Peterson Portable Sawing Systems Limited v Lucas
[2005] NZCA 29
•4 March 2005
IN THE COURT OF APPEAL OF NEW ZEALAND
CA64/03
CA97/03BETWEENPETERSON PORTABLE SAWING SYSTEMS LTD
First AppellantANDCARL JAMES PETERSON
Second Appellant
ANDREX CAMERON LUCAS
First RespondentANDG W LUCAS & SONS PTY LTD
Second Respondent
Hearing:6 and 7 April 2004
Court:Anderson P, McGrath and Glazebrook JJ
Counsel:C L Elliott for Appellants
J G Miles QC for Respondents
Judgment:4 March 2005
JUDGMENT OF THE COURT
A The appeal is dismissed.
BCosts to the respondent of $12,000 together with disbursements including the reasonable travelling and accommodation expenses of two counsel.
REASONS
(Given by Anderson P)
Table of Contents
Para No
Introduction [1]
Relevant aspects of the patent [10]
AMBIGUITY [13]
Insufficiency [18]
Lack of fair basis [20]
Lack of novelty [21]
Obviousness [26]
Appellants’ submissions [37]
Respondents’ submissions [63]
Discussion [76]Introduction
[1] This litigation is concerned with issues of infringement of and challenge to a patent in respect of a portable sawmill.
[2] In the timber producing industry a means of milling trees at or close to the point of felling has obvious economic advantages. Undressed but milled timber can be transported for further processing without the added cost and inconvenience of carrying out of the bush or forest the unwanted residues of milling. A common means of achieving this is the portable milling machine. Typically, that is relatively light and demountable, allowing its components to be carried on a utility vehicle, for example, to felling sites.
[3] Because milling a length of debranched log into planks involves rectilinear vertical and horizontal cutting movements, the machine must be capable of what is known as “vertical and horizontal gauging”. This allows the blade height and depth, relative to the log, to be adjusted when cutting horizontally, and the vertical position, relative to the width of the log, and the depth of cut, to be adjusted when cutting vertically. A common solution is to mount a motorised circular saw on a bogey, that is, a carriage or platform which slides or rolls along parallel rails, with the motorised assembly itself movable across the carriage at right angles to the rails. By employing a means of rotating the saw blade through ninety degrees from vertical, horizontal and vertical gauging are effected by adjusting the position of the motorised assembly on the bogey and by raising or lowering the side rails on which the bogey travels.
[4] A convenient means of propulsion of the bogey is for the miller to push it from a position between the rails. Once planks have been cut, it is convenient to withdraw them through the end-frames which support the side rails. A convenient design therefore envisages height adjustable side rails supported by a relatively open-ended frame. This case is principally concerned with the means of height adjustment of the rails in such a frame.
[5] One method of height adjustment attaches the ends of the rails to movable but lockable collars which travel on the uprights of the end-frames. Individual manual adjustment of the collars is required. A more efficient method is used in a mill designed and marketed by the respondents, which we shall refer to as “the Lucas mill”. This uses a winch at each end of the frame assembly, operating transversely at the top of the end-frames. At the bottom of each corner of the frame assembly is an idler wheel. Cords (referred to in the patent specification as “ropes 40”) are attached to each of the end rails, carried around the idler wheels to the winch and back to the end rails. The result is that each of the transversely opposite rail ends can be moved, not only simultaneously, but also with a result equivalent to locking because simultaneous upward and downward vertical forces are applied by each end of the cord. The advantages of the Lucas mill have been demonstrated by very favourable market responses. The first respondent has a patent in respect of the Lucas mill and has licensed the second respondent in relation to it.
[6] For some time the appellants have been involved in the design and marketing of portable saw mills. An early design, marketed from 1991 was known as the tube frame. It had the disadvantages of individual locking collars and of impediment to operator access between the rails. In 1999 there followed a model which allowed operator access between the rails but still employed individual collars for vertical gauging. This was known as the standard frame. Later in 1991 Mr Peterson developed a design known as the “production frame” which used stationary tracks at ground level and achieved vertical gauging through vertical movement of the saw carriage.
[7] In 1992, before the Lucas mill had been designed, Mr Lucas and Mr Peterson met for the first time at a forestry industry exposition in Australia. They agreed each would sell the other’s products in his own country. Mr Lucas and his brother became agents for the sale of Peterson mills in Australia from 1992 to 1994. But Mr Lucas ran up against competition from an American designed apparatus known as the “Lewis mill”. This achieved vertical gauging through a winch mechanism at each end-frame, allowing simultaneous raising or lowering of opposing end rails, but it had the disadvantage that the rails were too close together to permit operator access between them. They were in fact linked together, amounting to a compound, double rail assembly, rather than separate rails. Mr Lucas considered that the Lewis mill was also disadvantaged by slowness in horizontal gauging and inadequate motor power. He therefore designed the Lucas mill and filed a provisional patent for it in the Australian Patent Office on 24 March 1994. That application resulted in the patent in respect of which the respondents sued in the High Court for alleged infringement by Mr Peterson and his company.
