Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd RGC Mineral Sands Ltd v Wimmera Industrial Minerals Pty Ltd
[1998] FCA 273
•26 MARCH 1998
FEDERAL COURT OF AUSTRALIA
PATENTS ‑ Costs ‑ Infringement proceeding ‑ Cross claim for revocation ‑ Amendment of particulars of grounds of invalidity ‑ Earth Closet order ‑ See v Scott‑Paine order ‑ Appropriate switchover date for payment of costs.
Patents Act 1990 s 39
Baird v Moule’s Patent Earth Closet Co Ltd (unreported, Chancery Division, 3 February 1876) considered
Edison Telephone Co v India Rubber Co (1881) 17 Ch D 137 mentioned
See v Scott‑Paine (1932) 50 RPC 56 mentioned
Williamson v Moldline [1986] RPC 556 considered
GEC Alsthom Limited’s Patent [996] FSR 415 considered
CQR Security Systems Limited’s Patent [1992] FSR 303 distinguished
Smith v New South Wales Bar Association (1992) 176 CLR 256 mentioned
Aumac Limited’s Patent [1995] FSR 501; [1996] FSR 843 considered
WIMMERA INDUSTRIAL MINERALS PTY LTD (ACN 004 302 130) v RGC MINERAL SANDS LIMITED (ACN 008 763 666) and RGC MINERAL SANDS LIMITED v WIMMERA INDUSTRIAL MINERALS PTY LTD and THE COMMISSIONER OF PATENTS
VG 215 OF 1994
SUNDBERG J
26 MARCH 1998
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 215 of 1994
BETWEEN:
WIMMERA INDUSTRIAL MINERALS PTY LTD (ACN 004 302 130)
APPLICANTAND:
RGC MINERAL SANDS LIMITED (ACN 008 763 666)
FIRST RESPONDENTRGC MINERAL SANDS LIMITED
CROSS-CLAIMANTWIMMERA INDUSTRIAL MINERALS PTY LTD
FIRST CROSS-RESPONDENTTHE COMMISSIONER OF PATENTS
SECOND CROSS-RESPONDENT
JUDGE:
SUNDBERG J
DATE OF ORDER:
26 MARCH 1998
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
The date to be determined by the Court for the purposes of paragraph 5(b) of the Order of 11 February 1998 be 20 February 1995.
The time by which the applicant is required by paragraph 4 of the Order referred to in paragraph 1 hereof to elect be extended to 21 April 1998.
The respondent pay the applicant’s taxed costs of the motion notice of which was filed on 15 January 1998.
Save for the grant of leave under paragraph 1 of the motion notice of which was filed on 10 March 1998, the motion be dismissed.
The respondent pay the applicant’s taxed costs of the motion referred to in paragraph 3.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 215 of 1994
BETWEEN:
WIMMERA INDUSTRIAL MINERALS PTY LTD (ACN 004 302 130)
APPLICANTAND:
RGC MINERAL SANDS LIMITED (ACN 008 763 666)
FIRST RESPONDENTRGC MINERAL SANDS LIMITED
CROSS-CLAIMANTWIMMERA INDUSTRIAL MINERALS PTY LTD
FIRST CROSS-RESPONDENTTHE COMMISSIONER OF PATENTS
SECOND CROSS-RESPONDENT
JUDGE:
SUNDBERG J
DATE:
26 MARCH 1998
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
BACKGROUND
On 30 June 1994 the applicant (“WIM”) applied for an injunction restraining the respondent (“RGC”) from infringing Australian Petty Patent No 649,946, and for damages and other relief. In its statement of claim WIM alleged that it was registered under the Patents Act 1990 as the proprietor of the petty patent for an invention entitled “Production of Synthetic Rutile” which proceeded to grant and was published on 2 June 1994. By its defence and cross claim RGC contended that the petty patent was wholly invalid and sought an order that it be revoked. On 30 November 1994 WIM amended its application so as to rely on Australian Standard Patent No 639,089 as well as on the petty patent. In its amended statement of claim WIM alleged that it was registered as proprietor of the standard patent for an invention entitled “Production of Synthetic Rutile” which was published on 18 September 1991 and proceeded to grant on 11 May 1994. By its amended defence and cross claim RGC’s existing contentions were applied to the standard patent. On 20 February 1995 RGC filed amended particulars of grounds of invalidity. In the case of each patent the grounds included lack of novelty and lack of an inventive step when compared with the prior art base. In relation to the lack of novelty ground, fourteen prior papers and articles were particularised. Pursuant to WIM’s application under s 105 of the Patents Act 1990, on 15 October 1997 I ordered that the standard patent be amended. On 12 November, as a consequence of the amendments, I ordered that WIM file and serve an amended statement of claim and further amended particulars of infringement of the standard patent, and that any application by RGC to amend its defence, cross claim and particulars of grounds of invalidity be filed and served on or before 16 January 1998. On 6 February, on RGC’s application to amend, I ordered by consent that RGC have leave to file and serve a further amended defence, cross claim and particulars of grounds of invalidity.
