FEDERAL COURT OF AUSTRALIA

Research Affiliates LLC v Commissioner of Patents [2013] FCA 329

THE COURT ORDERS THAT:

1.    The application pursuant to s 158(2) of the Patents Act 1990 (Cth) for leave to appeal is referred pursuant to s 25(2)(e) of the Federal Court of Australia Act 1976 (Cth) to a Full Court of this Court.

2.    The question of the appropriate order to be made in respect to the costs of the present application is also referred to the Full Court.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On 17 December 2010 a delegate of the Commissioner of Patents concluded that claims in the specifications that accompanied two patent applications did not constitute a manner of manufacture for the purposes of s 18(1)(a) of the Patents Act 1990 (Cth) (“Patents Act”). An appeal from those decisions was dismissed by a former Judge of this Court on 13 February 2013: Research Affiliates LLC v Commissioner of Patents [2013] FCA 71.

2    Research Affiliates LLC (“Research Affiliates”) now seeks an order that an application for leave to appeal from the February 2013 decision be referred to a Full Court. The Commissioner of Patents (the “Commissioner”) consents to that order being made.

3    That application should be acceded to. It is prudent to give short reasons for granting the application.

THE APPLICATION FOR LEAVE

4    The requirement to obtain leave to appeal to a Full Court is imposed by s 158(2) of the Patents Act. That subsection provides as follows:

Except with the leave of the Federal Court, an appeal does not lie to the Full Court of the Federal Court against a judgment or order of a single judge of the Federal Court in the exercise of its jurisdiction to hear and determine appeals from decisions or directions of the Commissioner.

5    “The principles governing the exercise of the power under s 158(2) of the Patents Act and s 195(2) of the Trade Marks Act”, it has been said, “are similar to those governing the exercise of power to grant leave to appeal under s 24(1A) of the Federal Court of Australia Act …”: Pfizer Corporation v Commissioner of Patents [2006] FCAFC 190 at [10], 155 FCR 578 at 581 per Emmett, Allsop and Greenwood JJ.

6    Although the “principles” were there said to be “similar”, there seems to have emerged some tension between the principles which inform the exercise of discretion conferred by s 24(1A) of the Federal Court of Australia Act 1976 (Cth) (“Federal Court of Australia Act”) and those that inform the exercise of the discretion conferred by s 158(2) of the Patents Act.

7    Section 24(1A) states that:

An appeal shall not be brought from a judgment referred to in subsection (1) that is an interlocutory judgment unless the Court or a Judge gives leave to appeal.

This provision confers an “unfettered discretion” in “unqualified terms”: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 399. Sheppard, Burchett and Heery JJ there observed at 399-400:

In our opinion, the principles discussed in [Niemann v Electronic Industries Ltd [1978] VR 431] and in the other cases to which we have referred provide general guidance which a court should normally accept. However, there will continue to be cases raising special considerations, and the court should not regard its hands as tied in any case beyond this; that by s 24(1A) the legislature has evinced a policy against the bringing of interlocutory appeals except where the court, acting judicially, finds reason to grant leave. When the court comes to exercise its discretion on a particular application, an important distinction to be observed is that between the common interlocutory decision on a point of practice - concerning which the High Court has given (see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177) a strong warning that 'a tight rein' should be kept on appeals - and an interlocutory decision determining a substantive right - where leave will more readily be granted. …... In the present case, the interlocutory decisions in respect of which leave is sought are certainly attended with difficulty, and their correctness is open to dispute. If they are wrong, significant consequences will be suffered by the applicants. We regard this as a clear case for the grant of leave.

8    The principles that inform the exercise of the discretion conferred by s 24(1A), being the principles discussed in Niemann, are frequently summarised by Judges of this Court as inviting an inquiry as to:

(a)    whether in all the circumstances the judgment of the primary judge is attended by sufficient doubt to warrant it being reconsidered by the Full Court; and

(b)    whether substantial injustice would result if leave were refused supposing the decision would be wrong.

See for example: Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCA 536 at [17]; Atich v Civil Aviation Authority [2013] FCA 20 at [16]; and Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111 at [20].

9    That test is “cumulative” and is not satisfied unless each limb is made out: Rawson Finances Pty Limited v Deputy Commissioner of Taxation [2010] FCAFC 139 at [5] per Ryan, Stone and Jagot JJ. But the “two elements of the test are not unrelated”: Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111 at [20] per Kenny, Tracey and Middleton JJ. The “sufficiency of the doubt in respect of the decision and the question of substantial injustice should not be isolated in separate compartments”: Sharp v Deputy Commissioner of Taxation (1988) 19 ATR 908 at 910, 88 ATC 4184 per Burchett J.

