Zuru Ltd v Brand Developers Aust Pty Ltd
[2017] FCA 107
•16 February 2017
FEDERAL COURT OF AUSTRALIA
Zuru Ltd v Brand Developers Aust Pty Ltd [2017] FCA 107
File number: NSD 1702 of 2015 Judge: ROBERTSON J Date of judgment: 16 February 2017 Catchwords: PATENTS – infringement application in relation to Australian patent No 2015101248 – cross-claim for invalidity – interlocutory application to amend particulars of invalidity – whether leave to amend should be granted on condition relating to a pending application in the Administrative Appeals Tribunal (AAT) to review a decision by a delegate of the Commissioner of Patents to grant an extension of time for the filing of patent application 2015201240 in Australia – factual overlap between the two proceedings – whether proceedings in the Court will necessarily render the AAT proceedings otiose – whether cross-claimant’s application to amend should be allowed on condition that the AAT proceedings now be dismissed or permanently stayed – costs of the interlocutory application Legislation: Patents Act 1990 (Cth) ss 138(3)(d), 223(2)(a) Date of hearing: 8 and 16 February 2017 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and associated statutes Category: Catchwords Number of paragraphs: 28 Counsel for the Applicants/Cross Respondents: Mr CA Moore SC with Ms JM Beaumont Solicitor for the Applicants/Cross Respondents: AJ Park IP Pty Limited Counsel for the Respondent/Cross-Claimant: Mr N Murray Solicitor for the Respondent/Cross-Claimant: Griffith Hack Lawyers ORDERS
NSD 1702 of 2015 BETWEEN: ZURU LTD
First Applicant
TINNUS ENTERPRISES, LLC
Second Applicant
AND: BRAND DEVELOPERS AUST PTY LTD (ACN 115 139 565)
Respondent
AND BETWEEN: BRAND DEVELOPERS AUST PTY LTD (ACN 115 139 565)
Cross-Claimant
AND: ZURU LTD (and another named in the Schedule)
First Cross-Respondent
JUDGE:
ROBERTSON J
DATE OF ORDER:
16 FEBRUARY 2017
THE COURT ORDERS THAT:
1.Leave be granted pursuant to rule 16.53 of the Federal Court Rules 2011 (Cth) to the Respondent/Cross-Claimant to file and serve Amended Particulars of Invalidity, in the form of the document annexed to the Interlocutory Application filed on 5 December 2016 and marked Annexure A on condition that the words “with the housing” be added after the words “integrally formed” wherever appearing in paragraphs 1 and 2 and without the condition that the Administrative Appeals Tribunal proceedings be dismissed or permanently stayed.
2.By 22 February 2017, the Respondent/Cross-Claimant give the Applicants/Cross-Respondents further and better particulars of paragraph 13 of the Amended Particulars of Invalidity, such that each paragraph of the Malone declaration relied on in relation to paragraphs 13.1, 13.2 and 13.3 is identified and identify whether the representation is express or implied and if implied, the basis of the implication.
3.The Respondent/Cross-Claimant pay the Applicants’/Cross-Claimant’ costs thrown away by reason of the amendments.
4.By 8 March 2017, the Applicants/Cross-Respondents provide standard discovery in accordance with Rules 20.14, 20.16 and 20.17 of the Federal Court Rules 2011 (Cth) of:
(a)Documents comprising:
(i)Records or evidence of the description or specification of products promoted under or by reference to the name “Bunch of Balloons” (Products) manufactured for the purpose of the Toy Fair held in New York City on or about 16 to 19 February 2014 (Toy Fair);
(ii)Leaflets, brochures or handouts which promoted or described Products, and which were made available to attendees at the Toy Fair;
(iii)Images of Products as displayed or demonstrated at the Toy Fair;
(iv)Records of any orders placed for Products or sales of Products secured at the Toy Fair.
(b)Video footage comprising images of Products published on or about 15 February 2014 on Joshua Malone’s Google Plus account.
5.On or before 15 March 2017, the Cross-Respondents provide inspection of discovered documents.
6.The Applicants/Cross-Respondents pay the Respondents/Cross-Claimant’s costs of the Interlocutory Application dated 5 December 2016.
7.The matter be listed for hearing with an estimate of up to 7 days, commencing on Thursday, 21 September 2017.
8.Liberty to apply on 3 days’ notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ROBERTSON J:
These reasons are to be read as determining the matter which remains in dispute between the parties, that is, the question of the costs of the interlocutory application more fully described below. Since the contested interlocutory application on 8 February 2017 the parties have arrived at an agreement, reflected in consent orders, that leave should be granted to amend the Particulars of Invalidity. As I have said, the costs of the interlocutory application remain in dispute.
