent ground thus allowing termites to track under the slab and enter the building through the slab penetrations. This resulted in the incorporation of physical barriers comprising insecticide impregnated fabrics such as geotextiles into the chemical pipe treatment system which could be used as a protective blanket underneath the foundation slab and at slab penetration points. The development work on this "hybrid" system was conducted by Messrs Mann and Hannay under the direction of Mr Hearse, and led to the filing of provisional application PO4275 from which application 750994 claims priority.
Exhibit PH-4 is a copy of a document dated 6 August 1997 which allegedly sets out Mr Mann's recollections of the development of the applicant's termite proofing systems. This document states that at a meeting of the applicant directors on 4 April 1996, Mr Mann
"was given the task of designing a system which would just apply termiticides to the critical areas, plus give a means of making this barrier replenishable.
I experimented in our premises in Adelaide with various options and eventually settled on the best option as the system which John Rasmussen [the then Managing Director] lodged the patent for in August 1996. I was working on various options through May to August, and also developed a few varieties of systems which were similar to the Perimeter Retreatment, but that could be applied in regard to timber floor homes, suspended slabs, pier constructions, split level homes, garages poured at a lower level or after the initial slab was laid. I was given some ideas on how such a system might work during this experimentation time by various Licensees and people in industry, as well as the Termguard Directors and other Termguard employees. The system that evolved was as the result of a series of trial and error experiments, myself talking to various people about how our Ultimate System worked in various situations and how the External Ringline distributed termiticides. John Rasmussen while being the Managing Director of the organisation was gauging the results of tests and experiments as I know the Board of Directors were anxious for a system which they could put into the market place.
After the patent was registered and I undertook field trials and asked various industry opinion, I became aware that this new system would have major problems because of soil subsidance … The company went back to the drawing board and searched for something that would in effect do the equivalent of the physical barrier around the penetrations, and we experimented with the geofabric. Phil Hannay, a Termguard Licensee was on contract with the company at that time as a Consultant, and he was helping me work on this system. We registered this system with the geofabric in December 1996."
Mr Hearse says he is not aware of any contribution made by the requestor to the PRS and hybrid termite proofing systems developed by Mr Mann and Mr Hannay, and makes the point that Mr Mann does not refer to any involvement on the part of the requestor in exhibit PH-4. Mr Hearse further states that although the requestor was engaged as a consultant to the applicant until the end of 1995, his services were limited to the installation of the Ultimate termite proofing systems which are “different in design” to the PRS and hybrid systems.
Mr Mann dismisses exhibit PH-4 as a fabrication. He says the signature and date are not in his hand-writing, and denies having ever prepared a document of this nature. He further states that exhibit PH-4 is factually incorrect in the following respects:
·    no initial experimentation was required on his part as asserted in the second paragraph of exhibit PH-4 since the applicant's termite proofing systems were simply based on improvements to the Ultimate system originally designed by Mr Venema. According to Mr Mann, he explained
"to the meeting that the company already had two systems:-
1.   The first original patented system (1986) which became known as the Perimeter and Critical Areas Retreatment System and later the [PRS system].
2.   The Ultimate System which was the subject of the second patent (1990). Casey [Cornelius] Venema had developed first of all a partial Replenishable System ie. Chemical System but this was not sufficient to comply with the Australian Standard for chemical systems with partial chemical application as when he developed it a slab was not recognised as a barrier. Therefore the first system which he put into practice and which was covered by his first patent was with full hand spray of the relevant chemical. Once the concrete slab was approved as a termite barrier, both the reason and the requirement for full hand spray was removed. The option of applying the full under slab hand spray chemical application was still maintained with the [PRS] options …
I informed the meeting that company [sic] and its licensees could use the two patented systems in full or in part. I said that I personally was against dropping the hand spray but the meeting decided to pursue the first system without the hand spray. There was not a long discussion and certainly not a brainstorming session as both were unnecessary given what I had outlined to the meeting and its acceptance of my advice and its direction that the first system be used without the hand spray."
·    Mr Rasmussen did not have the expertise to gauge the results of tests or experiments even if any had been conducted. Some checking of flow distribution had been undertaken but this had nothing to do with “trial and error experiments”.
·    the applicant did not go "back to the drawing board" as a result of the issue of soil subsidence since it had long before the introduction of geotextiles used plastic sheeting, shade cloth and a nylex cover (called "Permecover") as a physical barrier around the slab penetration sites. The applicant began using geotextiles merely as a cheaper alternative to the nylex product.