[8] In April 1994 Mr Peterson visited Mr Lucas, photographed the new Lucas mill and obtained from Mr Lucas a copy of the provisional specification. Within about two months Mr Peterson was marketing in New Zealand a significant revision of his own designs. The new mill was called “Islander Mark I”. To the basic Peterson layout were added winches to raise the rails, but the design did not provide for a downward positive pull. Later in 1994 the appellants produced a Mark II version of the Islander. This had no upper horizontal member spanning the end-frames but did have a winding mechanism incorporating a positive downward pull. The winding mechanism was contained in the horizontal member at ground level. In June 1997 Mr Peterson produced the “Islander Mark III”, the winding mechanism of which now employed sprockets and chain rather than cord. Both the Mark II and Mark III had the following points of similarity to the Lucas mill:
(a) The moving means for the pairs of end rails allowed them to be moved in unison.
(b) The moving means was such that the rails did not move down simply under the force of gravity.
(c) The frame assembly allowed unimpeded access between the frame uprights.
[9] In 1999 the Lucas interests sued Mr Peterson and his company for patent infringements and for breach of the Fair Trading Act 1986.
Relevant aspects of the patent
[10] The Lucas specification covers 29 pages, including nine pages of drawings. It commences with a statement of description and objects in terms which identify, amongst other things, the winch mechanism with its upwards and downward forces and operator access between the rails. It comprises 20 claims of which Claim No. 7 is presently relevant to the litigation. If claim 7 should be defeated, claims 8-19 inclusive will fall with it.
[11] Claim 7 is in the following terms:
A portable sawmill comprising first and second end frames with a pair of separate rails extending there between, a carriageway prime mover and saw blade mounting movable engageable with said rails, each end frame having a pair of frame elements with a respective one of each of said rails being movably coupled via mounting means to the pair of frame elements, said rails being adjustably movably between upper and lower positions on the end frame by moving means whereby the rails can be moved in unison at each end frame to a position at or between said upper and lower positions.
[12] In the High Court, before Fisher J, the validity of Claims 7-19 was challenged on the grounds of ambiguity, insufficiency, lack of fair basis, lack of novelty and obviousness. The appellant had argued that there was ambiguity or uncertainty in the term “a pair of separate rails,” contending for example that it might include spaced rails which have the possibility of being bridged.
Ambiguity
[13] In the appellants’ submission, claim 7 is fatally ambiguous in three respects. The first argument is that the claim does not convey which of two possible pairs of frame elements is referred to in the following extract from the claim:
…each end frame having a pair of frame elements with a respective one of each of said rails being movably coupled via mounting means to the pair of frame elements…
[14] Fisher J held that it would be absurd to interpret the claim as possibly indicating a transverse rather than a longitudinal fixing of the rails because at the outset of claim 7 there is reference to a “portable sawmill comprising first and second end-frames with a pair of separate rails extending there between.” In our view, that reasoning is not seriously contestable.
[15] Fisher J held that there could not be any structure upon which a carriage for a prime mover “between a carriage and any mover could be ‘movably engageable with the said rails’ unless the rails provided a parallel connection between the two end-frames.” The Judge also held that even if claim 7 left any doubt it would be immediately removed by consideration of the specification as a whole. This is because “separate” must be taken to add a meaning to the expression “a pair of … rails”. Having regard to the specification as a whole, it could not be said that rails which, independently of the winding mechanism, were so connected that raising one would automatically raise the other, were “separate” for present purposes.
[16] The second allegation of ambiguity is that “the claim does not specify that the rails are coupled to the other pair of frame elements.” The Judge held that the point is literally correct but realistically pointless because the context makes it obvious that the rails must be attached in like manner to both frames. We think there is not even literal cogency to the argument. It is perfectly obvious that if there is a pair of separate rails extending between first and second end-frames, each end-frame having a pair of frame elements with a respective one of each of the said rails being coupled to the pair of frame elements, the claim can only describe longitudinally placed rails attached at each end to an upright member of an end rail.
[17] The third example of alleged ambiguity is that “prime mover” is not defined. Fisher J held there was no credible evidence at the hearing before him that the expression would cause the skilled addressee any difficulty. He held that it signifies a means of extracting power from energy sources such as fuel or electricity, and in the present context any kind of motor to drive the circular saw would qualify. In our view, the Judge was right to reject the particular argument. The expression “prime mover”, although perhaps a technical term in a general engineering context, is by no means arcane. References to the expression in the Oxford English Dictionary commence in the early nineteenth century. It is in fact an elementary term in engineering. It is inconceivable that a skilled but unimaginative addressee in the art of portable sawmill design and construction would not know that the reference is to a motor for driving the saw blade.
Insufficiency
[18] The appellants also challenged the patent on the basis of s 41(1)(h) of the Patents Act 1953, which provides as a ground for revocation that the specification “does not sufficiently and fairly describe the alleged method and the method by which it is to be performed or does not disclose the best method of performing it…” The appellants’ case on insufficiency concerned the description in the complete specification, at p 10, that “sliding members do not move down simply under gravity” when pulled on by ropes 40. The appellants say that how gravity is overcome so that the “sliding members” do not simply move under gravity when released for movement is not explained.
[19] The Judge found that criticism groundless because the preceding paragraph of the specification clearly states that rope 40 runs around an idler wheel at the lower end of a side member and this immediately explains how the sliding members are pulled downwards and not just allowed to lower under the influence of gravity. We find the particular submission groundless for the same reasons.
Lack of fair basis
[20] It was also argued before Fisher J as a ground of invalidity that claim 7 is not fairly based on the matter disclosed in the specification, such being a ground for revocation pursuant to s 41(1)(a) of the Patents Act. The Judge dismissed that argument as baseless, claim 7 being substantially a word for word reproduction of a particular paragraph appearing in p 5 in the body of the specifications.