FURTHER AMENDED PARTICULARS OF INVALIDITY
The document containing RGC’s further amended particulars of invalidity is marked up in a manner that identifies the amendments which are consequential on the amendment of the standard patent, those which bring together particulars already provided in earlier documents, and “other amendments”. The particulars of the lack of novelty ground in relation to each patent are expanded so as to include assertions that the invention as claimed in each of the claims is not novel in light of information made publicly available
by Mr Brian Bracanin in discussions with Dr Ian Grey on 19 January 1988 and 29 January 1988 in respect of which copies of file notes have been provided
by Mr Bracanin in discussions with the Western Australian Government Chemistry Laboratories prior to April 1988 and in a Report dated April 1988 entitled “Evaluation of the Response of Ilmenite to Better Process Upgrading” prepared by the Western Australian Government Chemistry Laboratories
in a Report to the TiO2 Corporation entitled “Cooljarloo Synthetic Rutile Studies” dated January 1988 prepared by Brian F Bracanin & Associates.
The particulars of lack of inventiveness are expanded to refer to twelve further instances of prior art, seven of which are publications of which Dr Grey is one of the authors.
THE 6 FEBRUARY 1998 ORDER
Paragraphs 4 to 6 of my order of 6 February 1998, in which leave was given to RGC to file and serve the further amended defence, cross claim and particulars of grounds of invalidity, are as follows:
4.Within four weeks of service of any further and better particulars of the respondent’s second further amended defence and further amended cross‑claim and further amended particulars of grounds of invalidity as referred to in paragraph 3 above, the applicant elect whether it will discontinue this action and withdraw its defence to the counterclaim and consent to an order for the revocation of Australian standard patent no 639089, and Australian petty patent no 649946.
5.In the event that the applicant elects to discontinue this action:
(a)Australian standard patent no 639089, and Australian petty patent no 649946 be revoked; and
(b)the applicant pay the respondent’s costs of this action up to and including such date to be determined by this Honourable Court on 20 February 1998 or otherwise as agreed between the parties before that date;
(c)the respondent pay the applicant’s costs of this action from the date referred to in paragraph (b).
6.In the event that the applicant does not elect to discontinue its action on or before 3 April 1998 the applicant file and serve an amended reply and defence to the respondent’s second further amended defence and further amended cross‑claim on or before 3 April 1998.
The date to be determined for the purpose of par 5(b) was the subject of argument on 20 February 1998. Shortly after 20 February, while I was considering my decision, I was asked by RGC’s solicitors to defer further consideration of the matter as some issue had arisen between the parties which if not resolved would affect the question under reservation. The matter came on again on 13 March pursuant to RGC’s notice of motion that it and WIM be permitted to make further submissions on the issue canvassed on 20 February. WIM submitted that RGC should not be permitted to reopen its case.
EARTH CLOSET ORDER
Particulars of grounds of invalidity delivered pursuant to O 58 r 15 may be amended with leave. However the amendment is usually permitted only on terms that protect the patentee from being prejudiced by the amendment. The form of order which, according to Terrell, is “almost invariably followed”, is that made by Sir George Jessel MR in 1876 in the unreported case Baird v Moule’s Patent Earth Closet Co Ltd, which appears as a note to the report of Edison Telephone Co v India Rubber Co (1881) 17 Ch D 137 at 139. See Terrell on the Law of Patents 14th ed (1994) 408. The order in the Earth Closet case was in part as follows:
Let the Plaintiff, within six weeks from the date of this order, elect whether he will discontinue this suit, and if the Plaintiff shall elect to discontinue this suit ..., refer it to the Taxing Master to tax the Defendants their costs up to and including the 23rd of February, 1875 (delivery of the original particulars of objection), and to tax the Plaintiff’s costs of this suit subsequently to the said 23rd of February, 1875, to the date of this order .... And if the Plaintiff shall not give notice to the Defendants of his discontinuance of this suit within the time aforesaid, let the Defendants be at liberty to add to the particulars of objections to the validity of the Plaintiff’s letters patent ... the following further objections ....
