Vector Corrosion Technologies Limited v E-Chem Technologies Ltd

Case [2022] FCA 188

FEDERAL COURT OF AUSTRALIA

Vector Corrosion Technologies Limited v E-Chem Technologies Ltd [2022] FCA 188

File number(s): QUD 117 of 2019
Judgment of: JAGOT J
Date of judgment: 9 March 2022
Catchwords: INTELLECTUAL PROPERTY — contested entitlement to patent concerning electrochemical treatment of corrosion in reinforced concrete — where applicant claims sole or joint ownership of patent as ex-employees conceived of inventive concept while working at business later purchased by applicant — where inventive concept conceived of by respondents after leaving former employer — proceeding dismissed with costs
Legislation:

Evidence Act 1995 (Cth) s 63

Patents Act 1990 (Cth) ss 15(1), 34(1), 138(3)–(4), 192, sch 1

Patents Act 1977 (UK) ss 7, 39–42

Cases cited:

Concrete Preservation Technologies v Vector Corrosion Technologies [2013] APO 71

Duoguard Australia Pty Ltd v Vector Corrosion TechnologiesLtd [2015] APO 86; (2015) 118 IPR 612

JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474; (2005) 67 IPR 68

Kafataris v Davis [2016] FCAFC 134; (2016) 120 IPR 206

Markem Corp v Zipher Ltd [2005] EWCA Civ 267; [2005] RPC 31

Neobev Pty Ltd v Bacchus Distillery Pty Ltd (Administrators Appointed) (No 3) [2014] FCA 4; (2014) 104 IPR 249

Polwood Pty Ltd v Foxworth Pty Ltd [2008] FCAFC 9; (2008) 165 FCR 527

Shum v Intel Corporation 499 F.3d 1272 (2007)

Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2010] FCA 1211; (2010) 88 IPR 459

Stack v Davies ShephardPty Ltd [2001] FCA 501; (2001) 108 FCR 422
Stanelco Fibre Optics Ltd’s Application (No 2) [2005] RPC 16

University of Western Australia v Gray (No 20) [2008] FCA 498; (2008) 76 IPR 222

University of Western Australia v Gray [2009] FCAFC 116; (2009) 179 FCR 346

Vehicle Monitoring Systems Pty Ltd v SARB Management Group Pty Ltd [2021] FCAFC 224

Yeda Research & Development Co Ltd v Rhone-Poulenc Rorer International Holdings Inc [2007] UKHL 43; [2008] RPC 1

Division: General Division
Registry: Queensland
National Practice Area: Intellectual Property
Sub-area: Patents and associated Statutes
Number of paragraphs: 388
Date of last submission/s: 2 July 2021
Date of hearing: 18, 21, 23–25, 28–30 June 2021, 1–2 July 2021
Counsel for the Applicant: Ms K Howard SC with Mr C H Smith
Solicitor for the Applicant: Bennett & Philp Solicitors
Counsel for the Respondents: Mr J S Cooke with Mr R Clark
Solicitor for the Respondents: Maddocks Lawyers

ORDERS

QUD 117 of 2019
BETWEEN:

VECTOR CORROSION TECHNOLOGIES LIMITED

Applicant
AND:

E-CHEM TECHNOLOGIES LTD

First Respondent

NIGEL DAVISON

Second Respondent

ADRIAN CHARLES ROBERTS (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

JAGOT J

DATE OF ORDER:

9 MARCH 2022

THE COURT ORDERS THAT:

1.The amended originating application be dismissed.

2.Subject to orders 3 and 4, the applicant pay the respondents’ costs of the proceeding as agreed or taxed.

3.If a party wishes to vary order 2 the party may file and serve notice of the proposed varied order and a written submission in…

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AGLC
Vector Corrosion Technologies Limited v E-Chem Technologies Ltd [2022] FCA 188
Case
[2022] FCA 188
Decision Date

CaseChat Overview and Summary

In the case of Vector Corrosion Technologies Limited v E-Chem Technologies Ltd, the Federal Court of Australia was tasked with determining the rightful ownership of a patent related to electrochemical treatment for corrosion in reinforced concrete. Vector Corrosion Technologies, the applicant, sought to establish its entitlement to the patent, claiming that it was either the sole owner or jointly owned it with E-Chem Technologies. The dispute arose from the applicant's assertion that the inventive concept was conceived by ex-employees while they were working for Vector Corrosion, a business subsequently acquired by Fosroc, which later merged with E-Chem Technologies. The applicant argued that the inventive concept was developed while the employees were still working for Vector Corrosion and that this entitled it to the patent rights.

