Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd
[2015] NZHC 1775
•30 July 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-4178 [2015] NZHC 1775
UNDER Patents Act 1953 IN THE MATTER
of New Zealand Patent No. 526262
BETWEEN
ASSA ABLOY NEW ZEALAND LTD First Plaintiff
ASSA ABLOY IP AB Second Plaintiff
AND
ALLEGION (NEW ZEALAND) LTD Defendant
Hearing: 29 July 2015 Counsel:
C L Elliott QC and B M Peacock for Plaintiffs
M C Sumpter and J W J Graham for DefendantJudgment:
30 July 2015
JUDGMENT OF BREWER J
This judgment was delivered by me on 30 July 2015 at 11:30 am pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors: Terry IP Law (Wellington) for Plaintiff
Chapman Tripp (Auckland) for Defendant
Counsel: Clive Elliott QC
ASSA ABLOY NEW ZEALAND LTD v ALLEGION (NEW ZEALAND) LTD [2015] NZHC 1775 [30 July
2015]
Introduction
[1] The plaintiffs sue the defendant for infringement of a patent for a sliding door lock. The defendant denies the infringement and counterclaims that the patent is invalid. The trial is imminent (17 August 2015). Five days have been allowed.
[2] The defendant now applies for leave to file an amended statement of defence and to file amended particulars of objection. The plaintiffs oppose. This judgment determines the defendant’s application.
The law
[3] The High Court Rules require leave of the Court to file an amended pleading after the close of pleadings date1 and to file amended particulars.2 In this case I do not see any difference to the approach I should take to the components of the defendant’s application. They are interdependent and the same principles apply.
[4] The leading case in this area is Elders Pastoral Ltd v Marr.3 It concerns an appeal from a decision of Tompkins J to allow a plaintiff to amend its statement of claim during final submissions. The Court of Appeal upheld the decision.
[5] Tompkins J’s general approach, approved by the Court of Appeal, was that amendments should be made, even at a late stage, “if they are necessary for the purpose of determining the real controversy between the parties”.4 This was subject to the proviso that amendments should be declined if to make them is likely to result in an injustice to the defendant.
[6] The Court of Appeal drew the principles together when considering a submission by counsel for the appellants on the supervisory role of the Court:5
[Counsel] argued for what may be called a disciplinary approach to belated applications for amendments: to penalise dilatoriness and to discourage opportunism. In our opinion, if an applicant can surmount the three
1 High Court Rules, r 7.7(1).
2 Rule 22.25.
3 Elders Pastoral v Marr (1987) 2 PRNZ 383 (CA).
4 At 384.
5 At 385.
formidable hurdles of showing that the amendment is in the interests of justice and will not significantly prejudice defendants or cause significant delay, very little if any weight should be given to the suggested desirability of something akin to the denunciation which is an established factor in criminal sentencing. We find it difficult to envisage a case in which the relevant considerations are not all comprehended in the three just mentioned.
[7] I will decide the application on this basis.
Background
[8] The defendant, on 2 July 2015, in the course of preparing evidence, became aware for the first time of a lock known as the “Securicraft MC 1120”. The defendant claims that this lock is prior art, belongs to the plaintiffs, should have been disclosed by them, and it invalidates the patent in question.
[9] The plaintiffs respond:
(a) It is not in the interests of justice to amend the pleadings at such a late stage.
(b) Amendment would cause significant prejudice.
(c) The addition of the new lock under the grounds of lack of novelty and obviousness, along with the new ground of insufficient description, would mean that the trial date would have to be vacated. Five days would be insufficient to deal with the new situation. There would be significant delay in determining the plaintiffs’ claim.
Discussion
[10] Like Tompkins J, my general approach is that I should allow the amendments if they are necessary for the purpose of determining the real controversy between the parties. However, even if they are, I will not allow them if the likely result is injustice to the plaintiffs.
[11] The defendant argues that the amendments are absolutely necessary. If the patent is invalid then the claim of infringement falls away. If the defendant can
prove that the newly discovered lock is prior art, then that alone would be sufficient to invalidate the patent. It would be unjust to allow the plaintiffs to pursue their claim of infringement while denying the defendant the ability to put before the Court evidence which might persuade it that the patent is invalid.