The effect of such an order is to give the patentee the option of discontinuing the action or proceeding with it. If he discontinues, he has to pay the costs up to and including the date of the original particulars of invalidity, and the defendant has to pay the costs after that date. If the patentee proceeds with the action, the defendant has to pay the costs of the application to amend, and in other respects the matter proceeds in the ordinary way.
A similar form of order is made in the case of amended particulars of invalidity in a cross claim for revocation: See v Scott‑Paine (1933) 50 RPC 56, where Eve J said that “what is sauce for the Plaintiff in similar circumstances ought to be sauce also for the Defendant”: at 58.
The cases which gave their names to the orders did not explore the rationale behind them. This was done by the Court of Appeal in Williamson v Moldline [1986] RPC 556. Slade LJ, with whom Dunn LJ agreed, first observed that despite remarks in earlier cases suggesting that where a defendant has amended his grounds of invalidity an Earth Closet order is made as a matter of course, the court’s discretion on the question of costs must be consciously exercised by reference to the particular circumstances of each case. His Lordship then turned to the rationale behind the order (at 564):
In the common case, where at the date of the original pleading the defendant had the knowledge or means of knowledge which would have enabled him originally to plead those matters which he seeks to plead by the proposed amendment, an “Earth Closet” order may very well be thought to work substantial justice. For in such a case a plaintiff may well be justified in making observations such as this to the court:
“If, at the time when the defendant served his original particulars of objections, I had known that he was going to rely on the new point now sought to be raised, I might well have discontinued my action. If, however, after further investigation of the legal and factual position in the light of this new point, I now find that there is a valid objection to my patent and accordingly I, sensibly, decide to discontinue my action, it is only fair that the defendant should be ordered to pay the unnecessary wasted costs which I have incurred since service of the original particulars of objection.”
Slade LJ went on to say that typical examples of cases where the order may be appropriate are where a defendant seeks to introduce by amendment objections of obviousness or want of novelty, when by making appropriate enquiries he could readily have discovered the availability of such pleas when he served his original pleading. His Lordship said that because of the expense of patent actions, defendants bear a rather heavier duty to get their cases in order before pleading than would fall on them in other actions. He continued (at 565):
In view of the notorious expense and legal complexity involved in preparing for trial in patent actions, it seems to me reasonable for the court ordinarily to expect that a defendant who intends to attack the validity of prima facie valid patent should make such investigations as may be required to enable him to formulate the appropriate particulars of objections at a reasonably early date in the proceedings. This is necessary so as to enable the plaintiff to know what case he has to meet and to take appropriate legal and other expert advice.
...
It follows that if a defendant, after failing to raise an objection in his original pleadings, (a) subsequently seeks leave from the court to raise it by amendment, but (b) at the same time submits that the plaintiff, rather than the defendant himself, should pay or bear the costs of both parties which have been wasted by the failure to raise the point in the original pleadings, the court may, in my judgment, fairly regard it as incumbent on the defendant to satisfy it by appropriate evidence that he could not by reasonably diligent investigation have discovered the relevant information before, and correspondently could not have pleaded it at an earlier stage.
His Lordship then rejected the suggestion that a plaintiff should seek to ascertain or investigate possible objections to the patent before they are brought to his attention. He said (at 566):
Provided that he acts in good faith, I think it a tenable view that he is entitled to proceed (or not) with his action having regard to the objections actually put in by the defendant, on the footing that his patent is prima facie valid and that he is under no obligation to incur additional trouble and expense in investigating whether other possible potential objections exist and are valid, until such objections are specifically brought to his attention.
In GEC Alsthom Limited’s Patent [1996] FSR 415 Laddie J pointed out that Earth Closet and See v Scott‑Paine orders can work injustice. In the case of a patent which is weak, the possibility of such an order can act as a serious impediment to the attacking party. He will know that if he seeks to plead prior art, the patentee, who is already aware that his patent is at risk, can seek an order which will allow him to bend to the inevitable and relinquish the patent while making the other party pay most of the costs of the action. His Lordship continued (at 421):
the overwhelming obligation on me is to try to do justice as between the parties on the evidence available. I must consider ... whether there has been unnecessary wastage of cost. Also, for the reasons set out above, I have to bear in mind that See v Scott‑Paine orders, unless really justified, may work a considerable injustice.