Before the Court on 8 February 2017 was an interlocutory application dated 5 December 2016 whereby Brand Developers Aust Pty Ltd (Brand Developers), the respondent/cross-claimant, sought leave to file and serve an Amended Particulars of Invalidity, substantially in the form of Annexure A to that application.
Annexure A included in the proposed Amended Particulars of Invalidity a number of paragraphs over 4 pages under the heading “False suggestion or misrepresentation”. Proposed particulars include that Tinnus Enterprises, LLC (Tinnus) made materially false representations to the Commissioner of Patents (the Commissioner) in support of its application for an extension of time to file patent application number 2015201240.
The substantive issue raised was whether, in light of related proceedings in the Administrative Appeals Tribunal (the AAT), that Amendment should only be allowed on conditions. This was the contention by Zuru Ltd and Tinnus, the applicants/cross-respondents in the substantive proceedings.
The conditions proposed are best understood in light of the application made to the AAT in November 2015 by Brand Developers seeking to review a decision by a delegate of the Commissioner to grant Tinnus an extension of time under s 223(2)(a) of the Patents Act 1990 (Cth) for the filing of patent application 2015201240 in Australia. On one version of the issues in the AAT, those issues include whether there was an error or omission by Tinnus or its agent or attorney within the meaning of s 223(2)(a) and whether there was a causal connection between any error or omission and the failure to file the patent application in time.
That provision is in the following terms:
223 Extensions of time
(1) …
(2) Where, because of:
(a)an error or omission by the person concerned or by his or her agent or attorney; or
(b) …;
a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act.
The conditions proposed by letter by the solicitors for the applicants/cross-respondents dated 3 February 2017 were as follows:
1.That your client dismiss the Administrative Appeals Tribunal proceedings.
2.That your client particularise paragraph 13 in further detail, in particular, that your client identify the paragraphs of the Malone declaration upon which your client relies for each of paragraphs 13.1, 13.2 and 13.3.
3.That your client provide further detail in respect of paragraph 4(i). The phrase “integrally formed” is unclear because it does not specify what the tubes are integrally formed with. Please provide further details in this regard.
4.That your client pay our client’s costs thrown away by reason of the amendments.
Mr Malone made a declaration on 10 July 2015 which was used in the successful application to the Commissioner for an extension of time which, in turn, is the subject of the application for review in the AAT.
The reference in the first proposed condition, set out in [7] above, to dismissal was later put as, alternatively, that the AAT proceedings be permanently stayed.
The contention on behalf of the applicants/cross-respondents was that the issue is that the AAT proceedings raised, substantially, the same issue as the proceedings in the Court. What that meant, it was submitted, was that by the proposed amendment the cross-claimant was, in effect, creating a duplicative proceeding where the duplication was that if the cross-claimant did not like the result in the Court proceedings, the cross-claimant would still be able, potentially, to prosecute the AAT application raising the same issues a second time.
By letter dated 7 February 2017, the solicitors for Brand Developers, the respondent/cross-claimant, said that the issues to be resolved by the AAT were not identical to the issues that the Court will have to decide in order to resolve the false suggestion allegation. Accordingly, it was said, even if the Court were to decide on the basis of certain findings of fact (that may well be binding on the parties in the AAT) that the patent was not obtained by reason of a false suggestion, “it would still be possible for our client to successfully pursue its appeal in the AAT. Our client wishes to reserve its right to do so.”
I deal first with matters other than the proposed dismissal or permanent stay of the AAT proceedings.
First, the letter dated 7 February 2017 indicated that Brand Developers consented to an order requiring it to identify the paragraphs of the Malone declaration upon which it relied for each of paragraphs 13.1, 13.2 and 13.3. This issue has now been resolved by the parties as reflected in part of order 1 of the consent orders handed up this morning.
Second, in the course of the interlocutory hearing on 8 February 2017, Brand Developers consented to the amendment of the proposed Amended Particulars of Invalidity by adding the words “with the housing” after the words “integrally formed” in proposed particular iii. b. in paragraph 1 and in proposed particular i. in paragraph 4. The resolution of this issue is reflected in order 2 handed up this morning.
Third, Brand Developers consented to an order requiring it to pay the costs of the applicants/cross-respondents thrown away by reason of the amendments.
This left only the condition referred to in paragraph 1 of the letter dated 3 February 2017 which I have set out in [7] above.