·    Mr Hannay's involvement with physical barriers occurred prior to the commencement of his consultancy with the applicant (exhibit BM 4).

Mr Mann also refutes Mr Hearse’s claim that the PRS and hybrid termite proofing systems were developed by Mr Mann and Mr Hannay under his direction. According to Mr Mann, Mr Hearse “was not in sufficient technical command of the subject to direct and supervise either of us but relied on us for all technical input.”
Exhibit RHB-11 is a copy of a two-page facsimile sent to Mr Baddeley from the applicant on 6 August 1997. The first page reads
"Robyn Hayes Hearse [the wife of the applicant’s declarant, Phillip Baden Hearse] has asked me to fax you my recollections of the initial brainstorming and ideas which contributed to this company developing the Perimeter Retreatment System.
Attached is a statement of my recollections in this regard."
and is signed by "Brad Mann". The statement in question replicates exhibit PH-4.
BASIS OF THE DISPUTE
Relevant law
Section 32 provides as follows:
"If a dispute arises between any 2 or more interested parties in relation to a patent application whether, or in what manner, the application should proceed, the Commissioner may, on a request made in accordance with the regulations by any of those parties, make any determinations the Commissioner thinks fit for enabling the application to proceed in the name of one or more of the parties alone, or for regulating the manner in which it is to proceed, or both, as the case requires."
The term "interested party" is defined in Schedule 1:
"interested party, in relation to a patent application, means the applicant or a joint applicant, or a person who claims to be entitled to the grant of a patent on the application, either alone or jointly with another person.
It is clear that the requestor is an interested party, as he claims sole entitlement to the grant of a patent on each of the applications in issue.
The entitlement of a person to the grant of a patent is provided for in section 15, which states:
“(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.”
Section 15 sets out the categories of persons who may be granted a patent. It makes a distinction, so far as is relevant, between the inventor in paragraph (a) and a person who derives entitlement under paragraph (b).
The section 32 requests
The section 32 requests were in accordance with regulation 3.6 accompanied by notices setting out the basis of the requestor’s alleged entitlement. In essence the “facts” he relies on are:
·    the requestor is the patentee of the original patents which were licensed to the applicant under a License Agreement made in September 1994 (exhibit CAV1);
·    prior to the above License Agreement, there was a Heads of Agreement made in August 1994 (exhibit CAV2) which required any patents of addition relating to the original patents and applied for in the name of the requestor to be subject to the Heads of Agreement and an earlier License Agreement made in April 1994;
·    the Arundell letter which states that provisional application PO1694 (from which application 742381 claims priority) was filed without the authorisation of the requestor;
·    the Fiocco letter attaching an amended Deed of Variation in which the applicant inter alia undertakes to withdraw provisional application PO1694, and agrees that “any additions to the Patents shall be applied for in the name of the [requestor]”;
·    the requestor’s rights in the termite proofing system the subject of divisional application 763449 follow his eligibility to the grant of a patent in respect of parent application 742381; and
·    application 750994 is a further development of the termite proofing system the subject of patent 583405.
Although somewhat incoherent, as I understand the notices the requestor is alleging that the applications in issue constitute applications for patents of addition to the original patents, and thus entitlement lies with him under section 15(1)(b) by virtue of the terms of the Heads of Agreement and license agreements he entered into with the applicant.
Nevertheless, during the course of cross-examination the requestor explained that he also relied on the contention that the applications in issue “fell into the scope” of the Ultimate systems which, when viewed in conjunction with the Mann, Hannay and Clarke declarations, indicates to me thatthe requestor is alternatively claiming entitlement under section 15(1)(a) as the inventor of the subject matter covered by the original patents.
ADMISSIBILITY OF EVIDENCE
Mr Wilenski submitted that any evidence filed in support of the requestor’s claim to inventorship went beyond the scope of the section 32 requests and was therefore inadmissible.
It is, however, important to remember that in these proceedings the Commissioner functions as an administrative tribunal and, in performing this role, is not obliged to determine questions of fact in accordance with the rules of evidence applicable in a court of law. As said in The Minister forImmigration and Ethnic Affairs v Pochi 31 ALR 666 at 689:
“These technical rules of evidence, however, form no part of natural justice. The requirement that a person exercising quasi-judicial functions must base his decision on evidence means no more than it must be based upon material which tends logically to show the existence or non-existence of facts relevant to the issue to be determined, or to show the likelihood or unlikelihood of the occurrence of some future event the occurrence of which would be relevant. It means that he must not spin a coin or consult an astrologer, but he may take into account any material, which as a matter of reason, has some probative value in the sense mentioned above. If it is capable of having any probative value, the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of deciding the issue.”