He then declined the invitation of counsel for the objector to look at the strength of the original attack on the patent and decide whether GEC’s continued assertion of validity thus far indicated mala fides on its part. He refused to engage in such a mini‑trial. All he could do, he said, was to bear in mind that it was possible that the patent would have been held invalid even on the unamended particulars of objection, and that GEC realised that. His Lordship concluded at 421 as follows:
In deciding what to do, I think that I should give consideration to, inter alia, the timetable of the proceedings, how late the amendment is, the extent to which the petitioner has explained that lateness and to what extent the respondent is likely to have been taken by surprise by the reliance on the new prior art. If I come to the conclusion that the defendant has not been reasonably diligent in relation to the prior art inquiries he has made, then that is a major factor which I should take into account in deciding whether to make an order in the See v Scott‑Paine form.
THE EVIDENCE
RGC’s preferred switchover date for costs is 15 October 1997, the date on which I ordered that the standard patent be amended. Its fall back dates, in order of preference, are 17 May 1996, when it was alerted to WIM’s intention to apply to amend, 6 March 1996, the date of the order refusing WIM’s application for further particulars, and 18 May 1995, the date on which RGC provided the particulars that the Court found were sufficient. In support of its submissions on the switchover date RGC relied on the affidavit of its solicitor, Mr Zawa, sworn 19 February 1998. That affidavit can be summarised as follows:
(a)On 17 May 1996 WIM’s solicitors informed RGC’s solicitors that WIM intended to apply to the Court to amend the standard patent in the manner set out in the letter. On 20 January 1997 WIM applied to amend in that manner. The amendment was directed on 15 October 1997.
(b)In September 1996 RGC’s solicitors gave WIM’s solicitors copies of further journal articles in relation to the prior art. These were eight of the fourteen that were later added to the particulars of lack of inventiveness. The covering letter said that RGC intended to amend its particulars to take into account a number of matters, including WIM’s foreshadowed application for amendment, and that “in the meantime” copies of the articles on which RGC intended to rely on the issues of obviousness and common general knowledge were provided.
(c)In November 1995 RGC had retained Mr Bracanin as an independent expert. Between December 1995 and February 1997 he had provided RGC with copies of the file notes and the two Reports referred to in RGC’s further amended particulars of invalidity. Copies of these documents, and others, were provided to WIM’s solicitors on 28 April 1997.
(d)In February 1995 WIM requested further particulars of RGC’s amended defence and amended particulars of grounds of invalidity. WIM was not satisfied with the particulars that were provided on 12 April and 18 May, and applied to the Court for better particulars. The application was heard in July 1995 and judgment refusing relief was given on 6 March 1996. WIM applied for leave to appeal, which was refused in June 1997.
SUGGESTED SWITCHOVER DATES
(a) 15 October 1997
In my view there is nothing to be said in favour of this as the switchover date. The amendments which are of concern to WIM, and which may cause it to discontinue, are those which introduce new particulars of lack of novelty and lack of inventiveness ‑ the amendments described by RGC in its further amended particulars of invalidity as “other amendments”. They are in no way connected with the amendment of the standard patent. This is underlined by the fact that although the petty patent was not amended, the same amendments which are of concern to WIM in relation to the standard patent are made to the particulars of invalidity of the petty patent.
In support of the date of the order directing amendment of the specification as the switchover date RGC relied on CQR Security Systems Limited’s Patent [1992] FSR 303. There the petitioner for revocation served the patentee with particulars of objections on 12 August 1987. In light of the particulars the patentee decided to seek amendment of its patent. On 6 February 1989 it gave notice to the petitioner of the desired amendments, which were advertised on 22 March 1989. The application to amend was mentioned on 31 July, when it was ordered that it be heard together with the petition. In January 1991 the petitioner sought leave to amend its particulars of objections so as to plead further prior art. The patentee asked for a See v Scott‑Paine order with 12 August 1987 as the switchover date. Aldous J allowed the amendments and said (at 319):
a petitioner should plead that which he wishes to rely upon at the trial. If there be an amendment of the patent sought, then he should as soon as practicable, decide whether he wishes to plead further prior art having regard to the amendment sought and, if so, apply to amend. That being so, a See v Scott‑Paine order may still be appropriate if an application to amend the particulars of objection is made after an application to amend the patent has been made. If the amendments to the pleadings do not arise out of and are not occasioned by the application to amend the patent then I see no reason why the normal order for costs should not be made, and the date in the See v Scott‑Paine order should not be the date of service of the original particulars of objections. However each case must depend on its own facts.