The central legal issue before the court was whether the applicant had acquired rights to the patent from Fosroc, considering that Fosroc did not possess any rights to the patent at the time of its acquisition. The court also had to consider whether the patent could be revoked on any basis. In examining these issues, the court had to balance the public interest in the integrity of the patent register with the need to avoid unreasonable delays in entitlement proceedings that could prejudice those with registered entitlement. The court found that the applicant's claims to entitlement did not meet the legal criteria required for patent ownership, and the applicant could not have acquired rights to the patent from Fosroc as it did not possess any such rights.

The court dismissed the applicant's claims, concluding that Vector Corrosion was not an eligible person for the patent, either solely or jointly with E-Chem Technologies. There was no basis upon which the patent could be revoked. The court further noted that rejecting the applicant's claims would not undermine the public interest in the integrity of the patent register, and there was an equal if not greater public interest in ensuring that proceedings are not unreasonably delayed to the prejudice of those with registered entitlement. The court ordered that the amended originating application be dismissed and that the applicant pay the respondents' costs of the proceeding as agreed or taxed, subject to further directions for varying the costs order and handling potential indemnity claims. Additionally, the publication of the reasons for judgment was restricted to certain parties to maintain confidentiality.

Orders

Orders of the court

1. The amended originating application be dismissed.

2. Subject to orders 3 and 4, the applicant pay the respondents’ costs of the proceeding as agreed or taxed.

3. If a party wishes to vary order 2 the party may file and serve notice of the proposed varied order and a written submission in support, together with any affidavit required, as well as consent to the issue of costs being determined on the papers or a request for a further hearing, within 14 days.

4. Any party served with documents under order 3 may, within a further 14 days, file and serve notice of any proposed varied order sought and a written submission in support, together with any affidavit required, as well as consent to the issue of costs being determined on the papers or a request for a further hearing.

5. Pending further order and pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), publication of the reasons for judgment be restricted to the respondents and their legal representatives and the applicant’s external lawyers and Australian barristers retained by or on behalf of the applicant’s external lawyers to act for the applicant in this proceeding who have signed and provided to the respondents’ lawyers a confidentiality undertaking in the form agreed between the respondents and the applicant (the applicant’s external lawyers).

6. Within 7 days, the respondents are to notify the associate to Jagot J and the applicant’s external lawyers of any proposed permanent redactions to the reasons for judgment.

7. Within a further 7 days, the applicant’s external lawyers are to notify the associate to Jagot J and the respondents whether they wish to be heard in respect of the proposed permanent redactions.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The only considerations put against such an exercise of discretion (assuming it exists) related to the “public interest in the integrity of the Register, as well as in patent rights not being held by a person who is not entitled to them”. The public interest in the integrity of the Register is underpinned by the need for certainty and transparency about patent entitlement. That interest would not be undermined by rejecting Vector’s claims to entitlement on a discretionary basis if such a discretion exists. Nor would any public interest consideration be undermined. There is an equal if not more important public interest in ensuring that people in Vector’s position do not unreasonably delay the commencement of entitlement proceedings to the serious prejudice of those whose entitlement has otherwise been registered. 10. Conclusions For these reasons, Vector’s claim must fail in its entirety. Vector is not an “eligible person” in respect of the E-Chem patent either solely, or in the alternative, together with E-Chem. Vector could not have acquired from Fosroc any rights in respect of the E-Chem patent as Fosroc possessed no such rights at any time. There is also no basis upon which the E-Chem patent would be revoked. Orders will be made accordingly. Directions will be made in relation to the issue of costs to enable any claim for indemnity costs, as foreshadowed by E-Chem, to be made.

Ratio Decidendi

Legal Principle Established

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