Accordingly, the Commissioner is entitled to act on any material which is “logically probative” of the issues being decided.
The evidence objected to by Mr Wilenski goes to inventorship under section 15(1)(a) which in itself is potentially determinative of the central issue of entitlement raised in the section 32 requests. Further, there would in my opinion be no denial of natural justice if the evidence in dispute was admitted into the proceedings since it is clear from the applicant’s own evidence that it has duly considered the evidence put forward by the requestor in relation to his claim to entitlement as inventor when preparing its case.
Taking these circumstances into consideration I intend to have regard to the whole of the evidence for the purposes of my decision.
STANDARD OF PROOF
It is common ground that the standard of proof in these proceedings is the normal standard of proof required in civil litigation, that is, on the balance of probabilities (Dunlop Holding Ltd's Application (1979) RPC 469).
The Dunlop case has further established that I can only make the determination sought under section 32 if I am satisfied that sole entitlement rests with the requestor and in this he carries the legal burden of proof. However, the evidentiary burden may shift according to the state of the evidence from time to time. This will depend on the circumstances of the case and the likelihood of the facts being within the knowledge of, or more readily available to, one party or the other.
DECISION
As is often the case where a dispute between parties becomes acrimonious the weight of evidence does not lie clearly on one side or the other. In these circumstances it is normally expected that testing the declaratory evidence under cross-examination would prove to be of some considerable assistance. However, I think it is fair to say that in this instance examination has fallen well short of resolving the many questions left unanswered by the declaratory evidence. Nevertheless, ultimately I must decide whether entitlement lies with the requestor and in this I am bound by the written and oral evidence that has been put before me.
Entitlement under section 15(1)(a)
In firstly deciding whether the requestor has entitlement as inventor, I think it appropriate to present a broad review of the development of the termite proofing systems the subject of the applications in issue.
It is not disputed by the applicant that initial development of these systems began as a full underslab treatment system as disclosed in patent 583405 (exhibit RHB-9) in the name of the requestor. This system comprises primary and secondary sub-systems of perforated pipes laid beneath a waterproof sheet above which a building foundation slab is laid. The primary pipe sub-system comprises a network of pipes regularly spaced throughout the floor area, with at least some of the pipes lying adjacent the foundation slab. The secondary pipe sub-system is located outwardly of the perimeter of the foundation slab. Each of the pipe sub-systems is in flow communication with at least one pipe extension having an end accessible from above ground and closed by a removable closure cap. The pipes of the primary system are preferably co-extensive with the walls of the building. On page 4 of patent 583405 it is stated that “[a]dditional tubes are preferably laid in those areas where dampness may occur, eg. laundry, toilet and bathroom.”
Patent 630228 (exhibit RHB-10), which is also in the name of the requestor, is directed to improving the distribution of insecticide achieved with the termite proofing system disclosed by patent 583405. In the former patent the primary sub-system of perforated pipes comprises “at least one relatively large diameter trunk tube” which extends across the building foundation slab and communicates at each end with a respective access port for charging the system with insecticide, and a plurality of smaller diameter “distribution tubes” connected to the trunk tube(s) at regular intervals. The secondary sub-system comprises a pair of pipes which extend halfway around the outer periphery or apron of the foundation slab and communicate at their ends with the access ports. The system of patent 630228 allows insecticide to be injected from both ends of each trunk tube via the access ports whereby
“the distance to be travelled by the insecticide is much reduced from the distance which existed with the embodiment described in my [patent 583405], and this enables a higher rate of distribution to occur for a shorter period of time which will result in a more even distribution of insecticide.”
As already mentioned, the termite proofing systems disclosed by the requestor’s original patents were utilised for infusing termiticide into the ground underlying and surrounding the building foundation slab, and became known as the “Ultimate” systems. Although providing an effective barrier, these systems were considered too expensive for general market acceptance.
The regulatory authorities in Australia subsequently accepted the foundation slab itself as a physical barrier to termites, and the termite proofing system disclosed in application 742381 (exhibit RHB-5) and divisional application 763449 (exhibit RHB- 8) is said to have arisen from a commercial imperative on the part of the applicant to design a cost competitive system that would utilise the foundation slab as a partial barrier.