If, however, the amendments to the pleadings arise out of and are occasioned by the application to amend the patent, a See v Scott‑Paine order in the normal form would not appear to me to be appropriate. However, it could be an appropriate order to make provided that it is modified so as to take into account the fact of the amended proceedings and the fact that the amendment to the pleading arises from those proceedings. This could be done by an appropriate adjustment of the date as to when the petitioner should bear the costs of the action if the action is discontinued. In my view the date in such circumstances should not be earlier than the date when the petitioner should have made his application to amend his particulars of objections.
His Lordship examined the evidence and concluded that the application to amend the particulars had been prompted by the application to amend the patent. He was of the view that the petitioner had had ample time to investigate its case as to the validity of the proposed amended patent by 31 July 1989, the date on which the motion to amend first came before the Court, and fixed that as the switchover date.
In the present case, unlike CQR Security, there is no causal relationship between the amendment of the specification and the amendments to the pleadings which are of concern to WIM. Some of the amendments of the pleadings are consequential on the amendment of the specification, but they are not relevant to the discontinuance issue.
(b) 17 May 1996
What I have said about the 15 October 1997 date rules out, as the appropriate switchover date, the date on which RGC was alerted to the fact that WIM proposed to amend.
(c) 6 March 1996
All that was submitted in support of the date of dismissal of WIM’s application for further particulars as the switchover date was that there was a linkage between the particulars and the amendment application. This submission was said to be supported by the fact that in directing amendment of the specification I said that it was reasonable for WIM to delay seeking the amendment until after the determination of its application for further particulars. Because I regard the s 105 amendments as irrelevant to the fixing of a switchover date, the suggested linkage of the particulars to the amendments is also of no relevance, and cannot make appropriate as the switchover date the date on which the Court refused to order RGC to provide further particulars.
(d) 18 May 1995
This date was suggested in passing. All that was said in its support was that because of the linkage between the further particulars and the s 105 amendments “the date of delivery of the particulars is the prima facie position, perhaps, if a See v Scott‑Paine order is justified”. In view of what I have said about the irrelevance of the linkage, I reject this date as appropriate. However, the way in which the submission was put invites comment. The issue between the parties is not whether an Earth Closet or See v Scott‑Paine type of order should be made. Such an order was made by consent on 6 February. As RGC’s counsel said in his opening submission, RGC “did not disagree that an order of that type ought to be made”. The only matter in dispute was the switchover date. It is wrong therefore to approach the issue as if the question were whether “a See v Scott‑Paine order is justified”.
THE DIVISIONAL APPLICATION
RGC’s application for leave to re‑open was supported by a further affidavit of Mr Zawa sworn 10 March 1998. He exhibited a copy of a divisional application which WIM had lodged with the Commissioner of Patents on 22 March 1996. The application covers much the same ground as the patent in suit prior to amendment. The patent in suit in that form is described in my judgment of 15 October 1997 directing the amendment, and the claims are there set out. The difference between the patent in that form and the divisional application can be seen by comparing the claims in the former with those in latter, which are as follows:
1.A process for upgrading the titania content of a titaniferous material which process comprises the steps of:‑
(i)reducing the titaniferous material using a solid carbonaceous reductant under temperature conditions which promote the formation of metallic iron, a rutile phase and a separate impurity bearing titaniferous phase to produce a thermally reduced product;
(ii)cooling the thermally reduced product in an environment which prevents substantial re‑oxidation to produce a cooled reduced product; and
(iii)removing iron and other impurity elements from the cooled reduced product by a leaching step.
2.A process according to claim 1, wherein the leaching step is preceded by an aeration step for removal of metallic iron.
3.A process according to claim 1, wherein the leaching step comprises two stages.
4.A process according to claim 1 wherein the minor impurity bearing phase is a metatitanate (M2O3) or an anosovite/pseudobrookite like phase (M3O5).
