W.R. Grace & Co v Asahi Kasei Kogyo Kabushiki Kaisha

[1993] HCATrans 307

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M31 of 1993

B e t w e e n -

W.R. GRACE & CO

Applicant

and

ASAHI KASEI KOGYO

KABUSHIKI KAISHA

Respondent

Application for special leave

to appeal

BRENNAN J
DEANE J

McHUGH J

Grace 1 15/10/93

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 15 OCTOBER 1993, AT 9.54 AM

Copyright in the High Court of Australia

MR J. McL. EMMERSON, QC: If the Court pleases, I appear

with my learned friend, MR B.N. CAINE, for the applicant. (instructed by Davies Ryan Deboos)

MR R.J. ELLICOTT, QC:  Your Honours, I appear with

MR R.C. MACAW, QC and MS K.J. HOWARD for the

respondent. (instructed by Blake Dawson Waldron)

BRENNAN J:	Dr Emmerson.
MR EMMERSON:	If the Court pleases, the case, the subject of

this application, raises, in our submission, an

important question because it raises for

determination the question of the patentability of
a large class of inventions, that is to say,

inventions made by empirical testing for a specific

result.

Now, this is a class of cases which has become

of increasing importance in the courts. It

includes many chemical, pharmaceutical and

agricultural chemical cases in a number of which,

in fact, the courts, under the old procedure,

granted an extension of term of the patent.

It arises when you have circumstances in which

somebody embarks on a programme of testing, not

knowing in advance whether that programme is to

lead to success or failure, and he makes up a list
of substances or materials and he tests them. Now,
in each case, ex hypothesi, he has some prospect of
success in that, once he embarks on the programme,

the substance or material is worth including in the

programme. However, he does not know in advance

which, if any, of the substances or materials will

produce the result that he is looking for.

BRENNAN J: That is a very general statement. The question

here is as to the known properties of the substance

that he was using in these tests.

MR EMMERSON:  And the known properties were properties which

suggested that it might be useful for a variety of

applications, that is to say, it gets you to the

point in which it is a material which, once you

have embarked on this programme, is included in

that programme. What was not known was that the

particular set of advantages for which the inventor
was looking and which he obtained by the use of

this material could be so obtained.

BRENNAN J:  What were the advantages that he was looking

for?

MR EMMERSON:  He was looking for the combination that he found of an approved combination of what is called

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"heat shrink" in the decision, that is to say, he

is looking for something which can be used as part

of a multi-layer film which, when heated, will
shrink. That, in combination with cold seal, that

is to say, when you seal the package using this

material, the seal has sufficient strength.

Next, as a further part of the combination,

the seal must have strength when it is heated and,

finally, because the major application of this

invention is in the context of the packaging of

meat, you must have a satisfactory seal even in the presence of grease and you must have a satisfactory seal even in the presence of blood.

Now, that is the combination of properties that he was looking for. What was known were four

publications known as the Union Carbide articles

and, in our submission, on no fair view could you

hold that that combination of advantages was

disclosed in those articles.

Now, the court approached it by an approach

which is known shorthand as the "obvious to try"

test, that is to say, the court approached it by

asking whether, once you embarked on this

particular programme, you knew that this material

was something which should be included in it. Now,

that, of course, substitutes for the test laid down

in the Act another test and the question is whether

that is a legitimate substitution.

Now, so far as that is concerned, there is a

conflict in the cases between United States cases

and the English cases. The United States cases

reject the "obvious to try" as a test for

patentability. They take the view that the

question is whether the invention, as a whole, is obvious, including the nature of the results that

are obtained. Now, that is, of course, a different

question from the question as to whether something

is worthwhile including in a testing programme.

In our submission, the United States' approach

is in accordance with the approach taken by this

Court in the Minnesota Mining case, albeit that

this Court was considering a slightly different

question. In Minnesota Mining what

Sir Keith Aickin, with whom the other members of the Court agreed, said was that the question was

whether the invention as a whole was obvious, and we say that is the question. It follows that you

therefore must look at the invention as a whole and

not just ask whether something is worthwhile

trying.

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The line of cases which, to some extent, goes

against that approach is a line of cases in the

United Kingdom which appeared to have begun with

some observations by Lord Justice Diplock, as he

then was, in the Johns-Manville case. However, in

that case His Lordship, in our submission, in the

passage which is often referred to, in fact begins

by pointing to the danger of laying down a single

verbal formula which will cover all cases. So, it

is clear that His Lordship was there proceeding on

the facts of that particular case and was not
intending himself to substitute another verbal

formula for the expression that turns up in the

Act.

BRENNAN J: His Lordship was also concerned to point out

that the ultimate Court of Appeal there, or the

third tier, would not be minded to upset the

findings of fact on obviousness which had been made

by the tribunals below.