[12] I accept that argument, subject to analysing the plaintiffs’ position. I note that the plaintiffs have done enough work on the newly discovered lock to be able to assert in affidavit that it does not invalidate the patent. That means that there is a conflict of evidence which would have to be resolved at trial. It is not a conflict on which I can, realistically, form a view on the material before me.
[13] I note also that, since inspecting the lock on 7 July 2015, the plaintiffs have been working through written records, not searched previously, to see if anything pertains to the lock. The work is ongoing.
[14] So, I have to look at whether, having regard to the plaintiffs’ position, the
overall interests of justice require the case to proceed without the amendments.
[15] First, the plaintiffs point to the public interest in protecting intellectual property rights and running litigation efficiently. The defendant says that the amendments do not really change the shape of the case. There is no new cause of action. This is merely an expansion of what is already pleaded. The plaintiffs submit that the opposite is true.
[16] I do not need to delve into the pleadings and the details of the particulars. That is because I accept that the amendments reshape the factual basis of the case. This is new evidence. It could be decisive evidence. Mr Elliott QC for the plaintiffs estimates that without the amendments the issue of validity would take two days of the five days allocated for the trial. If the amendments are made, his estimate is that the issue of validity will take three weeks to argue.
[17] Mr Sumpter, reporting the estimates of Mr Miles QC, submits that seven or eight days will be required for the trial without the amendments. The amended pleadings could add perhaps three days to the estimate.
[18] Mr Elliott submits that the lateness of the application adds to the plaintiffs’ prejudice. It cannot be expected to respond, in the time available before trial, to this changed pleading.
[19] The prejudice, Mr Elliott submits, is compounded by delay. If the amendments are granted then the trial will have to be adjourned, probably until the middle of next year. The plaintiffs are entitled to their day in Court, and it is nothing of their doing which has led to the situation.
[20] I record that on the issue of blame, there is a significant dispute between the parties. The defendant submits that the newly discovered lock belongs to the plaintiffs. They should have discovered the prior art. It was only fortuitous that the defendant found out about it on 2 July 2015. The defendant points to the affidavit of Mr Weyermayr filed in support of the plaintiffs’ opposition as describing discovery activities which should have been performed before. Mr Elliott responds that the tailored discovery order, and the common law, do not require the plaintiffs to go hunting for prior art. He submits that the defendant has been dilatory, is being opportunistic, and has provided no evidence as to how it discharged its own obligation to justify its pleading in this area.
[21] I accept there is prejudice to the plaintiffs if the amendments are allowed:
(a) They will have to answer a counterclaim with a substantially different factual basis. This will involve work and expense.
(b)There will be substantial delay because Mr Elliott is adamant that resolving the issues raised by the amendments cannot be accommodated in the allocated trial period. However, he does submit that the issue of infringement could be dealt with.
[22] My view of the overall interests of justice is that the amendments must be permitted. Invalidity has been pleaded. Now there is a new basis for it. It could be determinative of the dispute between the parties. It would be wrong, both from the point of view of the public interest in upholding intellectual property rights and from
the point of view that justice means resolving the actual disputes between parties, for the Court to embark on a trial which would produce a result without considering evidence of real import.
[23] Usually, I would now ameliorate the prejudice to the plaintiffs by adjourning the trial to enable them to recover from their surprise, and awarding costs in their favour. I am not going to do so:
(a) The defendant, at the close of the hearing, itself applied for an adjournment. Mr Sumpter submits that an adjournment is necessary because the case – with or without the amendments – cannot be heard within the allocated five days. Mr Elliott opposes an adjournment. In his submission, the infringement claim can be heard in the five days. Mr Sumpter opposes this. His submission is that validity must be determined before infringement. This is an issue outside the scope of the defendant’s application and it needs separate consideration in the context of the case overall.
(b)There is a significant dispute as to whether the plaintiffs should have discovered the claimed prior art. I think that the trial Judge will be best placed to decide that issue having heard the evidence, and to take the finding into account when determining costs.
Decision
[24] The application is granted. Leave is given to the defendant to file the amended statement of defence and amended particulars.
[25] I direct the registry to refer the case to the Civil List Judge so that he can determine:
(a) Whether there should be an adjournment or whether the time should
be used to resolve the plaintiffs’ infringement claim; and
(b) Arrangements, including date and time allocation, for the resolution of
either the case as a whole or the defendant’s counterclaim on validity.
[26] Costs are reserved.
Brewer J
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