5.A process according to any one of the preceding claims wherein step (i) comprises reducing the titaniferous ore or concentrate with a solid carbonaceous reductant at a temperature in a range from 900oC to 1200oC.
6.A process according to Claim 1, wherein step (i) is performed at a temperature in a range from 900oC to 1050oC.
7.A process according to claim 1, wherein the minor impurity bearing phase is anosovite or pseudobrookite and step (iii) includes leaching in excess hot sulphuric acid whilst agitating the hot sulphuric acid for a period of from 15 minutes to 24 hours.
8.A process according to claim 7, wherein the acid has an initial concentration of up to 50 wt%.
9.A process according to claim 1, wherein the solid carbonaceous reductant is sub‑bituminous or lignitic coal or char derived therefrom.
10.A process according to claim 1, wherein the rutile phase includes reduced rutiles.
11.An upgraded titaniferous material produced according to the process of any one of the preceding claims.
Mr Zawa says that on 23 February 1998 he contacted RGC’s patent attorney to enquire about the status of WIM’s divisional application. The attorney told him the application was due for renewal on 12 August 1997, but that there was a six month period of grace in which the renewal fee could be paid, so that WIM had until 12 February 1998 to pay. When the attorney had checked the status of the application on 3 February 1998, he had found that payment had not been made. A further check on 23 February disclosed that the fee had been paid on or about 11 February. Mr Zawa then wrote to WIM’s solicitors setting out the above information, and sought an undertaking that if WIM were to elect to discontinue, it would not thereafter bring proceedings against RGC, its customers or successors in title in respect of any patent which might be granted pursuant to the divisional application or any divisional therefrom. WIM’s solicitors refused to give the undertaking.
Where a complete patent application has been made, s 39(1)(a) of the Patents Act enables the applicant to make a further complete application for a standard patent or a petty patent for an invention that is disclosed in the specification filed in respect of the first‑mentioned application.
RGC’s concern, as expressed by its counsel, is that if WIM were to discontinue under the Earth Closet order (with the consequence that the standard patent and the petty patent would be revoked), it could then obtain either a standard or a petty patent based on the divisional application, and sue RGC all over again, having in the meantime been paid its costs incurred after the switchover date. It was submitted that for WIM to be permitted to do that would be inconsistent with the rationale of an Earth Closet order as explained in Moldline. It was said that the notion “If only you had told me earlier, I would have discontinued and saved myself a lot of money”, is inapplicable to one who discontinues and then starts again on the same or substantially the same cause of action.
The first question is whether RGC should be permitted to reopen the matter canvassed before me on 20 February 1998. RGC was aware of the divisional application, and could on that day have made submissions as to its significance to the Earth Closet issue. I assume that the matter was simply overlooked. However, I think the justice of the case requires me to allow RGC to reopen. At the time the issue arose, I had not delivered judgment: cf Smith v New South Wales Bar Association (1992) 176 CLR 256 at 266‑267. Four days after I reserved my decision, WIM’s solicitors were notified of the new issue, and the Court was asked to delay giving judgment. WIM can be protected by an order for costs, and an extension of the period before which it is required to elect whether to discontinue. No real inconvenience has been caused to the Court.
I do not regard the existence of the divisional application as a consideration that is relevant to the selection of the switchover date for the Earth Closet order. The purpose of the order is to put WIM in the same position so far as costs are concerned as if matters had been pleaded at the proper time. The divisional application is irrelevant to that. As a result of filing its original application for patent protection WIM acquired a right to pursue a divisional application in respect of an invention disclosed in the original application. Speculation as to what might be the outcome of the divisional application, and the use to which WIM might put the rights arising out of that application, does not seem to me to have any bearing on the appropriate switchover date.