MR EMMERSON:  Yes, Your Honour, and we are not seeking

special leave simply on a question of fact. What

we say is that the approach taken by the trial
judge and endorsed by the Full Court was itself

flawed because it applied the "obvious to try"

test.

BRENNAN J:  I understand that you say that that is so and,

no doubt, you will maintain it with some support

from the text of the judgment. But, in substance,

as I understand what has been said in the courts

below, it is this:  a new resin came on to the

market. Those in the industry know that you have

to try out new resins in order to make "heat

shrink" wraps. They tried out the new resin; it

worked; they got a better one, and at the priority

date they were still testing, and then 12 months

afterwards they put it on the market. Well now,

that rather is like somebody who is making a cake

who gets a new brand of self-raising flour, is it not?

MR EMMERSON: 

We would say no, because there is, in the

reasoning of both the trial judge and the
Full Court on appeal, an unspoken assumption that

it is sufficient to say, "Oh, people would test a

resin." The question that arises is, "Tested for

what?"  "To achieve what particular purpose?"

BRENNAN J: If one looks at the material before - and I do

not wish to debate it with you, but there were

passages in the material before that said it was

suitable for a variety of purposes, including
"shrink and stretch" wraps; that the resins are

"processable by common plastics processes and sheet

extrusion"; that it had all sorts of qualities such

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as "working well with heat and cold", the very

sorts of qualities you have outlined earlier.

MR EMMERSON:  But not precisely the qualities that I

outlined. To say "working well with heat and cold"

could mean any one of a number of different things.

BRENNAN J: Yes. I am not sure that I quoted it correctly.

MR EMMERSON:  Yes. What they do not say is that you get

this combination of properties which is necessary

and important for the present invention. So that

you see in the article, as it were, a general puff

and that gets you to the point of saying, "Well, if

you want to solve a specific problem in order to

achieve a specific combination of properties, then

that might be something that you include in the

list", and that is where the "obvious to try" test

comes in. But the articles themselves do not tell

you that you will get that combination. They are silent on whether you can seal through grease and

whether you can seal through blood, which is an

absolutely essential property for the major

application of this invention. There is total

silence on that. The question of not whether you

get some shrink but whether you get a good shrink

is again one on which they are totally silent.

Now, in developing of films of this particular

sort it is not sufficient to say you can get some
shrink. That is something which had been around in

the prior art. What you want to do is get an

improved combination of that and all the other

properties. So, the articles, in our submission,

raise very clearly precisely the problem that comes

up if you ask, "Well, is the 'obvious to try' test

an appropriate test for patentability in classes of cases where you work empirically?", and that is, of
course, the central point that we wish to agitate

if given leave to appeal.

DEANE J:  Dr Emmerson, would you dispute the summary at the

top of page 90 of the application book?

MR EMMERSON: That is to say that His Honour, in essence,

said that - I am sorry, I apologize, Your Honour, I

was looking at the wrong page.

DEANE J:  The quote from the trial judge's finding which is

specifically endorsed by the Full Court. If I can

follow through before you answer my question: what

was going through my mind was if one accepts that,

the comment of the Full Court to the effect that it

was an "obvious to use" case may indicate a

significant difference between "obvious to try" in

the sense in which you use that phrase.

Grace	15/10/93
MR EMMERSON:	I take the point, Your Honour, but, in our

respectful submission, that is not so and, indeed,

this passage again points up the fallacy that we

say is present in the reasoning of the trial judge

and the Full Court. That is to say, what this

passage is saying is that once you have included

the new material in your test programme the

subsequent steps are straightforward and, indeed,

for my client they were because they had had this

programme going for a long time.

Now, that being so, once they solved the

problem, they were able to use that solution

commercially very quickly. But that entirely

sidesteps the question which we say is the
essential one of whether inventions which are made
by a process of testing are inventions which are

patentable. Take this case: you embark on a

process of trial and testing; you find that you
test and a whole lot of things do not give you the
result you were looking for. Then, one day, you

find something that does give you the result you

are looking for. Now, of course, from that moment

you are geared up to make use of that result but,

that, in our submission, does not mean that the

invention is obvious. Accordingly, we would say

that that part of the reasoning is all part and

parcel of the particular problem that we see in

this case.

I have mentioned a conflict that appears

between the United States cases and the English
cases. In our submission, even in the English

cases, those cases do not go so far along the "obvious to try" path as the trial judge and,

following him, the Full Court did in this present

case.

The case which is referred to and applied by

the trial judge is Beecham's case, the

Amoxycillin case, and the relevant extracts are

conveniently taken at page 41 of the application

book where His Honour is, in fact, quoting from the

Coopers Animal Health case which, in turn, quotes

from the Amoxycillin case.