These applications disclose a termite proofing system in which the primary sub-system of perforated pipes comprises an inner perimeter pipe connected to pipe grids which surround plumbing pipelines or other slab penetrations into “wet areas” of the building such as bathrooms, toilets and kitchens. The inner perimeter pipe may be omitted for a monolithic slab construction. The secondary sub-system comprises an outer perimeter pipe. In use the termite proofing system of applications 742381 and 763449 provides a means of treating “critical areas” of a building with insecticide, including construction joints in the slab and the aforementioned wet area penetration points and perimeter edges. Most notably, the primary sub-system does not, in contrast to the Ultimate systems, include a network of regularly spaced pipes under the slab.
The termite proofing system disclosed by application 750994 (exhibit RHB-6) is particularly concerned with the provision of a physical barrier for blocking termite access through gaps which form through soil movement between the foundation slab and slab penetrations. The barrier may be an active barrier comprising an adsorbent material such as a geotextile impregnated or otherwise treated with insecticide which is secured to the slab penetration, or underlies the whole foundation slab to form a protective blanket. Alternatively, a passive barrier including a collar or sheath which engages the slab penetration, and a flange below the slab to close off any gaps, may be utilised. On page 4 it is stated that the physical barrier is conveniently employed with pipe systems of the type described in the original patents and application 742381.
As noted previously, the termite proofing systems respectively disclosed by applications 742381 and 763449, and application 750994, were known as the PRS and hybrid systems. It can be seen from the foregoing review that these systems have essentially evolved from the full underslab treatment system the subject of the original patents to a system for treating only the perimeter and critical areas of a building.
Returning now to the question of entitlement, in determining whether an alleged inventor has an entitlement to an invention, the test that is often applied is whether that person's contribution, either solely or in conjunction with others, had a material effect on the invention. This is apparent from Row Weeder Pty Ltd v Nielsen 39 IPR 400 and is an approach approved of by the Administrative Appeals Tribunal in Upham v Commissioner ofPatents [1998] AATA 852. Also potentially relevant in the present circumstances is the principle discussed in Falkenhagen et al v Polemate Pty Ltd [1995] APO 32 where it was said:
"… it seems to be the case that a second person, engaged because of that person's expertise to construct a device … based on instructions from or given the concept of a first person, is not normally regarded as an inventor of the device, and this holds true even if the second person suggests ways to aid its design or operation. However if the second person's suggestions give a result or advantage not contemplated by the original concept then the second person may qualify as a joint inventor of the improved device. In this context I think the result or advantage would need to be a material one so that the resulting device is overall an improved one not merely a preferred workable embodiment of the original concept."
A fundamental difficulty the requestor faces in making out his case on inventorship is that there is simply no evidence from which I can identify the exact contribution allegedly made by him to the PRS or hybrid systems. Mr Mann provides some insight when he contends that these systems arose “as a natural progression of the original patents”. However, before considering this line of argument further, it is to be noted that the authorities are quite clear that inventiveness is not relevant to a determination of the rights to an invention but rather, as in the words of the Deputy Commissioner in CSIRO v Gilbert and Hazlewood 31 IPR 67 at 72, it involves “an objective assessment of the contribution simpliciter to the invention”.
Mr Hearse states in his evidence in support that while director of the applicant he formed the opinion that the Ultimate termite proofing systems would be difficult to commercialise. Consequently, he allocated to Mr Mann, who he knew to have relevant expertise, the task of designing a termite proofing system that would utilise the foundation slab as a partial barrier and offer a more cost competitive alternative to the Ultimate systems. Mr Hearse goes on to say that
“Mr Mann subsequently solved the problem by designing a chemical pipe treatment system applying termiticides only at “critical areas” of a structure. These “critical areas” included the perimeter edges and slab penetrations thereby achieving Termguard’s corporate objective of providing customer choice and reducing our termite proofing systems’ costs.”
When this statement is read in context it is immediately apparent that the treatment system said by Mr Hearse to have been designed by Mr Mann is the PRS system.
For his part Mr Mann states in his evidence in response that he can recall Mr Hearse “saying that some licensees were telling the company that installation of the Ultimate System was very labour-intensive and some were querying the cost of installation”. Mr Mann also says that during further discussions he pointed out that the acceptance of the foundation slab as a physical barrier “gave the company several options.”