If the purpose of an Earth Closet order is to leave the defendant absolutely free of the risk of suit at the patentee’s hands in reliance not only on the patent revoked under the order but on any similar patent that might be granted after the date of the order, there would be force in RGC’s contention. But authority is against that being the purpose of the order. In Aumac Limited’s Patent [1995] FSR 501 Aumac applied to the United Kingdom Patent Office for a patent. Later it applied to the European Patent Office (“EPO”) for a European patent. The United Kingdom patent was granted. The petitioners then applied for revocation of the United Kingdom patent. Later they sought leave to amend the attack on the patent by adding a fresh ground of objection. Leave was given, and a See v Scott‑Paine order was made. Thereafter Aumac applied to the EPO to divide its application for a European patent and to designate the United Kingdom for the divisional patent, thereby seeking for the first time to obtain a monopoly in the United Kingdom derived from the EPO application. Aumac then withdrew its answer to the petition and consented to the revocation of the United Kingdom patent. The petitioners applied for amendment of the order so that the election to withdraw the answer and consent to an order for revocation would be coupled with an undertaking by Aumac not thereafter to bring proceedings against the petitioners in respect of any patent which might be granted pursuant to the EPO patent application or any divisional application therefrom. Jacob J rejected the various bases on which relief was sought. His Lordship said (at 506, 508):
the petitioner’s cry “foul”. They say the consequence of Aldous J’s order should have been a complete clearance for the United Kingdom if the patentees elected for revocation. They have not got it.
...
Williamson v Moldline ... makes it clear that the reasoning behind the order is to penalise the amending defendant in costs for not having included the matter earlier. After all, if it had been, the patentee could have given up his patent then.
I can see nothing in any of the cases which say that the purpose of a See v Scott‑Paine order is to give defendants or petitioners clearance if the patentee elects for revocation. That is indeed a consequence of the order. But [counsel’s] contention that historical considerations show that, by his order, the Judge must have intended that the defendants would be given a clearance is simply not supported by the reasoning in the cases. The reasoning is all about unnecessary costs.
Jacob J then rejected a submission that if Aldous J had known about the possibility of a divisional, he would have required an undertaking of the type sought or would have found some other means of giving the petitioners complete clearance. His Lordship said (at 509):
consider the position if the petitioners had gone to trial on the matter introduced by the amendment. And suppose the petitioners won, so the United Kingdom patent was revoked. That would not, of itself, have prevented the grant by the EPO of the divided out patent. That patent will (one assumes) have different and narrower claims which will not have been considered in the prior petition. So there would be no res judicata in relation to them, though, of course, there might be some issues in any second petition where there would be an issue estoppel (eg the facts of an alleged prior use). If then, a contested revocation would not serve to give the patentees clearance, why should the court require it simply as a condition of leave to amend? I can think of no reason.
The Court of Appeal refused the petitioners leave to appeal from Aldous J’s order, and dismissed their appeal from Jacob J’s decision: Aumac Limited’s Patent [1996] FSR 843. Morritt LJ, with whom the other members of the Court agreed, said (at 854‑855):
Why then should the petitioners be placed in a better position than they would have been in if the proceedings had been fought to a conclusion and the petitioners had won merely because Aumac conceded the revocation of its United Kingdom patent without further dispute?
The reason given by the petitioners is because Aumac obtained what they describe as a preferential costs order in its favour as part and parcel of the See v Scott‑Paine order ...
...
What is described ... as the preferential order is designed to put the patentee in the position he would have been in from the point of view of costs and discontinuance if the particulars of objection had been fully and properly pleaded from the start. It has nothing to do with preventing subsequent actions.
Counsel for RGC sought to distinguish Aumac on two grounds. The first was that in Aumac the divisional was not in the same office as the patent in suit. In my view that is an irrelevant difference between Aumac and the present case. What is important is that it is possible in the EPO and in the United Kingdom, as it is in Australia, to make a divisional application, and to obtain therefrom a patent similar to one that has been revoked pursuant to an Earth Closet order. Jacob J said (at 504):
In both the United Kingdom and the EPO it is possible, in some circumstances, to make what is known as a “divisional” application. When an original application (“the parent”) is made it may contain matter which can be divided into two or more distinct patents ‑ two or more inventions. The patentee may then ... “divide” his application. What he does is to file a new application for matters taken out of the parent and put into the “divisional”. The parent proceeds for the original matter less the divided out matter. The divided out application proceeds in parallel. The patentee continues to claim the date of his original application for priority (or the date claimed for that) .... The upshot will be that he gets two (or more if there is more than one divisional) patents emerging from an original single application.
The second suggested distinction between Aumac and the present case is that RGC, it says, is not seeking a complete clearance. The undertaking sought in Aumac was that Aumac would not bring proceedings in the United Kingdom against the petitioners or any of their successors in title in respect of any patent that might be granted pursuant to the EPO patent application or any divisional application therefrom. The undertaking requested by RGC is that WIM will not bring proceedings against RGC, its customers or succesors in title in respect of any patent which might be granted pursuant to the Australian patent application or any divisional therefrom. This undertaking is more expansive than that sought in Aumac. If the latter amounted to a complete clearance, so does the former. There is therefore no relevant distinction between the two cases in this respect.