Now, this, we say, is as high as the English

courts have gone on the "obvious to try" test. If

you go to line 9, the Court of Appeal is saying:

It will suffice if it is shown that it would

appear to anyone skilled in the art but

lacking in inventive capacity that to try the

step or process would be worthwhile.

And then at line 15:

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Worthwhile to what end? It must, in my

opinion, be shown to be worth trying in order to solve some recognised problem or meet some

recognised need.

Therefore, the view taken there is not the

same as the United States cases. It nevertheless

makes some concession to the idea that it is simply

not sufficient for a thing to be obvious to say,

"Well, here is a new material with lots of useful properties", and because various people might try

it in various applications, that makes the

invention in suit obvious.

So, in our submission, there is an important

conflict between the two lines of authority but

even within that conflict we would say that the

Full Court has gone too far, has adopted an

analysis which, if correct, would lead to the lack
of patentability in a large class of highly

meritorious cases.

Now, that is the central issue and we say that

the question of patentability in this class of

cases arises in each part of the reasoning of the

Full Court - that is to say, centrally, of course,

it is concerned with obviousness. To the extent

that it brings in the question of patentability

under section 6 of the Statute of Monopolies, that

is essentially held by both the trial judge and by

the Full Court to raise identical issues and so

nothing new arises there.

To the extent that the Full Court also held against my clients on the issue of novelty, again,

in our submission, this raises the same analysis.

The test for novelty that should be applied is set

out at the appeal papers at page 38. The classic

Australian test is Sir Keith Aickin in Myers Taylor

set out at line 15 on page 38, the so-called

reverse infringement test. That is saying, you:

can properly ask oneself whether the alleged

anticipation would, if the patent were valid,

constitute an infringement.

Now, in order for that to be so, so far as a

document is concerned, the document must tell you

to do something within the scope of the claims of
the patent in suit. These documents clearly do not

do that. At most, as the trial judge correctly, in

our submission, held, they start a chain of

inquiry.

Similarly, the famous test in Flour Oxidizing

v Carr is set out at line 31 at the same page:

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it is not, in my opinion, enough to prove that

an apparatus described in an earlier

specification could have been used to produce

this or that result. It must also be shown
that the (prior) specification contains clear

and unmistakable directions so to use it.

Now, the Full Court has treated this test of "clear

and unmistakable directions" as if that is

sufficiently satisfied by a general indication of

the usefulness of material for a wide variety of

different applications but where the specific use

and advantage that you get from this invention is

nowhere disclosed.

Similarly, the test in General Tire and Rubber

is referred to by the learned trial judge at

page 40, lines 9 and following. He says:

At best I think the Union Carbide articles
might be said to provide a signpost upon the

road to the patentee's alleged invention.	The
prior inventor has not "planted his flag at the precise destination".

Now, again, that is the notion, "the planting of the flag at the precise destination".

In our submission, this therefore bring in to

the Full Court's reasoning on the issue of novelty

the same error which, in our submission, occurs on

the question of obviousness because, again, it

takes a general disclosure and gives it specific

invalidating application.

Now, again, on that part of the case, if the Full Court is right then there must be many major inventions, particularly in the pharmaceutical and

agricultural chemical area, which on that test

would be held not to be patentable.	In the past,
the courts of this country have held them to be

patentable and, indeed, have granted extensions of

term? In our submission, this raises an important

question where it is necessary for this Court to

decide the matter, both because of its intrinsic

importance and because it is necessary to resolve

the differences which are found in other published

cases. If the Court pleases.

BRENNAN J:  Mr Ellicott, the Court would like to hear you on

the question of the test that was applied by the

Full Court in relation to obviousness.

MR ELLICOTT:  Your Honours, we have handed up an outline of

submissions already. I think it was filed some

days ago. Your Honours have that. When you go to

the question of obviousness, there is no

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difference, in our submission, between the test

which has been applied in Australia and the test

that has been applied in the English cases.

The notion that there is some difference

between the statutory statement about obviousness

in section 100 and the notion that there is

something different in the words "obvious to try"

or "worthwhile to try" is incorrect. All that the

courts have been doing - indeed, this Court has

been doing it - is simply explaining the meaning of

the statutory words. For instance, in the cases
that are referred to in 5.5 and 5.6 - particularly

5.6 of our submissions, this Court, in a series of

judgments, partly before single Justices but also

before the Full Court in Olin's case, the courts

have used the very dicta that come out of the

English cases and therefore - - -

DEANE J:  Mr Ellicott, there is a bit of a problem about

this phrase "obvious to try" in the sense it could

obviously cover processes which would involve true

inventiveness; in other words, if "obvious to try"

is understood as meaning "obvious to take this and

see if we can adjust it and use it with other

things to produce this consequence" it could mean

no more than obvious to set out on a path of

invention. The other way of using it is in

something equivalent to what I put to Dr Emmerson as an "obvious to use" rather than an "obvious to

try". Now, in what sense was the notion of

"obvious to try" being used by the Federal Court in

this case?