These discussions are said by Mr Hearse to have occurred at a meeting of the applicant directors which was held on 4 April 1996. Mr Mann acknowledges that a meeting took place, but says he “cannot be certain of the date”. Exhibit PH-4 is alleged by Mr Hearse to set out Mr Mann’s recollections of the meeting and the ensuing development of the PRS and hybrid systems.
Although no direct submission has been made concerning the relevance of exhibit PH-4, it seems the inference the applicant seeks to draw from this exhibit is that by Mr Mann’s own account the Ultimate systems did not naturally suggest either the PRS or the hybrid system. In cross-examination Mr Mann stated he had “absolutely no idea” of how his signature came to be applied to exhibit PH-4, and repeatably denied under fairly intense questioning that he had been asked by anyone to prepare a document setting out his recollections, including Robyn Hearse who is the wife of the applicant’s declarant Mr Hearse. Mr Mann rejected the authenticity of exhibit RHB-11 for the same reasons. During the course of the hearing Mr Wilenski tendered a copy of a document which Mr Mann agreed was similar to exhibit PH-4 except for one typographical error. He also agreed that the wording “BRAD Ring me – any changes to this?” at the bottom of the document was in Robyn Hearse’s hand writing, but stated he had not seen the document before.
It is perhaps unfortunate that Ms Hearse was not called as a witness on this matter, but there is nothing before me to suggest that the applicant was reluctant to do so through fear that her evidence may have exposed facts unfavourable to its case (Jones v Dunkel (1959) 101 CLR 208) as Mr Morrisey has submitted. Thus in the absence of evidence to the contrary, I have no reason to disbelieve Mr Mann’s evidence that he did not provide any input into or sign either of exhibits PH-4 and RHB-11.
However, his evidence regarding the content of exhibit PH-4 presents some problems for the requestor. Mr Mann states in his evidence in response that one of the options discussed at the meeting of the applicant directors stemmed from the termite proofing system disclosed by the first of the original patents, namely, patent 583405. Mr Mann says he informed those present at the meeting that
“the first system which [the requestor] put into practice and which was covered by his first patent [583405] was with full hand spray of the relevant chemical. Once the concrete slab was approved as a termite barrier, both the reason and the requirement for full hand spray were removed. The option of applying the full under slab hand spray chemical application was still maintained … as per the original 1^st patent …
I said that I personally was against dropping the hand spray but the meeting decided to pursue the first system without the hand spray.”

In cross-examination Mr Mann stated that in his view the termite proofing system of patent 583405 was designed to treat critical areas of the slab including wet areas and perimeters, and it is evident from the following exchange that this opinion has coloured his evidence regarding the contribution allegedly made by the requestor to the PRS system:
“Mr Wilenski: Is it the case that because you understand 583405 as being a wet or critical area treatment system you think that the application that Termguard subsequently made for the system that had the perimeter and the pipes attending the wet areas and the penetrations that that was in fact the same as the original Venema patent? Mr Mann: Yes.”
While it is true that patent 583405 briefly mentions the possibility of laying pipes in areas where dampness may occur, I agree with Mr Wilenski that as a matter of proper construction the specification of patent 583405 does not envisage the focussed treatment of critical areas. The primary thrust of the patent when read as a whole is plainly directed to a full underslab treatment system and, apart from a single sentence, the specification (including the drawings) of patent 583405 is wholly silent on the treatment of wet areas. Notably, there is no teaching that directs the reader of the specification to adopt the slab penetration pipe grids of the PRS system as a means of effecting such treatment. Indeed it became apparent during cross-examination that Mr Mann has misapprehended the contents of both original patents when he stated emphatically that the system disclosed by patent 630228 incorporated a number of regularly spaced pipes under the slab, “not like the first patent”. In light of the discussion above this analysis is clearly flawed.