Lack of novelty
[21] Fisher J then turned to another alleged basis of invalidity, founded on s 41(1)(e) of the Patents Act, which permits a Court to revoke a patent on the ground that the invention, so far as claimed in any claim of the complete specification, is not new having regard to what was known or used before the priority date of the claim in New Zealand.
[22] It was common ground that claim 7, absent the words “by moving means whereby the rails can be moved in unison at each end-frame to a position at or between said upper and lower positions”, would describe the Peterson mill. The appellants argued that the Lucas machine was anticipated by the Peterson standard frame mill. The Judge rejected that argument and in our opinion rightly so. It was argued before Fisher J, by the appellants, that the expression “moving means” contemplated movement by two operators, each lifting or lowering a rail at the same time as the other did so. The sliding couplings by which the rails were attached to the end-frame members may be considered movable means but to suggest that a plurality of operators attempting synchronised movements is a moving means whereby the rails can be moved in unison is entirely unpersuasive.
[23] Next, the appellants had argued that the Lucas mill was anticipated by the Lewis mill. The Judge rejected that on the grounds that in the Lewis mill the rails were joined by cross members to form a single unit and therefore did not amount to “separate rails”. Further, the Lewis mill rails are not movably coupled via mounting means to the pair of frame elements. The Judge discussed the design in these terms:
In the Lewis mill the winding means is attached to a cross-frame which slides up and down the end-frame. On the cross-frame there is another element known as a beam-carrier attached to the cross-frame and moving transversely across it. The beam-carrier has projecting horizontal bars parallel to the end-frames. On the bars are vertical pins. On the pins are the rotating ends of the beams. On the beams are the rails. In those circumstances it could well be said that the rail horizontal projecting bars and pins were “mounting means”. It could further be said that the rails are moveably coupled via that mounting means to the cross-frame. However, it could not be said that the rails are moveably coupled via the mounting means to the pair of frame elements. In my view, the combination of cross-frame, beam-carrier, horizontal projecting bars, and vertical pins, involve too many distinct members, and too many moving parts, to be collectively described as a “mounting”. I do not consider that an engineer skilled in the art of making sawmills would consider that it fell within the wording of claim 7 in that respect.
[24] The appellants relied on two further designs known as the Hutchinson mill and the Elgin mill. The Judge dismissed those particular examples in the following terms:
The next design relied upon by the defence was the Hutchinson mill patent number NZ 217710 published on 30 September 1987. In my view this mill did not have “separate rails” in the sense adopted. The rails were attached to each other by fixed cross-members at each end. The rails were raised and lowered by moving means, but not in unison.
The final design relied upon by the defence was the Elgin mill patent number US 5,213,022 published 30 July 1993. This similarly lacks “separate rails” in the sense that I have described. Additionally, as Mr Stevens explained “the need for lifting gear so as to apply an even lifting force at each upright of the support frame is evident in Lewis, Miles, Stubbe, Kaster and Elgin. In each of these specifications a single structure is slidably supported across a pair of uprights on which sleeves, fastened to the structure, can slide.” Further, it does not seem that the Elgin mill has a framework formed by two end-frames joined by rails along which the saw carriage moves. Nor do the rails move vertically on frame elements.
[25] Fisher J concluded that claim 7 of the Lucas patent is not open to challenge on the basis that it lacked novelty in terms of s 41(1)(e).
Obviousness
[26] The appellants then argued invalidity on the basis of s 41(1)(f) which is in these terms:
That the invention, so far as claimed in any claim of the complete specification, is obvious and does not involve any inventive step having regard to what was known or used before the priority date of the claim in New Zealand;
[27] Fisher J pointed out that, in essence, claim 7 describes the basic Peterson standard layout, but with the addition of a moving means for raising and lowering the rails and a coupling in the moving means to achieve this in unison. The appellants argued that all the features described in claim 7 were well known among existing mill designs and that to combine the three (basic Peterson standard layout, rail raising device, and in unison) was obvious.
[28] The Judge held that the starting point for determining obviousness is usually taken to be the four stage analysis propounded in Windsurfing International Inc v Tabur Marine (Great Britain) Ltd [1985] RPC 59 at 73 (CA) and adopted by Tompkins J in Smale v North Sails Ltd [1991] 3 NZLR 19 at 42: The test is expressed in these terms:
There are, we think, four steps which require to be taken in answering the jury question. The first is to identify the inventive concept embodied in the patent in suit. Thereafter, the court has to assume the mantle of the normally skilled but unimaginative addressee in the art at the priority date and to impute to him what was, at that date, common general knowledge in the art in question. The third step is to identify what, if any, differences exist between the matter cited as being “known or used” and the alleged invention. Finally, the court has to ask itself whether, viewed without any knowledge of the alleged invention, those differences constitute steps which would have been obvious to the skilled man or whether they require any degree of invention.
[29] Fisher J then identified supplementary principles which he summarised as follows:
(a) Where the invention is the combination of features all of which were individually known, the Court must avoid the danger of concentrating on the integers rather than the whole concept: Wood v Gowshall Ltd [1937] 54 RPC 37; Smale, supra, at p 43; Sabaf SpA v Meneghetti SpA [2003] RPC 264, 278 at para 40.
