ResMed Ltd v Fisher & Paykel Healthcare Ltd
[2017] NZHC 2954
•30 November 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-001968 [2017] NZHC 2954
BETWEEN RESMED LIMITED
Applicant
AND
FISHER & PAYKEL HEALTHCARE LIMITED Respondent
Hearing: 16 October 2017 Counsel:
J G Miles QC, I Finch and J R E Wach for the Applicant
A R Galbraith QC and K McHaffie for the RespondentJudgment:
30 November 2017
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 30 November 2017 at 4.00 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Counsel : J G Miles QC, Auckland
A R Galbraith QC, Auckland
G F Arthur, Wellington
Solicit ors : James and Wells, Auckland
A J Park Limited, Wellington
RESMED LTD v FISHER & PAYKEL HEALTHCARE LTD [2017] NZHC 2954 [30 November 2017]
Introduction
[1] ResMed Ltd and Fisher & Paykel Healthcare Ltd (FPH) are engaged in patent litigation worldwide. This proceeding relates to four of ResMed’s patents for continuous positive airway pressure (CPAP) therapy. The CPAP technology allows treatment for sleep disordered breathing.
[2] ResMed alleges that its patents are infringed by FPH’s products, namely the Simplus, Eson and Eson 2 CPAP masks, and the Icon fixed pressure CPAP machine. FPH denies the infringement claims and it counterclaims seeking revocation of the ResMed patents on various grounds including lack of novelty and obviousness.
[3] ResMed seeks further and better particulars of FPH’s statement of defence and counterclaim. The particulars sought fall into the following broad categories:1
(a) Category 1: FPH’s reliance on specific features of commonly available masks said to form part of the “common general knowledge”;
(b)Category 2: FPH’s failure to identify where in the cited prior art each integer of the claims relied on is said to reside;
(c) Category 3: Positive allegations made by FPH in support of its statement of defence to the infringement claim.
[4] FPH resists the application. It says that it has already provided particulars of its pleading which go beyond what is required, and to provide further particulars would require it to plead evidence or matters of law. FPH also says that an order of particulars is premature given that discovery has yet to be completed.
The current state of the pleadings
[5] ResMed’s statement of claim was filed on 17 August 2016 and was accompanied by particulars of breach. In October 2016, it provided further and better
1 ResMed initially requested a fourth category of particulars relating to the use of open-ended or non-exhaustive pleading, but this has since been resolved between the parties and is no longer pursued.
particulars of its claim in response to a request by FPH. FPH’s statement of defence and counterclaim was filed on 4 November 2016.
[6] FPH’s statement of defence includes denials of each allegation of breach in relation to each patent. Those denials are particularised by reference to the absence of features in the FPH’s products which are claimed to breach the ResMed patents. ResMed seeks particulars of those denials in its request for particulars.
[7] FPH counterclaims against ResMed seeking revocation of all four patents under s 112 of the Patents Act 2013. It relies on various grounds set out in s 41 of the Patents Act 1953,2 including:
(a) That the invention is not new, having regard to what was known or used before the priority date of the claim in New Zealand (lack of novelty);3 and
(b)That the invention 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 (obviousness).4
[8] The counterclaim includes pleaded particulars of the grounds of invalidity. These include particulars of what FPH says was known in New Zealand before the priority date by reference to prior art (both documents and devices) and the common general knowledge at the relevant date.
[9] By notice dated 29 November 2016 (first notice), ResMed sought further particulars of the defence and counterclaim. FPH provided further particulars on
31 January 2017.
[10] ResMed’s application seeks further and better particulars of the statement of defence, counterclaim, and the particulars provided in response to the first notice.
2 Patents granted under the Patents Act 1953 may only be revoked by the court on the grounds set out in s 41(1) or (3) of that Act: see s 254(2)(e) of the Patents Act 2013.
3 Patents Act 1953, s 41(1)(e).
4 Section 41(1)(f).
Applicable rules and principles
[11] Under r 5.21, a party may request another party to give such further particulars of its pleading that may be necessary “to give fair notice” of its cause of action, grounds of defence, or the particulars required by the rules. In Price Waterhouse v Fortex Group Ltd, the Court of Appeal said that the purpose of a pleading is to:5
… supply an outline of the case advanced, sufficient to enable a reasonable degree of pre-trial briefing and preparation. Discovery and interrogatories are only an adjunct, not a substitute for pleading.