Nevertheless, Mr Mann contends on this footing that the PRS system is simply an improvement or modification of the requestor’s original system which is the subject of patent 583405. He says this is demonstrated by the fact that no trial and error experimentation was required to implement the decision made at the meeting of 4 April 1996 to use “the first patented system without the hand spray.” Exhibit PH-11 is a copy of a CSIRO technical appraisal of the PRS system. The appraisal appears to have been first conducted in September 1996, and while not providing an endorsement its stated intention is to “help all those concerned with the approval, specification and use of new products or systems.” On assessing a number of aspects of the PRS system the appraisal expresses the opinion that under certain conditions the system
“will provide a suitable reticulation system for use with concrete slab-on-ground (both monolithic and infill slabs) for protection of the slab perimeter and around slab penetrations. When injected with an approved chemical termiticide to deter subterranean termite attack, it is capable of providing rates of application that comply with the requirements Standards Australia, AS 3660-2000, ‘Termite management. Part 1. New building work’ (in the treated areas)”
The appraisal also notes the requirement for using the PRS system in conjunction with a full coverage hand spray in areas that need additional protection beyond that provided by the foundation slab. However, there is no indication in exhibit PH-11 that the PRS system was technically assessed “using the data generated from the [original] patents” as asserted by Mr Mann in his written evidence, or that the appraisal was otherwise assisted by reason of the CSIRO’s acceptance of the PRS system as a slight variation of the already tested Ultimate systems, and did not regard it as “new or different.”
In maintaining this avenue of attack, Mr Morrisey pointed out that provisional application PO1694 which first disclosed the PRS system was filed only four months after the meeting of 4 April 1996, and there is no evidence of any investigative work on the part of the applicant during this time. To the contrary, he submitted that exhibit PH-8 shows that only efficacy testing was carried out. However, the evidence is to my mind inconclusive on the nature of the testing undertaken by the applicant in respect of the PRS system over the period in question, and the relatively prompt filing of provisional application PO1694 says nothing of whether or not subsequent developmental work was required before the system was market ready. This is of course not an uncommon protection strategy in which the principal role of a provisional application is to establish an early priority date, and not to provide a full disclosure of the final form of the invention.
Whichever way it has been presented, the case for the requestor is essentially that the PRS system is merely an improvement or modification of the system of patent 583405. I have difficulty in accepting this proposition. Aside from the failure of patent 583405 to expressly disclose how the treatment of wet areas is accomplished, it is readily distinguishable from the PRS system in that the latter does not rely on any underslab treatment which Mr Hearse described in cross-examination as “a major shift in culture in the business.” Furthermore, although the inventive merit of these differences has yet to be tested, as I have already said rights in an invention do not flow from an assessment of the inventiveness of respective contributions to the invention. Thus Mr Mann’s attempts in particular to downplay the significance of the features that differentiate the PRS system from the system of patent 583405 are misguided in the present context.
More relevantly, Mr Mann has not as required by the authorities to which I have referred established the exact contribution allegedly made by the requestor to the PRS system. The requestor has claimed that he is the sole inventor, but for completeness I will also consider whether he has entitlement as joint inventor.
There is a useful discussion on joint and sole inventorship in Chisum on Patents at 2.02:
“The concepts of sole inventorship and joint inventorship are critical elements of originality. Sole inventorship occurs when one person conceives the solution to the problem, the means to the desired end, which constitutes the subject matter of the invention. Joint inventorship occurs when more than one person contributes to the conception of the solution. It is frequently difficult to determine who has in fact contributed to the conception of a given invention because the contribution must consist of more than suggesting a desired result or following the instructions of another.”
In the present matter there is no evidence that the requestor alone conceived the PRS system as the solution to the problem of devising a termite proofing system that would offer a more cost competitive alternative to the Ultimate systems while utilising the foundation slab as a partial barrier which was raised by Mr Hearse on 4 April 1996 at the meeting of the applicant directors. In fact, on his own evidence, the solution originated with Mr Mann. Moreover, and as already discussed, his assertion that the solution was naturally suggested by the requestor’s patent 583405 is unconvincing given Mr Mann’s obvious misconstruction of its true scope and his consequential failure to satisfactorily explain how on any view a treatment system that targeted the perimeter and critical areas of a building is inherently disclosed by the full underslab treatment system of patent 583405.
So far as the issue of joint inventorship is concerned, Mr Mann states in his evidence in support that the PRS system arose from his informal work with Mr Hannay and the requestor when seeking to devise improvements to “the patented system.” However, if, as Mr Mann has previously stated, these improvements merely involved trivial changes to the system of patent 583405, it is rather surprising that he required the assistance of Mr Hannay and the requestor. Importantly, Mr Mann does not identify any contribution made by the requestor to this work which materially benefited the PRS system. Thus, for example, if the requestor’s input was needed to give practical effect to the solution proposed by Mr Mann at the meeting of 4 April 1996, or provided a result or advantage not contemplated by this proposal, it seems incomprehensible that Mr Mann would not have stated as much in his evidence.