(b) The Court must also avoid the danger of falling into ex post facto analysis. It must put out of its mind developments since the invention and view the question of obviousness from the perspective of persons skilled in the art immediately before the priority date: Non-drip Measure Co Ltd v Strangers Ltd [1943] 60 RPC 135, 142; Technograph Printer Circuits Ltd v Mills and Rockley (Electronics) Ltd [1972] RPC 346, 362. The warning against being wise after the event is of special importance in a field, such as the present one, where it is easy to imagine that one is skilled in the art after a relatively brief period looking at a few drawings: Fichera & Anor v Flogates Ltd & Anor [1983] FSR 198.
(c) There is no inventive step if a known article is applied to a new and analogous purpose: Morgan & Co v Windover & Co (1890) 7 RPC 131, 134 (HL); Smale v North Sails, supra, at 43.
(d) Similarly, there is no inventive step if known features are brought together into a single whole in which the component parts continue to “do their own thing”: International Paint Co Ltd’s Application [1982] RPC 247 at 275. Thus there is no invention if “however juxtaposed to the other ingredients of the mixture or parts of the article, each part performs its own function and would do so even in the absence of the other parts.” (ibid). The converse is true if the collocation of features produces a new or improved function by virtue of the novel relationship established between the known features.
(e) Obviousness relates to the technical subject matter claimed to be inventive, and not to its commercial worth: Windsurfing, supra, at 72.
(f) The mere fact that the claim is merely to an improvement to a product already on the market does not preclude an inventive step: Hickman v Andrews [1983] RPC 147 at 189.
(g) In the end, it is impossible to avoid the conclusion that the distinction between novelty and obviousness is a question of degree rather than classification, at least in a case of the present kind.
[30] Fisher J found that the Lucas design brought together in one mill, for the first time, a series of advantages which for the purposes of claim 7 combined lightness, ease of assembly, open access through the end-frames and speed of operation. The last mentioned point is of course referable to the raising and lowering mechanism. He pointed out that no one has denied the utility of the new combination formed by claim 7. Arguably, in his view, the two leading portable sawmill designers in Australasia in 1994 were Mr Peterson and the respondents’ expert witness Mr Hutchinson. Neither they, nor any other designer, had come up with the solution offered by Mr Lucas. Mr Peterson’s answer to the slowness of the four point rail adjustment in his standard frame was to move on to his new production frame design. In our view, that represents a designing away from the features of the art which were advanced by the Lucas mill. He returned to the standard frame design only when the means of mechanisation indicated by the Lucas mill had been demonstrated.
[31] Mr Peterson did not dispute that he was inspired to design the Islander as a result of seeing the Lucas mill, but he sought to explain this on the basis of price and horse power. The Judge specifically disbelieved Mr Peterson’s evidence on that matter, finding that the break-through was the new combination introduced by Mr Lucas.
[32] Mr Hutchinson agreed that with hindsight the raising mechanism in the Lucas mill was a simple one but denied that it was obvious at the time. He said he would have liked to have thought of such a system.
[33] Fisher J acknowledged that the test for obviousness is an objective one which does not turn on the insights gained or lacked by any particular individuals. In his view, if the combination of ideas represented by claim 7 was not obvious to men as skilled, experienced and directly involved, as Mr Peterson and Mr Hutchinson, it is difficult to believe that it would have been obvious to the ordinary hypothetical skilled operator in that field at the time.
[34] A further point is that those mills which employ mechanised lifting systems did so, not for the purpose of the twin advantages of speed and accuracy obtainable by the Lucas mill, but because of the weight needed to be raised or lowered or the need to avoid the binding of a single unit of substantial width which had to slide vertically on separated uprights.
[35] Ultimately, Fisher J preferred the evidence of the respondents’ witnesses, Mr Stevens, a registered professional engineer, and Mr Hutchinson, to the evidence of the appellants’ expert, another registered professional engineer, Dr Van Wyk. The Judge chose to cite the following evidence of Mr Stevens:
The sawmills to which Dr van Wyk refers all show a mind set of the industry to the use of a lifting and lowering mechanism for each structural unit. Therefore, if a skilled person using the simple engineering techniques which Dr. van Wyk claims to have been well known in the industry the skilled person would have used a winch or equivalent mechanism to raise and lower each of the rails. What Mr Lucas did was radically depart from this mind set and use a single mechanism to move a pair of independent structures namely the two separate rails into an adjusted position.
[36] In the result, Fisher J found that none of the challenges to the validity of the patent were sustainable; that each of the Islander designs infringed the patent and that both Mr Peterson and his company were liable for infringement. What consequences should follow that finding of liability was reserved for further argument. In the meantime, of course, the appeal has been brought.
Appellants’ submissions
[37] There is a matter discussed near the end of Mr Elliott’s submissions but which we think we ought deal with now. It concerns a series of submissions directed at the reliance Fisher J placed on the respondents’ witnesses Mr Stevens and Mr Hutchinson. That was in respect of the application of the test for obviousness in terms of attributing all the common general knowledge to a notionally skilled addressee and asking what that addressee would have done at the priority date.
[38] Counsel submitted that the respondents did not advance any evidence to suggest Mr Stevens had the requisite specialist knowledge; that he could not draw on personal experience in the saw milling industry as at 1994 and had not made any search or inquiry as to the common general knowledge as at the priority date in 1994; and that was a general mechanical engineer with only limited current practical knowledge of portable saw milling in 1994.