10    The principles that inform the exercise of the discretion conferred by s 158(2) of the Patents Act were summarised, at least in part, by their Honours in Pfizer Corporation as follows:

[8]    … Leaving aside applications for leave on a question of pure law, in the context of essentially undisputed facts, and subject always to considerations of fairness and the interests of justice raised by a particular case, leave to appeal against a decision rejecting a pre-grant opposition will often be granted only where the applicant has demonstrated a clear prima facie case of error in the decision appealed from, such that the likely effect of that decision would be to allow an invalid patent to proceed to grant: …

[9]    On the other hand, the Court should be studious in its examination of the questions likely to arise on appeal, before refusing leave to appeal from an order of a single judge where an opponent has been successful. The Court should be slow to shut out an applicant for a patent or a trade mark who has had only one judicial consideration of entitlement to a grant. Before refusing leave, the Court should be satisfied that it is clear, beyond doubt, that there has been no error and that any patent or trade mark, if granted, should be revoked or expunged …

Reliance in the application presently before the Court was placed upon the need for the Court to be “studious … before refusing leave to appeal” and the observation that leave should only be refused where the court is “satisfied that it is clear, beyond doubt, that there has been no error…”. But those observations have to be considered in the context of the nature of the application for leave being entertained.

11    When entertaining an application for leave to appeal against a decision upholding a decision of the Commissioner of Patents dismissing opposition to the grant of a patent, Black CJ, Merkel and Goldberg JJ in Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742 at [16], 92 FCR 106 at 111 said that where “an opponent to a patent has had the benefit of two hearings and has been unsuccessful in both, we think there should be limited scope for a further appeal, particularly where the matters primarily in issue are essentially questions of fact…”. Similarly, Graham J in Sunnyfield Association v Cronk [2010] FCA 143 at [11], 85 IPR 384 at 387 said that only “in exceptional circumstances would it be right to grant an applicant what would effectively amount to a further consideration of factual issues”. His Honour went on to say that this “is particularly so given that an unsuccessful opponent of a patent will still be able to institute revocation proceedings under s 138 of the Act, with the result that a refusal to grant leave to appeal under s 158(2) will not be finally determinative of the opponent’s rights…”.

12    There nevertheless seems to be the potential for tension between the two different inquiries: an inquiry as to whether a decision is attendant with sufficient doubt to warrant the grant of leave in applying s 24(1A) of the Federal Court of Australia Act and an inquiry as to whether a court can be satisfied that there has been “no error” in applying s 158(2) of the Patents Act. The different classes of decision that may attract an application under s 24(1A) of the Federal Court of Australia Act, being decisions that may vary from interlocutory procedural decisions to decisions that determine substantive rights, to the many different classes of decision that may attract a grant of leave pursuant to s 158(2) of the Patents Act, may go some way to explaining the propositions generally expressed (for example) in Décor and Pfizer. In Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742 at [14], 92 FCR 106 at 111, Black CJ, Merkel and Goldberg JJ again referred to the need to avoid “laying down of rigid rules that would restrict” the exercise of discretion and to “the diversity of cases to which s 158(2) will potentially apply…”.

13    But whether there is some divergence of approach between the exercise of the discretions conferred by s 24(1A) of the Federal Court of Australia Act and s 158(2) of the Patents Act can be left to one side.

14    Now before the Court is not an application for leave to appeal but rather an application for an order that the question of leave should be referred to a Full Court. It is that application which needs to be presently resolved rather than whether leave to appeal should be granted. Not surprisingly, the two issues nevertheless overlap.

A FULL COURT?

15    Section 158(2) of the Patents Act expressly provides that an application for leave to appeal is to be made to “the Federal Court…”.

16    That application would normally first come before a single judge of the Court. Section 25(2) of the Federal Court of Australia Act, however, provides as follows:

Applications:

(a)    for leave or special leave to appeal to the Court; or

(b)    for an extension of time within which to institute an appeal to the Court; or

(c)    for leave to amend the grounds of an appeal to the Court; or

(d)    to stay an order of a Full Court;

must be heard and determined by a single Judge unless:

(e)    a Judge directs that the application be heard and determined by a Full Court; or

(f)    the application is made in a proceeding that has already been assigned to a Full Court and the Full Court considers it is appropriate for it to hear and determine the application.

The manner in which applications for leave to appeal is further addressed in Division 35.2 of the Federal Court Rules 2011.

17    It was assumed on the part of Research Affiliates that the application for leave to appeal for the purposes of s 158(2) of the Patents Act would in fact come before a single Judge of this Court for determination and that thereafter a single Judge had to exercise the discretion conferred by s 25(2)(e) of the Federal Court of Australia Act to refer the application for leave to a Full Court.