The other evidence relied on by the requestor is similarly deficient. Mr Clarke’s evidence, so far as is relevant, is largely hearsay, and Mr Hannay simply notes that the PRS system “was finalised” by Mr Mann and himself but says nothing of the informal work referred to by Mr Mann in written evidence that allegedly involved the requestor. For his part the requestor has not provided any explanation of his role in the development of the PRS system, even though he has had ample opportunity to do so.
On the basis of the foregoing I find that there is an overwhelming lack of evidence to support a claim by the requestor to sole or joint inventorship. As has become apparent, his ownership of the original patents in itself goes nowhere near establishing that he made a material contribution to the PRS system.
My findings in respect of the hybrid system are the same for the reasons already discussed in relation to the PRS system, and it is especially noteworthy that once again the evidence for the requestor concerning the development of the hybrid system does not refer at all to the role played by him.
In any event, and as submitted by Mr Wilenski, the hybrid system which is the subject of application 750994 “bears no resemblance to anything that came before it” since there is no suggestion whatsoever in either of the original patents of utilising a physical barrier to block termite access through gaps which form through soil movement between the foundation slab and slab penetrations. Application 750994 explains that termiticide impregnated fabrics such as geotextiles are a preferred form of barrier. In his evidence in response Mr Mann states that
“… Mr Hearse allows the reader to form the impression that the GEOfabrics were introduced to the company by himself as “those fabrics were familiar to me from my experience in providing services to the mining industry”. Whilst that may be so the company developed the use of those products in the way I have stated as the Nylex factory from which the original Permecover product come [sic] was just up the road from the then Salisbury base of the company and I went there to establish contact and to acquire the company’s product which we found satisfactory. When the Nylex product went up in price, we switched to that sold by GEOfabric Australia …”
which clearly suggests that the idea of using a geotextile barrier came from Mr Hearse or Mr Mann, but not the requestor.
Accordingly, I conclude that the requestor does not have entitlement under section 15(1)(a) to the grant of a patent on any of the applications in issue.
However, as I have stated earlier, the requestor’s alternative submission is that he is entitled under section 15(1)(b).
Entitlement under section 15(1)(b)
At the core of this aspect of the requestor’s case is clause 4 of the Heads of Agreement exhibited as CAV2 in which the parties including the requestor and TPIS agree that
“any patents of addition relating to either of the [original] patents and hereafter applied for in the name of the [requestor] shall be subject to these Heads of Agreement and to the Licensing Agreement of 18th April 1994 ...”
This same condition was carried into effect in a later agreement dated 8 September 1994 (exhibit CAV1) by the requestor to grant a license to TPIS in respect of “the Patents” which are defined in clause 1.1 of the agreement to mean
“Patent Number 583405 and Patent Number 630228 issued by the Australian Patents Office and any patents of addition relating to either of the existing patents hereafter applied for in the name of the Licensor”.
According to Mr Morrisey, these agreements are to be read as a present assignment of future intellectual property whereby any patents of addition relating to either of the original patents would be applied for in the name of the requestor. He said this interpretation is consistent with the Arundell and Fiocco letters, and their respective attachments.
The Arundell letter relevantly states:
"PO1694 is a provisional application for a patent of addition to Patent No 583405 which has been filed in the name of Termguard Pty Ltd.
The applicant for a grant of a Patent of Addition must be the applicant or patentee of Patent No 583405 or a person authorised by the applicant or the patentee ie. yourself.
Accordingly an error has been made on our part as we have not received authorisation from you to register the Patent of Addition.
We therefore would like to formalise this matter and to this end we enclose a Deed of Variation and Assignment for your perusal. This deed provides us with the right to utilise the Patent of Addition in exchange for royalty fees as currently being paid."
The Fiocco letter advises that the draft Deed of Variation and Assignment previously forwarded to the requestor with the Arundell letter had been amended so as to give effect “to the matters you have asked to be included.” The Fiocco letter attaches a copy of the amended Deed in which the “terms of the Deed which have been amended from the previous version have been underlined for ease of reference”.