[39] As to Mr Hutchinson, submitted counsel, although he was involved in the portable saw milling industry generally, his knowledge of the New Zealand situation was unclear, as was the degree to which his views were representative of the common general knowledge of the portable saw milling industry.
[40] Mr Elliott submitted that if Fisher J had approached his task systematically and in accordance with established principle, he would or should have tested the respondents’ evidence against the common general knowledge. In the result, the jury was said to have erred in preferring the evidence of the respondents’ witnesses to that of Dr Van Wyk.
[41] Mr Elliott’s points can be summarised in the following terms:
(a) The Judge should not have admitted the evidence of the opinions of the respondents’ witnesses because they were not properly qualified to express a relevant opinion;
(b) Even if such evidence were admissible, it should not have been favoured over the evidence of the appellants’ expert.
[42] Neither submission is persuasive. It is too late now to challenge the admission of the opinion evidence; that should have been done at the time. The Judge and the parties proceeded on the basis of admissibility and a belated rethink now on what points might have been taken falls short of persuading us to attempt an evaluation of the adequacy of the qualifying status. In any event, the matters pointed at by counsel seem to us to go more to weight than admissibility in the circumstances of the case.
[43] As to the Judge’s preference of witnesses we note that it is not simply a case of expressing a bare preference as between conflicting witnesses, although impressions may be gained at first instance by a greatly experienced judge, as Fisher J was, which do not lose their cogency through the inability of an appellate court to reproduce the evidence viva voce. Fisher J was obviously unimpressed by the selective reliance by Dr Van Wyk on a plainly inapt definition of “separate” in construing that term in clause 7.
[44] Further, the Judge, at [84] and [85] of his judgment explained the basis of his rejection of Dr Van Wyk’s opinion to the effect that a lifting device would be a routine response to the exertion of moving rails. The Judge observed that the design captured by claim 7 was not driven by issues of exertion. The winch and crank mechanisms that were well known at the time had no obvious application to the basic Peterson standard layout. Nor, explained the Judge, did Mr Van Wyk’s comments explain the further insight that there would be speed and efficiency advantages in raising and lowering in unison even where that feature was not dictated by the need to avoid binding.
[45] The Judge preferred the opinion of Mr Stevens and Mr Hutchinson that however simple the solution may now appear, it was not obvious at the time. We see no proper basis for rejecting his preference of witnesses.
[46] Another incidental matter complained of by the appellants is that Fisher J, in the course of a conference on 13 March 2003, upheld an objection by the respondents to the admission of a brief of evidence from a farmer, Mr Richard Tait, whom the appellants wished to call. The Judge declined leave because the proposed evidence purported to indicate a prior use and on such an important issue there should have been sufficient warning to the respondents in the form of pleadings particulars and associated discovery, supported if necessary by interrogatories. Fisher J was not prepared to allow such a significant matter to be raised so proximately to trial. In the course of his rulings at the particular conference the Judge was very critical of “the lamentable procedural history on the part of the defendants”.
[47] We note that even at the late stage of two weeks before trial in litigation which had been extant for years the appellants were still trying to get their case into some sort of shape. Attempts were made to amend what was then the fifth amended statement of defence. The appellants had been to trial years before on an application they brought for revocation of the patent. That had ended in a non-suit at their election and a substantial costs award against them. About three years previously Master Kennedy-Grant had remarked, with undue optimism, that he was dealing with “the final stage of a long drawn out process designed to ensure that the defendants’ pleading in this patent matter complies with the rules…”.
[48] We consider that the Judge’s refusal to allow yet another belated plea for a concession was justified. Certainly we see no proper basis for taking a different view. But even if otherwise were the case we are at a loss to understand what the appellants’ expect this Court’s response to be. In view of the protracted procedural history it would be out of the question for us to remit the matter to the High Court for consideration in the light of Mr Tait’s testimony including cross examination and re-examination. The position is further exacerbated by the subsequent retirement of Fisher J from the High Court bench. Apart from these considerations, the point is meritless.
[49] We turn now to the more substantial issue of the Judge’s treatment of the issues of obviousness, which Mr Elliott submitted was the main focus at trial and on the appeal. Counsel submitted that the Windsurfing approach which directs a four step approach is of long standing. Although the Judge recited Windsurfing and purported to follow it, he did not in fact do so.
[50] Counsel submitted that the primary evidence in such a process will be that of properly qualified expert witnesses who will convey whether or not, in their opinions, the relevant step would have been obvious to a skilled person having regard to the state of the art, all other evidence being secondary. Fisher J noted this principle but, in counsel’s submission, he failed to apply it. Indeed, submitted Mr Elliott, Fisher J adopted in fact an intuitive and essentially subjective approach to the question of obviousness.
[51] A fundamental issue, said Mr Elliott, is whether deciding to lift the rails in unison was a natural product improvement, or whether it bore the hallmark of genuine invention. If the step was routine in nature then claim 7 of the patent would stop other saw mill operations from doing something which was merely an obvious extension of what they had been doing or what was known in the art before the priority date.