[12] Particulars illuminate a pleading, and ensure that the opposite party is fairly informed of the case to be met at trial. In that respect, particulars serve to isolate the issues in dispute, and assist in determining the scope of the evidence required to be called at trial.6
[13] The Court of Appeal has cautioned against the temptation to insist upon excessively refined pleadings, observing that it is not an area for “mechanical approaches or pedantry”.7 Excessively refined pleadings are also wasteful of costs and court time, especially in complex cases where a party’s case will inevitably develop with time.8 Whether a request is oppressive or an unreasonable burden upon the recipient is a relevant consideration in deciding whether to grant an application for further and better particulars.9
[14] Part 22 of the High Court Rules sets out rules regulating proceedings and appeals under the Patents Act 2013. Subpart 4 deals with objections to the validity of a patent.
[15] Under r 22.19, particulars of an objection to the validity of a patent must include the grounds on which the validity of the patent is disputed (sub-r (b)); and
“include particulars clearly stating issues intended to be raised” (sub-r (c)).
5 Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 19.
6 Ayers v LexisNexis NZ Ltd [2012] NZHC 3055, (2012) 21 PRNZ 313 at [49]; Platt v Porirua
City Council [2012] NZHC 2445 at [19].
7 Price Waterhouse v Fortex Group Ltd, above n 5, at 19.
8 BNZ Investments Ltd v Commissioner of Inland Revenue (2008) 23 NZTC 21,821 (HC) at [45].
9 Body Corporate 74246 v QBE Insurance (International) Ltd [2015] NZHC 1360 at [18(h)(iii)].
[16] Rule 22.20 deals specifically with particulars of a claim for want of novelty. That rule provides:
22.20 Particulars if want of novelty alleged
(1) The particulars of an objection on the basis of want of novelty must state the time and place of the alleged previous knowledge, publication, or use.
(2) The particulars of an objection on the basis that the invention has been used prior to the date of the patent must—
(a) state the name and address of the alleged prior user and the place of prior use; and
(b) state whether the prior use is alleged to have continued to the date of the patent, and, if not, the earliest and latest dates on which the prior use is alleged to have taken place; and
(c) contain a description (accompanied by drawings, if necessary) sufficient to identify the alleged prior use; and
(d) if the use relates to machinery or apparatus, specify whether it is in existence and where it may be inspected.
(3) Evidence that exists at the date of delivery of the particulars about machinery or apparatus in relation to which prior use is alleged is not able to be received, unless it is proved that the party relying on the prior use has,—
(a) if the machinery or apparatus is in that party's own possession, offered an inspection of it; or
(b) if the machinery or apparatus is not in that party's own possession, used best endeavours to obtain an inspection of it for the other parties to the proceeding.
[17] Under r 22.24, a party may not be heard or adduce evidence in support of an alleged infringement, objection, or defence insofar as it relates to matters that are not specified in, or are at variance with, the particulars delivered by that party. However, under sub-r (2), the Court may grant leave on terms that it considers appropriate.
[18] Rule 22.25 provides that particulars may be amended by leave of the Court on terms the Court considers just, but further and better particulars may, at any time, be ordered by the Court.
Category 1 – reliance on specific features of commonly available masks said to form part of the common general knowledge
[19] This category of requests targets FPH’s reliance on “common general knowledge” in its counterclaim. Requests 4, 6, 8, 9, 13, 14, and 17 fall within this category. Requests 8 and 13 also fall within category 3 and I have addressed them under that category as set out below.
[20] The FPH pleading targeted in the requests includes a pleading that the invention claimed in the ResMed patents is no more than “collocating known features of mask systems” available before the earliest priority date. The other parts of the targeted pleading include allegations that the claims are not new, or are obvious and do not involve any inventive step, having regard to what was “common general knowledge” at the relevant time.
[21] FPH pleads that the “common general knowledge” includes features of mask systems which are then listed with some specificity. FPH has also identified the available masks which are said to incorporate these known features in the particulars of its counterclaim.
[22] ResMed’s requests require FPH to specify “which specific features of each mask relied on are alleged to be common general knowledge”. In effect, the request requires FPH to marry the pleaded “known features” with the pleaded “commonly available masks”.