MR ELLICOTT: In this case, Your Honour, the Union Carbide

articles made it abundantly clear that the skilled

addressee, the hypothetical skilled addressee,

should use the Union Carbide "VLDPE" as it is

called, as a substitute for Union Carbide's EVA in

relation to films.	They were saying it is a
substitute for it.

DEANE J:  Can I take you to page 92, the second-half of the

first paragraph beginning, "All that was done". Is

that, as you see it, a summary of the outcome of

this case and does it conform completely with the

trial judge's findings?

MR ELLICOTT: We would submit so, Your Honour. This, of

course, is under the heading "Section 6" and quite

apart from the question of obviousness, this

patent, we say, is clearly invalid, and this is

another reason - whatever Your Honours thought

about obviousness, this is a new use for a known

substance. The Full Court is saying and the judge

below was saying, "Use this VLDPE instead of

EVA". Then some experimentation took place, no

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doubt, which was routine and they used the VLDPE

for their particular purpose. Therefore, on that

basis, they found that it was a new use of a known

substance. If the Court pleases.

BRENNAN J:	Dr Emmerson.
MR EMMERSON:	If the Court pleases, the passage that

Your Honour Justice Deane referred to helps to show

up the fallacy in the reasoning of the Full Court

here. The Full Court says:

All that was done in this case was for the appellant to test an available new resin as part of its ordinary activities as an

organization that routinely tests new resins

when they become available.

Now, the question is, "Test for what?" It is

because the applicant had a testing programme

seeking specific results that it carried out these

tests and that was what it looked for.

DEANE J: It is a double-barrelled section though, is it

not? I fully appreciate what you say about that

sentence but then comes the next sentence with a
bit of a sting against you, though one would wish

they had used a word other than "obvious".

MR EMMERSON:	A sting but one that we say, with the greatest respect, should never have been put. Because what
they say is:

It was tested as a sealing layer which was an

obvious thing to do as Sig Quacquarella

himself conceded -

Now, he was the inventor. It is settled under our

law that the question of whether something is

obvious to the inventor is not the question. That

was held unanimously by this Court in the Wellcome	case. What the court is here doing is substituting
the precise person who is carrying out this plan of research which we say is activity of a kind which merits patent protection, substituting him for the
notional unimaginative skilled worker in the field.
That is where the error occurs because once you get
to the point where you - - -

BRENNAN J: That is scarcely a fair reading of the judgment,

is it, if one looks at the top of page 89 where

Their Honours specifically refer to "the hypothetical person"?

MR EMMERSON:  The court refers to "the hypothetical person

in Australia skilled in the art of science" at

page 89, but what it does in treatment of

Grace 10 15/10/93

Signor Quacquarella is impermissibly, in our submission, put him in that position. So, while

recognizing, as clearly any court must, and this

Court has laid down who the hypothetical person is,

the court then impermissibly puts into the shoes of

that person the actual inventor, and we would say

that this is simply wrong.

Now, can I just take up one further point that

my learned friend made? My learned friend referred to particular decisions of this Court which are set out in paragraph 5.6 of his outline of argument.

In our submission, while it is correct to say that

those cases refer to some of the English

authorities, they do not endorse the English

authorities on the point that we seek to agitate in

the present case. Those passages refer to those

English authorities in general terms. They are not

to be taken, in our submission, as endorsing the

"obvious to try" test. If the Court pleases.

BRENNAN J:  The first claim in the applicant's patent reads

as follows:

A thermoplastic multi-layer packaging film having superior heat shrink and cold seal properties comprising at least an outer

polymer layer, an inner heat sealing layer and

optionally an oxygen barrier layer between the

said inner and said outer layer, characterized

in that the heat sealing layer comprises a

copolymer of ethylene -

the technical specifications of which were set

out.

The inventive step advanced by the applicant

is the use of a copolymer of ethylene of the stated

specifications in the heat sealing layer of a

triple-layered thermoplastic packaging film. At

the priority date, several of the qualities of the

particular copolymer of ethylene which made it

suitable for the purpose were known to those versed

in the relevant art.

The courts below have found that the use of

the particular copolymer of ethylene was obvious

and that there was no inventive step. A challenge

to this conclusion does not have sufficient

prospects of success to warrant a grant of special

leave. Accordingly, special leave is refused.

MR ELLICOTT:  Would Your Honours make an order for costs?

BRENNAN J: With costs.

AT 10.35 AM THE MATTER WAS ADJOURNED SINE DIE

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