[52] Counsel submitted that when it comes to the concept which supposedly underpins claim 7 the specification is silent. It is clearly acknowledged by the respondents that the idea of sawmills with liftable rails was known in the prior art and there is no suggestion that there was any difficulty in identifying and comprehending the idea of lifting rails in unison. Counsel submitted that the conception of the idea and then the employment of known components to achieve the desired result is not inventive when all of the elements were themselves known and used in that exact field and each component did exactly what it was supposed to do. The respondents, through claim 7, improperly attempt to monopolise a broad and well known principle of operation and the claim must be considered invalid.
[53] In counsel’s submission Fisher J failed adequately to distinguish between novelty and obviousness in holding that in the present case the distinction was a matter of degree.
[54] Mr Elliott submitted that the Judge failed to take the first step in Windsurfing, which was to identify the inventive concept. The Judge considered the inventive concept to be “a walk through frame providing synchronised track raising”. But, said Mr Elliott, that is not stated in claim 7 and amounts in fact to an interpretation which requires that feature to be built into the claim.
[55] The prior art, said Mr Elliott, knew the use of winch mechanisms to lift and lower rails in unison. This was employed, for example, in the Lewis mill. As to the second step in Windsurfing, the imputation of common general knowledge in the art to the normally skilled but unimaginative addressee, the Judge failed, in counsel’s submission, to undertake this step at all.
[56] Counsel took issue with references made by the Judge to the moving means in unison notwithstanding the absence of any requirement to avoid binding and regardless of the weight to be lifted. He submitted that binding was a non issue in the prior art.
[57] Counsel turned to the issue whether the step in question was “worth a try”. In doing so he invoked the observation included in this Court’s elucidation of the obviousness test in Ancare New Zealand Ltd v Cyanamid of NZ Ltd [2000] 3 NZLR 299 at [43]:
That aside, the test is well established. It postulates a person (or, where appropriate, a team) skilled in the field but not inventive, invested with the common general knowledge available in the field at the priority date, presented with the prior knowledge or prior use relied upon. Prior documents may be looked at together if that is what the skilled person or team would do. It asks whether to that person or team the alleged inventive step would be obvious and would be recognised, without bringing to bear any inventiveness, as something that could be done or is at least worth trying. That is a question of fact. If any embodiment within the scope of the claim is obvious the claim is invalid. These propositions are helpfully expanded upon in the recent English cases which are still applicable though under the 1977 Act; see the Windsurfing International case, Hallen Co v Brabantia (UK) Ltd [1991] RPC 195 at p 211, and Mölnlycke AB v Procter & Gamble Ltd [1994] RPC 49 at p 112.
[58] Mr Elliott said that Fisher J did not mention this test notwithstanding that counsel had put it to the respondents’ witnesses at trial. So long as, from the point of view of a skilled portable saw mill engineer, something was “worth a try” to address speed, efficiency, the weight of a heavier saw, or some other concern, then the clause is bad for obviousness. Dr Van Wyk gave evidence that moving two rails in unison would have been worth a try, and Mr Lucas had agreed that since it came to lifting of the tracks “a person would naturally almost without thinking say, “well I’ve got to use some type of winch or ratchet or some type of (device) to wind the rails up and down.”
[59] Mr Elliott submitted that all the features of claim 7 were known and used in the portable saw milling art to do their usual tasks. No additional ingenuity was required to overcome fresh difficulties. There was no “teaching away” from using a winch to move rails in unison. He said the Lucas mill of claim 7 is in reality a Tube Frame in which the moving of rails is mechanised or automated. In counsel’s submission, if the Judge had applied the proper legal test for obviousness and had relied solely on the overall evidence and admissions made by Mr Stevens and Mr Hutchinson, he would or should have come to a different conclusion.
[60] Mr Elliott argued that Fisher J did not take a principled approach to the analytical process dictated by Windsurfing. He did not consider what the common general knowledge was nor how it informed the situation. He did not test theories against it and modify or qualify them accordingly. Nor in counsel’s submission did the Judge properly identify the type and attributes of the skilled addressee, whether there was a mechanical engineer or a sawmill engineer, or a portable sawmill engineer, or a sawmill operator or even a combination of these several possibilities. As a result the Judge did not properly educate and inform the addressee and thus himself. He then failed to ask the right question once invested with the appropriate knowledge. Instead he applied a subjective and personalised approach.
[61] Under the heading of “Infringement” Mr Elliott’s written submissions dealt with an argument which is essentially that of ambiguity, to which this judgment refers at [13]-[16]. It gains no greater cogency under that heading than we felt able to accord it as an argument of ambiguity.
[62] Counsel argued that the Judge was wrong to find Mr Peterson personally liable for participating in a common design or concerted action with the company. The Judge, said Mr Elliott, did not provide adequate reasons for his conclusion. We intend to dispose of this point immediately. There was abundant evidence that Mr Peterson’s mind and will was the company’s mind and will; that the company did what Mr Peterson directed. The Judge’s conclusions, set out at [92] were entirely open to him. He said:
The first defendant company manufactured, marked, and sold, the infringing Islander sawmills. It was the primary infringer. The second defendant, Mr Peterson, was the managing director, employee and sole or principal designer of the first defendant. He participated in a common design or concerted action with the primary infringer. As such he is liable as a joint tortfeasor: see Unilever PLC v Gillette UK Ltd [1989] RPC 583, 608 and 609 (CA); MCA Records Inc v Charly Records Ltd [2002] EMLR 1 at para 59.