OTHER MATTERS
I have rejected all the switchover dates urged by RGC. However submissions of a more general nature were made for RGC. It was put that in September 1996 it had drawn WIM’s attention to eight of the fourteen journal articles that were later added on the issues of obviousness and common general knowledge, and that copies of the Bracanin documents had been provided to WIM in April 1997. Thus WIM could not say it had been taken by surprise by RGC’s reliance on the new prior art: cf GEC at 421. There are several things to be said about this submission. First, it bears no relationship to any of the switchover dates suggested by RGC. Secondly, it appears to be directed to whether an Earth Closet order should have been made at all. When the question is whether such an order ought to be made, it is appropriate to look at the various considerations mentioned in Moldline and GEC, with no disposition towards making an order as a matter of course simply because the respondent has relevantly amended its particulars of invalidity. But the present case is unusual in that the parties have agreed that such an order should be made. The only question is the switchover date. Thirdly, it was accepted that WIM’s attention had not been drawn to six of the journal articles pleaded in the further particulars of invalidity. Fourthly, until an amendment is in fact made, a patentee cannot seek an Earth Closet order.
It was pointed out for RGC that its amendments were obtained much earlier than those in GEC, and that, unlike the position there, the present case is not ready for trial. Nevertheless, the proceeding commenced in June 1994, and is a fair way down the track. But on the whole I do not regard the stage at which RGC’s amendments were sought as a particularly significant factor either way. It was also put for RGC that an Earth Closet order is capable in a particular case of working an injustice to a respondent. However, on the limited material before me, I am unable to form a view as to the strength of the patents before the amendment of the particulars of invalidity so as to discern whether, if WIM were to discontinue, it would be bowing to the inevitable. Indeed I was not uged to make the attempt.
A major factor to be taken into account in determining whether to make an Earth Closet order is whether the objector has been reasonably diligent in relation to the prior art inquiries: GEC at 421. I would regard it as relevant also to the switchover date for an order that has already been made. No material was directed to this issue, and it was not submitted for RGC that it had been reasonably diligent. What was said was that “we deliberately have not said we couldn’t have found the articles earlier. We have to face up to the fact that of course, I suppose, we could have found the articles earlier”. I do not think RGC has been reasonably diligent in relation to prior art inquiries.
Some of the matters I have mentioned under this heading go beyond the question directly in issue, namely the switchover date for the purpose of an existing Earth Closet order, and relate more to whether an Earth Closet order should have been made at all.
CONCLUSION
Having considered the matters adverted to in the authorities that bear upon the exercise of my discretion as to the switchover date, I am satisfied that 20 February 1995 (the date on which RGC filed amended particulars of grounds of invalidity) is the appropriate date. Counsel for RGC urged me to make clear that the Earth Closet order is not intended to disturb existing positive orders as to costs, that is to say orders made on interlocutory motions awarding costs one way or the other, as opposed to orders reserving costs or making them costs in the cause. Counsel for WIM did not mention this issue, and I infer from this that he did not disagree with RGC’s position. I will therefore state that it is not my intention that the Earth Closet order should disturb existing positive costs orders in the sense I have explained.
COSTS
WIM has been successful on the switchover date, and should have the costs of its motion notice of which was filed on 15 January 1998. I have considered RGC’s submission that WIM should pay the costs of the hearing on 6 February 1998 on the ground that WIM did not respond to RGC’s reasonable suggestion that the amendment issue be resolved under O 35 r 10. As it turned out, WIM’s advisers were considering the impact of some of the amendments on the viability of its proceeding, and were giving consideration to seeking an Earth Closet order. I think they were entitled to take the course they did. RGC’s argument based on WIM’s divisional application has been unsuccessful, and WIM should also have its costs of the reopening motion notice of which was filed on 10 March 1998.
I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg
Associate:
Dated: 26 March 1998
Counsel for the Applicant: J McL Emmerson QC Solicitors for the Applicant: Arthur Robinson & Hedderwicks Counsel for the Respondent: D K Catterns QC and A J Maryniak Solicitors for the Respondent: Allen Allen & Hemsley Dates of Hearing: 20 February, 13 March 1998
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