[23] ResMed submits that without these particulars it is left to guess at which of the features within the pleaded lists are said to be found in each of the various products, and that presents a serious challenge for assessing FPH’s counterclaim and briefing its expert witnesses. Furthermore, ResMed submits that these particulars should be easy to provide because FPH must have already conducted an analysis and identified which of the pleaded features resides in each pleaded mask or humidifier for the purposes of preparing its counterclaim.
[24] In Amarillo Cell Culture Co Inc v Fernz Corp Ltd, Barker J considered whether to order further particulars of a counterclaim in which obviousness had been pleaded
as a ground for revocation.10 Barker J held that to support “common knowledge” in a defence of obviousness, the party seeking revocation of the patent should not be able to rely on any document unless it had been particularised before trial. However, “common general knowledge” was a matter of evidence to be given by persons knowledgeable in the art.11
[25] That approach was softened somewhat in Stallion Plastics Ltd v McInnes.12 In that case, Dobson J outlined what he considered to be a more contemporary approach to the pleading of common general knowledge. He referred to the following passage from Ratiopharm v Napp (a decision of the England and Wales Court of Appeal) as exemplifying that contemporary approach:13
… I consider that the time has come when the matter which is said to be common general knowledge ought to receive some more formal exposition in advance of the expert evidence stage. Apart from anything else, the Pozzoli approach, which depends on identifying a difference between matter alleged to form part of the start of the art and the inventive concept, cannot begin to be applied without adequate particularisation of the starting point.
[26] That statement needs to be understood in context. It is prefaced by a reference to rules of pleading which require a party to identify the matter in the state of the art which is relied on to support an attack on the ground of obviousness. Justice Floyd observed that, despite those rules, there had been a practice in that jurisdiction for allegations of obviousness “to include a plea founded on nothing other than ‘common general knowledge’”. The Judge observed that in some cases, claims had reached trial stage without any further particularisation other than the expert evidence adduced to support it. It was in those circumstances that the Judge considered the time had come for common general knowledge to receive more formal exposition.
[27] In Stallion Plastics, the Assistant Commissioner had struck out the pleading of common general knowledge on the grounds that it was to be determined by the
evidence of experts. In response to that reasoning, Dobson J said:
10 Amarillo Cell Culture Co Inc v Fernz Court Ltd HC Auckland CL52/93, 3 October 1994.
11 At 15.
12 Stallion Plastics Ltd v McInnes HC Wellington CIV-2008-485-2250, 29 April 2009.
13 Ratiopharm GmbH v Napp Pharmaceutical Holdings Ltd [2008] EWHC 3070 (Pat) at [154] cited in Stallion Plastics Ltd v McInnes, above n 12, at [19].
[23] With great respect, that approach misconceives the purpose of pleadings. If an opponent's argument on any one or more grounds of opposition is intended to be supported by reference to common general knowledge, then as a matter of pleading the opponent should commit to an outline of the respects in which common general knowledge will be claimed to be relevant, and the applicant is entitled to know that in considering its response. As with all factual allegations in pleadings, the assertion of what constitutes the common general knowledge at a particular point in respect of a particular device does not give that assertion any status as being the truthful or unquestionable state of the relevant knowledge: rather, it is the opponent's contention of what the Assistant Commissioner will find, on evidence to be adduced, to be the state of knowledge. It is useful for it to be signalled as a matter of pleading to enable the applicant to consider the strength of evidence available to challenge that assertion.
[28] The Stallion approach therefore requires a party to commit to an outline of the respects in which common general knowledge will be claimed to be relevant. Signalling that as a matter of pleading enables the applicant to consider the strength of the evidence available to challenge the assertion.
[29] In the present case, there is a dispute between the parties as to whether the Amarillo principle still applies given the approach taken in Stallion. I do not consider it necessary or helpful to establish a bright line rule to apply to pleadings of “common general knowledge”. Just where the line between evidence and pleading is to be drawn will differ from case to case depending on the application of the rules and principles to the nature of the particular case and pleading in issue.
[30] Applying those rules and principles to this case, I consider the particulars of common general knowledge relied on by FPH are adequate. This is not a case where there has been no exposition of common general knowledge at all. FPH has given notice of what it contends to comprise the common general knowledge, namely the known features, together with the masks. That is a sufficient outline of its case around common general knowledge to allow expert evidence to be briefed.