I therefore find against both defendants that claim 7 is valid and that both defendants are liable for its infringement by all three models of the Islander. Against the first defendant there was no challenge to the validity of claims 8 to 19 inclusive. Consequently the proper findings against the first defendant is that it also infringed in respect of claims 8 to 19 of the Lucas specification.
Respondents’ submissions
[63] Mr Miles QC submitted that at the heart of the appellants’ argument in support of obviousness is a premise that the Lucas mill is simply a combination of known features and hence must be obvious. But the respondents’ argument has always been that the inventive step lay in combining a particular set of known factors which when combined, produced a new and inventive mill.
[64] Further, the appellants’ approach to construction was not purposive, contrary to the approach mandated by Catnic Components Ltd and Anor v Hill and Smith Ltd [1982] RPC 183, which Fisher J referred to when examining the authorities relevant to contribution. The principles of construction were enumerated by the Judge at [28] of his judgment in the following terms:
(a) The interpretation of a patent specification is a question of law for the Court to determine but expert evidence can be received as to the meaning of technical terms and concepts found within it.
(b) The specification is to be construed objectively through the eyes of a skilled but unimaginative addressee. The test is what an addressee skilled in the particular art in question would understand from the document as a whole.
(c) The patent is to be given a purposive construction. Not appropriate is the kid of meticulous verbal analysis to which lawyers can sometimes be attracted.
(d) The Court is to have regard to the surrounding circumstances as they existed at the priority date, this including matters of common general knowledge at that time.
(e) It is to be assumed that redundancy was not intended. Consequently separate effect should be given to each word and phrase unless no sensible additional meaning can be ascertained from them.
(f) The specification is to be interpreted as a whole. Since it is the claims that define the scope of the monopoly, they will normally be the starting point but ambiguity in words or expressions can, in appropriate cases, be resolved by reference to the context of the document as a whole. Importantly, for this purpose the document includes the drawings.
(g) The complete specification is broadly divisible into the description or consistory clauses (s 10(1) and (3)(a)) of the Patents Act, the best method for performing the invention (s 10(3)(b)), and the claims (s 10(3)(c) and (4)).
(h) The description or consistory clauses must identify and describe the essence of the invention in terms which reveal the inventive step or steps. The question is what the skilled addressee would understand as the essential and novel features of the invention.
(i) The superlative “best” when referring to the best method (s 10(3)(b)) implies that more than one embodiment will be possible for any given invention. Passages in the specification by the word “preferably”, or “in a preferred form”, or “in one embodiment of the invention”, or words to similar effect, may tend to indicate that what is being described is merely optional and therefore not an essential part of the invention itself.
(j) It may also be necessary to distinguish between consistory clauses and embodiments for another reason. When referring to the body of the specification for the purpose of clarifying ambiguous expressions in a claim, consistory clauses may be exhaustive as to the intended scope of the expression. Embodiments, on the other hand, might help to show the broadness of a claim but presumably never its narrowness.
(k) Notwithstanding those technicalities, the overriding requirement will always be to view the specification purposively through the eyes of the technically skilled addressee and not those of lawyer conducting a line by line analysis of a debenture or will.
[65] In Mr Miles’ submission, a consistent theme of the appellants’ argument is an overly literal construction of the claims together with a persistent reiteration that claim 7 is nothing more than a Peterson standard mill with a number of features well known to the industry.
[66] Fisher J’s approach, said Mr Miles, cannot fairly be criticised. He made findings on the basis of expert secondary evidence and on the basis of the specification itself.
[67] In respect of anticipation, the appellants’ arguments are, said Mr Miles, dependent on semantic absurdities. One is that “moving means” contemplates an object which can be moved by hand. The other is that “separate” means simply “a spacing between the rails”. These propositions were, in Mr Miles’ submission, rightly rejected by the Judge. And in fact the “parroting” by Dr Van Wyk of Mr Peterson’s evidence on the meaning of “moving means” was one of the reasons for rejecting that expert’s opinion.
[68] As to obviousness, Mr Miles argued that again the Judge’s approach was correct and his conclusions justified. Whether an invention is or is not obvious is a question of fact, usually determined by reference to experts’ opinions on whether or not the inventive step would have been obvious to a skilled person having regard to the state of the art. Recourse may be had to inferences from secondary evidence such as evidence of others searching for the same solution, and of the commercial success of the invention.
[69] To overturn the judgment, this Court would have to be satisfied that the conclusion reached by Fisher J was not open on the evidence, either because there was no evidence to support it or because having regard to the evidence as a whole the Judge was plainly wrong; Rae v International Insurance Brokers Ltd [1988] 3 NZLR 190.
[70] Here, Fisher J gave a clear indication that he preferred the evidence of Mr Stevens and Mr Hutchinson to that of Dr Van Wyk, and he specifically disbelieved Mr Peterson’s evidence that the Islander was inspired by new insights into price and horsepower.
[71] In Mr Miles’ submission, Fisher J clearly applied the Windsurfing test. He identified the inventive concept in terms of a base Peterson frame but “with the addition of moving means whereby the rails could be moved vertically in unison”. He then examined the literature said to anticipate the claims and found no disclosure of moving means whereby separate rails could be moved in unison. He identified and applied the test of obviousness in respect of a normally skilled but unimaginative addressee. He concluded, after an analysis of the experts’ evidence and the fact that the inventive concept was not obvious “to men as skilled, experienced and directly involved as Mr Peterson and Mr Hutchinson” that the inventive step would not have been obvious to the ordinary hypothetical skilled operator in that field at that time.