However, during the course of the hearing Mr Morrisey conceded that exhibit CAV4 and the attachment comprising part of exhibit CAV5 were not, as was intended, copies of the Deeds sent to the requestor with the Arundell and Fiocco letters, respectively. This error becomes apparent when it is realised that both documents in question are entitled “Deed of Variation and Trade Mark License” rather than “Deed of Variation and Assignment”, and are stamped “POSTED 13 JAN 1998” which is well after the date of either the Arundell letter or the Fiocco letter. In addition, no underlining is present in the Deed of exhibit CAV5 contrary to the advice given in the Fiocco letter. As it turns out the Deeds that had been incorrectly tendered as exhibits were prepared by the requestor’s accountant, and were never sent to the requestor by or on behalf of the applicant. Consequently, I will have no further regard to these documents.
There is, however, no dispute as to the authenticity of the Arundell or Fiocco letters. In relation to the former, Mr Baddeley, the patent attorney for the applicant, notes that although application 742381 claims priority from provisional application PO1694, it is not an application for a patent of addition as purported in the Arundell letter. He says this is also the case with application 763449 which, as noted beforehand, is a further application of application 742381. I shall return to this matter later. For the present it is sufficient to observe that on its face the statement in the Arundell letter to the effect that the applicant for a patent of addition must be the applicant or patentee in respect of the parent application or patent, or a person authorised by the applicant or patentee, is simply a reference to legal requirements (cf. section 81(1)). There is certainly no inference of any passage of entitlement in provisional application PO1694 to the requestor. The Fiocco letter similarly does not suggest any recognition of a transfer of title in his favour.
This leaves me to consider the meaning of the terms of the Heads of Agreement and the license agreement of 8 September 1994 (hereafter the agreements). This must be determined by construing the agreements in accordance with the normal principles of law. It is accepted that where the words of an agreement are free from ambiguity, then the plain, natural or common meaning is adopted. Evidence of the factual matrix surrounding the agreement is admissible to assist in determining the plain or natural meaning of the terms in the agreement. Where there is ambiguity in the language used, then extrinsic evidence is admissible to reveal the intention of the parties (see Halsbury’s Laws of Australia, para [110-2243] et seq).
The agreements are said by the requestor to confirm that any patent applications deriving from the original patents are to be filed in his name. I do not agree that as a matter of construction the terms of the agreements can be read in this way.
There are two questions that need to be answered here. First, what patent applications are covered by the agreements and, second, what rights (if any) do the agreements transfer to the requestor. The agreements unambiguously refer to “any patents of addition relating to” the original patents held by the requestor. The term “patent of addition” has a precise meaning in patent law. There is no direct evidence on whether the term as it appears in the agreements has the same meaning, but it is clear that the requestor has effectively adopted this meaning by regarding the applications in issue as being directed to improvements or modifications which do not alter the essential character of the subject matter of the original patents. However, as correctly noted by Mr Baddeley, none of the applications in issue has been filed as an application for a patent of addition, and I therefore do not view them as falling within the terms of the agreements.
Even if I am wrong in this, the agreements next speak about any patents of addition “hereafter applied for in the name of” the requestor. There is again no ambiguity and on its plain meaning the overall effect of this statement is that the rights granted by license from the requestor to TPIS would apply in respect of the original patents, as well as any applications for patents of addition to the original patents that were filed in the name of the requestor, provided such applications were filed in the name of the requestor. That is, the agreements do not impose a condition on TPIS that any applications for patents of addition to the original patents must name the requestor as applicant. Thus TPIS (or the applicant as its successor in title) was not prohibited by the agreements from filing any such applications, including the applications in issue, in its own name.
I therefore find that the operation of the agreements does not transfer title in the applications in issue to the requestor pursuant to section 15(1)(b).
CONCLUSION
I have found that the requestor has not derived entitlement under section 15(1)(a) or section 15(1)(b) in respect of the applications in issue.
I therefore direct that:
·    Application 742381 proceed in the name of Termguard Pty Ltd alone, with Bradley Mann named as sole inventor;
·    Application 750994 proceed in the name of Termguard Pty Ltd alone, with Bradley Mann, Phillip Hearse, Phillip Hannay and David Clarke named as co-inventors; and
·    Application 763449 proceed in the name of Termguard Pty Ltd alone, with Bradley Mann named as sole inventor.
COSTS
Having considered all the circumstances in this case I see no reason to depart from the normal practice that costs follow the event. I therefore award costs according to Schedule 8 against the requestor.
O L Haggar
Delegate of the Commissioner of Patents
Patent attorneys for the applicant: Watermark, Perth
Patent attorneys for the requestor: Collison & Co, Adelaide

[2004] APO 34

15 December 2004