The applicants/cross-respondents accepted that, subject to the question of the proposed condition, it would be an appropriate case for amendment.
In the circumstances of this case I would not have been minded to impose that condition, that is, that the AAT proceedings be dismissed. This is because it was not clear to me that the proceedings in this Court would necessarily render the AAT proceedings otiose. If the respondent/cross-claimant were to be unsuccessful in the Court proceedings then the AAT proceedings would not necessarily be deprived of utility.
It was common ground between the parties that there was a substantial degree of overlap at a factual level, but as it seemed to me, that circumstance indicated that it was too early to predict what impact, at that level, the factual findings to be made in the Court proceedings would or might have on the AAT proceedings.
In the course of the interlocutory hearing on 8 February 2017, I raised with the parties the possibility that, sitting as a Deputy President of the AAT, I could hear the AAT proceedings with the Court proceedings so as to avoid possible inconsistency of fact-finding and duplication of hearing time in the AAT and in the Court. I directed the parties to file short written submissions on that procedural issue.
In its submissions, dated 10 February 2017, the respondent/cross-claimant agreed that the Court proceeding be heard concurrently with the related proceeding before the AAT. It was submitted that the concurrent hearing was preferable to a prior determination of the AAT proceeding. The common substratum between the proceedings was factual and the facts were not agreed.
In submissions on behalf of the applicants/cross-respondents provided on 14 February 2017, the applicants/cross-respondents agreed that it would be appropriate, if it could be arranged, for the AAT proceeding to be heard and determined at the same time as the Federal Court proceedings. Those parties submitted that it would nevertheless be necessary to preserve an appropriate separation of the proceedings so that, for example, the Federal Court proceedings were heard on the pleadings and evidence before the Court and in accordance with the Evidence Act 1995 (Cth). Those parties maintained their submission questioning the utility of certain issues raised in the AAT proceedings and questioning the impact of an AAT decision in favour of the applicant/cross-respondents on the false suggestion case in the Court.
In those circumstances I would have made the order sought in paragraph 1 of the interlocutory application dated 5 December 2016 and would have done so by allowing the Amended Particulars of Invalidity without this condition. Whether or not the AAT proceedings were able to be heard at the same time as the Court proceedings, I would not have required the respondent/cross-claimant to bring the AAT proceedings to an end whether by way of dismissal or permanent stay, merely because there was a factual overlap in relation to the proposed Amended Particulars of Invalidity so far as concerns the false suggestion or misrepresentation case under s 138(3)(d) of the Patents Act. Section 138 of the Patents Act relevantly provides that a person may apply to the Court for an order revoking a patent and the Court may, by order, revoked the patent, either wholly or so far as it relates to a claim, on the ground, amongst others, that the patent was obtained by fraud, false suggestion or misrepresentation.
Neither would I have required the respondent/cross-claimant to bring the AAT proceedings to an end because on one possible outcome of the Court proceedings the AAT proceedings would become otiose. I did not discern an abuse of process on the part of the respondent/cross-claimant.
During the course of the interlocutory hearing on 8 February 2017 I indicated that it will be important soon to find suitable dates for the final hearing. Correspondence from the parties has identified a period beginning on 21 September 2017 as suitable. I shall fix the final hearing accordingly.
Subject to hearing any contrary views on the part of the Commissioner, a party to the AAT proceedings but not to the proceedings in this Court, it is also my intention, as a Deputy President of the AAT, to have those proceedings listed for hearing at that time. The necessary administrative arrangements are being made.
I have been informed that the other order sought in the interlocutory application and pressed on 8 February 2017, order 3, relating to discovery, has been resolved between the parties. That is reflected in order 4 of the consent orders handed up this morning.
As to costs, in my opinion the appropriate order is that the respondent/cross-claimant should have its costs of the interlocutory application. Little time was spent on paragraph 3 of the interlocutory application dealing with discovery. Paragraph 1 of the interlocutory application, gave rise to the contention on behalf of the applicants/cross-respondents of whether or not the amendment should be allowed on condition that the AAT proceedings be dismissed or permanently stayed. Although that condition is now the subject of a consent order following the hearing on 8 February 2017, to the effect that that condition not be imposed, it was not a condition I would have imposed for the reasons I have given.
I make orders accordingly.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson. Associate:
Dated: 16 February 2017
SCHEDULE OF PARTIES
NSD 1702 of 2015 Cross-Respondents
Second Cross-Respondent
TINNUS ENTERPRISES, LLC
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