[31] The requests require FPH to plead matters which are to be addressed in expert evidence. They go further than requiring a formal exposition of what is relied on as common knowledge. Effectively, FPH is being asked to commit its expert evidence to pleadings in circumstances where discovery has yet to be completed and the pleadings have not yet closed. Such a request is unduly burdensome and unnecessary in the circumstances.
[32] The current pleading provides a sufficient outline of what FPH relies on as common general knowledge for ResMed to know the claim that it must meet. Further particulars are not necessary and this category of requests is declined.
[33] The application for further and better particulars in relation to the requests falling within category 1 is declined.
Category 2 — the defendant’s failure to identify where in the cited prior art each integer of the claims relied on is said to reside
[34] The requests falling within category 2 are requests 5, 7, 10, 11, 12, 15, 16, 18, and 19. These requests target the defendant’s pleading which refers to certain specified prior art documents, and two allegedly prior devices.
[35] Request 12 is in respect of FPH’s pleading that one of ResMed’s patents (NZ 597689) was obtained on a false suggestion or representation, and that another US patent anticipates the claims. The remaining pleading targeted by the category 2 requests contain references to prior art documents or prior devices to support FPH’s allegations of:
(a) lack of novelty (requests 5, 10, 15, and 18); and
(b)obviousness and lack of inventive step having regard to what was common general knowledge in New Zealand together with the document concerned (requests 7, 11, 16, 19).
[36] Where it is relying on prior art documents, FPH pleads in some parts of its counterclaim that it relies on the whole of the prior art document; in other parts it pleads that it relies on the whole of the document but refers to particular passages and figures in the document. The particular features of the alleged prior devices relied upon are pleaded in each case.
[37] ResMed requests particulars of where each integer of certain claims reside in the prior art documents/devices relied upon.
[38] ResMed says that there are over 20 prior art documents, which are lengthy and complex. It submits that its burden in preparing its case in response to the whole of each document relied upon is oppressive. Further, ResMed says that the particulars sought are easily provided as FPH must have already analysed the documents and formed a view about the particulars sought in order to plead them in good faith.
[39] The principles concerning the scope of pleading required in respect of prior art documents are summarised in Terrell on the law of Patents as follows:14
Whether or not a defendant will be required to give particulars of the exact passages of the prior documents relied on, or to point out specifically what part or parts of the claimant’s specification they allege to be affected thereby, will depend upon the circumstances of the case and the nature of the documents. Where it appeared that the defendant had, figuratively speaking, “thrown at the head” of the claimant a large number of complicated specifications without any attempt at discrimination, further particulars were required. If, however, the defendant bona fide relies on the whole of one or more documents, and the subject matter is simple, the particulars of objections will not be interfered with.
[40] That passage was applied by Quilliam J in Alfa-Laval Cheddar Systems Ltd v Silver Dawson Industries Ltd.15 In that case, Quilliam J went on to state that where the whole publication is referred to, the defendants will be taken to be relying upon every claim which appears in the publication.16
[41] When FPH’s pleading is considered in its entirety, it is evident that FPH has discriminated between those specifications where it relies on the whole of the document, and those specifications where it relies on certain passages and figures. This is not a case of FPH “throwing at the head” of ResMed a large number of complicated specifications where the whole of the document was not relied upon by FPH in good faith.
[42] The documents which are said to be unduly long and complex were not adduced in evidence. However, one document referred to in ResMed’s submissions
as being particularly lengthy (165 pages) is one of ResMed’s own patents. Other
14 Colin Birss and others Terrell on the law of Patents (18th ed, Sweet and Maxwell, London, 2016)
at [19.207].
15 Alfa-Laval Cheddar Systems Ltd v Silver Dolphin Industries Ltd HC Christchurch A20/82,
1 September 1982 at 6.
16 At 7.
documents referred to are also ResMed’s patents. One of the devices relied on by FPH (the Sullivan HumidAire) is a ResMed product. It can be reasonably expected that ResMed will be familiar with its own patents and products, and able to construe those without further assistance by way of particulars. To the extent that the other documents are technical and complex, then ResMed is well equipped to instruct its own experts to construe these documents in light of FPH’s current pleadings.
[43] The relative ease of providing the particulars may be a relevant factor in deciding whether to grant the request.17 I am unable to assess the relative ease of identifying the integers in each specification without seeing the specifications themselves. However, I consider it unlikely that identifying the integers is as easy as ResMed suggests. What appears more likely is that the process of identifying where each integer of an independent claim resides will involve construing the documents and devices. Where obviousness and lack of inventive step is pleaded the documents and devices will need to be construed with the common general knowledge also relied upon by FPH. To respond to the requests, FPH will be required to plead matters of evidence and law which, in my view, strays beyond the proper function of pleadings in this case.