[72] At [69] of his judgment Fisher J identified supplementary principles (see [29]) which include a caution against concentrating on integers rather than a whole concept, and falling into ex post facto analysis.
[73] The putting together of two or more features may involve an inventive step, and where a case involves a collation of known concepts the question is whether it will be obvious to the skilled person, using common general knowledge, to combine those concepts. Sabaf SpA v Meneghetti SpA [2003] RPC 264.
[74] The present case was, in counsel’s submission, a classic example of an inventor using components known in the industry but, by designing away from the traditional use of those components, producing something new and inventive.
[75] The current art employed lifting mechanisms for reasons of weight, or to ensure the even movement of a single structure moving on a pair of supports. The Lucas mill was lightweight and had separate rails. The moving mechanism was employed for synchronisation of independent rails in an open end frame assembly.
Discussion
[76] Mr Elliott criticised Fisher J’s opinion that at least in a case such as the present the distinction between novelty (s 41(1)(e) Patents Act) and obviousness (s 41(1)(f)) is a question of degree rather than classification. But he noted that as a conclusory view after identifying a number of supplementary principles. There is no basis for considering that he conflated the two different statutory concepts.
[77] Yet each requires a consideration of the existing art and a comparison with that of a claimed invention. There may be such a correlation that the claimed invention should not be considered new; or not considered inventive because of obviousness. Distinction between the concepts may be subtle when expressed abstractly, or when applied to a particular case, but there is no basis for thinking that Fisher J misunderstood them.
[78] Mr Elliott submitted that the Judge merely identified the Windsurfing technique but did not apply it. In the sense of a check list of his findings in terms of the stages of the Windsurfing test that might be arguable. But such argument is redolent of the undue literalism which led to the frail argument that moving means in unison could envisage two men lifting or lowering with synchronised movements. The Judge identified the relevant legal principles and then undertook a factual assessment. It cannot reasonably be argued that having identified the law the Judge then put it to one side. The substance of what he did rather than the dissected entrails, is the appropriate focus of examination.
[79] The inventive concept was the addition to the Peterson Standard mill, with its advantages of open end framing, lightness and stability, of a quick and efficient method of, simultaneously, raising and lowering the separate rails. The integers of moving means to adjust a saw bed, and of movable separate rails, were individually known in the art; but they were not known in the particular combination which resulted in simultaneous adjustment of the separate rails of an open ended frame.
[80] That combination was fairly readily achievable, obvious in hindsight, and as the commercial success showed, very desirable to millers. But designers were designing away from such integration, not towards it. This would seem to be a classic case of a simple but not obvious solution, like the wheel.
[81] Such observations are, however, less pertinent than the essentially factual enquiry which had to be undertaken by the trial Judge. It was for him to determine whether the Lucas mill was anticipated or obvious to the skilled addressee.
[82] There will be cases where the subject art is complex and diverse, with the skilled addressee possessing extensive arcane knowledge which must be evaluated by a trial judge. Yet other cases will concern an art less specialised and complex. In those cases the scope for novelty and inventiveness may be relatively compressed and the notional skilled but unimaginative addressee may be more readily identifiable.
[83] The present case seems one of the latter type. Indicative of the notional addressee are Mr Lucas, Mr Peterson, Mr Hutchinson and such designers as those of the Lewis mill. Fisher J was plainly entitled to have regard to reality in seeking to identify the notional. The appellants’ approach has been to invest a relatively straight forward, albeit subtle, question with an unwarranted complexity.
[84] For all the appellants’ dissecting of the judgment it remains inevitably a factual inquiry. The appellants are up against the hurdle of having to demonstrate that Fisher J was wrong in his conclusion, either because he applied the wrong tests for determining the relevant facts or because there was no adequate evidential basis for his factual conclusions. It is not for this Court to contemplate the substitution of a view as if this were a hearing de novo.
[85] Fisher J identified all the relevant principles, albeit that he did not specifically invoke the “worth a try” test, the utility of which may well be moot. It seems to add little to the technique of ascertaining obviousness. Anything may be worth a try, depending on acceptable cost for potential benefit, but inventiveness may lie in deciding what to try. The crucial test is the statutory expression examined in terms of the orthodoxy of Windsurfing. Fisher J examined and marshalled the facts before him, taking into account indications of reliability or otherwise in the testimony and demeanour of the witnesses, applied the appropriate tests for the nature of the dispute, and came to factual conclusions.
[86] Mr Elliott argued that the factual findings were challengeable because Fisher J did not follow the correct legal method in deciding what the relevant facts were. The result, in his submission, was that that facts were now at large and for this Court to ascertain afresh. We do not accept that Fisher J’s approach was wrong in principle, for the reasons discussed so far by us.
[87] The onus of proving that the claim was anticipated or was obvious lay on the appellants. The onus of satisfying us that the judgment under appeal was wrong lay on the appellants. We have not been persuaded that Fisher J misapplied the law or came to unwarranted factual conclusions.
[88] In the result, the appeal is dismissed with costs to the respondents of $12,000, together with disbursements including the reasonable travelling and accommodation expenses of two counsel.
Solicitors:
Gaze Burt, Auckland for Appellants
Simpson Grierson, Auckland for Respondents
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