[44] The proceeding is still at its early stages with discovery yet to be completed. The current pleading provides the necessary level of detail to fairly inform ResMed of FPH’s case and the documents and devices it will rely upon to establish its claims of invalidity. No further particularisation is required.
[45] The application for further and better particulars in relation to the requests falling within category 2 is declined.
Category 3 — positive allegations made by the defendant in support of its statement of defence
[46] Category 3 comprises requests 1, 2, 8 and 13 (with requests 8 and 13 straddling category 1 also). All of the requests require FPH to explain aspects of its pleading in
17 Body Corporate 74246 v QBE Insurance (International) Ltd [2015] NZHC 1360 at [18(h)(iii)].
its statement of defence and counterclaim. Requests 1 and 2 are directed at para [11.7.1], request 8 at para [24.1], and request 13 at para [27.1].
Requests 1 and 2
[47] The relevant paragraphs of FPH’s statement of defence to the infringement claims provides as follows:
11.7 Apart from the above admissions, the allegations made in paragraphs
1, 2, 3, 4 and 5 are denied. In particular, the defendant says that the manufacture and sale of its Simplus, Eson, Eson 2 masks, and Icon
product do not infringe any of the relevant claims of the relevant
patents referred to in the said paragraphs. In particular the defendant says:
NZ592064
11.7.1 The headgear used on the Simplus and Eson 2 masks does not have at least:
(a) one strap where the first fabric layer and second fabric layer are joined at a joint. The defendant says that the fabric layers on the headgear for the Simplus and Eson 2 masks are not joined, or at least there is no joint therebetween, because they do not come into direct contact with each other.
(b) a joint configured to be positioned away from the patient’s face when in use.
(c) at least one strap having at least one rounded edge when viewed in cross-section.
As claimed/described in the relevant patent (claim 1 and claims dependent thereon).
[48] ResMed’s requests are directed at paragraph 11.7.1(b) and (c) and require FPH to specify in what way it is said that the headgear used on the Simplus and Eson 2 masks does not have:
(a) at least a joint configured to be positioned away from the patient’s face when in use; and
(b)at least one strap having at least one rounded edge when viewed in cross-section.
[49] FPH submits that these requests are objectionable as they require FPH to give particulars of a negative, that is, the absence of a feature. I agree. Furthermore, they require FPH to plead its construction of the terms used in ResMed’s patent. That is a matter of evidence, not pleading. The requests extend well beyond what is required to give fair notice to ResMed of FPH’s claim, or an outline of its claim. No further particulars are required.
Requests 8 and 13
[50] Both requests 8 and 13 target FPH’s pleading that the inventions claimed in NZ 597689 and NZ 608551 comprise no more than collocating known features of mask systems available before the earliest priority date. In each case FPH pleads the “known features” relied on and the commonly available masks incorporating these known features.
[51] The pleaded known features include the following:
[in relation to NZ 597689]
(a) Mask systems comprising a frame, and removably attached cushion components, and the frame being external to the cushion component.
[in relation to NZ 608551]
(b) Cushions or seals that are deformable to accommodate different facial geometries, including by the use of … folds, gussets, bellows or pleats.
[52] Requests 8 and 13 require FPH to specify what is meant by “frame”, “cushion components”, and “gussets” in the above pleading. Request 13 also requires that, if it is said that the gussets are comprised in a product or document, then FPH should specify the product or document.
[53] Again, I consider these requests go too far. What is meant by “gussets”, “frames” and “cushion components” will be obvious to those familiar with the patents and the products. To require further explanation in the pleading would be to require matters of evidence to be pleaded to a degree of specificity which is not required by the rules or general principles relating to particulars.
[54] The application for further and better particulars in relation to the requests falling within category 3 is declined.
Result
[55] ResMed’s application for further and better particulars is declined.
[56] If costs cannot be agreed between the parties, then a memorandum in support of an application for costs may be filed 10 working days after receipt of this judgment, and a memorandum in opposition filed five working days thereafter. Costs will be determined on the papers.
[57] I direct the Registry to allocate a first case management conference before me at the first available date in the first quarter of 2018.
Edwards J
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