18    There is a “presumption that a single judge would ordinarily hear such an application”: Saraceni v Australian Securities and Investments Commission [2012] FCA 899 at [4]. McKerracher J there summarized as follows the factors to be taken into account when referring such an application to a Full Court:

[5]    Amongst the factors which have been considered on the authorities in relation to whether or not an application for leave should be referred to a Full Court are the following:

o    the novelty and importance of the issues raised;

o    whether the matter is simply a ‘minor interlocutory squabble’ or a matter of practice and procedure;

o    what is the most efficient disposition of the application having regard to factors such as those referred to above;

o    what will be the most cost effective means of considering leave;

o    the important question of whether or not the application for leave is apparently hopeless or unarguable; and

o    other factors relevant to the justice of the particular case.

See also: Ensham Resources Pty Limited v AIOI Insurance Company Limited [2012] FCA 822 at [9] per Griffiths J.

19    In making a direction that an application for leave to appeal be heard by a Full Court, Robertson J in Chan & Naylor Norwest Pty Ltd v CNIP Pty Ltd [2011] FCA 1203 concluded:

[3]    My view is that this is an appropriate case for me to direct, under s 25(2)(e) of the Federal Court of Australia Act, that the application for leave to appeal be heard by a Full Court.

[4]    The basis of my conclusion is first that the parties accepted that there was a substantial overlap between the matters that need to be agitated on the leave question and the matters in the substance of the appeal. Another consideration is that the orders of Perram J are at the substantive end of the spectrum, and do not deal with a matter of mere practice and procedure. Although interlocutory in form, they do affect the substantive rights of the applicants since the defences were struck out and, subject to the assessment of damages, judgment was given for the present respondents. Another consideration is that there seems to me to be no appeal from an order of a single judge dealing with the leave to appeal question. So, in those circumstances and for those reasons, I direct under s 25(2)(e) that the application for leave to appeal be heard by a Full Court.

[5]    I add that, subject to any contrary direction of the Full Court, the application for leave to appeal be heard concurrently with, or alternatively, immediately before, any appeal. That course, would give the Full Court maximum flexibility in terms of how the justices constituting the Full Court would wish to proceed.

20    In the present proceeding the questions to be resolved in determining whether the application should be referred to a Full Court are said to be very much the same as whether any appeal should be allowed – assuming leave to appeal is granted. In referring the application for leave to appeal pursuant to s 158(2) of the Patents Act to a Full Court, it is considered that:

    there is an obvious convenience to the parties in advancing their competing arguments once rather than twice – once on the application seeking to leave to appeal and thereafter to a perhaps differently constituted bench on the appeal. The prospect of potentially two hearings would not be consistent with s 37M of the Federal Court of Australia Act; such a course would be “a very inefficient and wasteful course”: TS Production LLC v Drew Pictures Pty Ltd [2008] FCA 1329 at [14] per Heerey J;

    the arguments to be advanced in seeking leave to appeal will be much the same as those to be advanced on the hearing of any appeal and that all argument can be completed within a single day. The merits of the proposed appeal in the present proceeding, it may be expected, would be argued “no less fully than would have been the case were leave not an issue”: cf. Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435 at 441, FCAFC 133 at [28] per Heerey, Gyles and Middleton JJ. The hearing before the primary Judge, it may be noted, itself took one day;

    the questions to be resolved can largely be resolved by reference to the specifications relied upon by Research Affiliates and whether those specifications satisfy the requirements of s 18(1)(a) of the Patents Act. The questions to be resolved will thus depend not upon any attempt to re-agitate questions of fact but rather the more confined question as to whether the specifications satisfy a statutory requirement; and

    there is an importance in the questions to be resolved, the importance of those questions extending beyond the private interests of the parties to the present proceeding and being the very reason why the Commissioner of Patents supports the application being referred to a Full Court.

Such considerations, it is respectfully concluded, are sufficient to warrant the exercise of the discretion conferred by s 25(2)(e). There is “some value, some benefit or advantage” in the application for leave being heard by a Full Court: cf. Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCA 536 at [12] per Barker J. If leave to appeal were granted, it is desirable that the appeal from the February 2013 decision be itself heard by a Full Court.

CONCLUSIONS

21    The application for an order seeking to have the question of leave to appeal referred to a Full Court is thus acceded to.

22    The question of whether the application should be referred to a Full Court pursuant to s 25(2)(e) of the Federal Court of Australia Act, it is respectfully considered, is very much intertwined with the manner in which the application for leave to appeal pursuant to s 158(2) of the Patents Act is to be resolved. The less the reason why leave to appeal should be even entertained, the greater may be the reluctance of a single judge to refer the application for leave to a Full Court. Conversely, the greater the reason why leave to appeal should be resolved by a Full Court, the greater may be the reluctance of a single judge to resolve the question of leave himself.

23    Sufficient reason, it is further concluded, has been demonstrated in the present proceeding why the application for leave to appeal should be resolved by a Full Court.

24    It should, however, be left to the Full Court to determine whether it may wish to hear argument on whether it should grant leave to appeal in advance of any other argument. The manner in which the Full Court proceeds should thus be left to the Full Court to resolve.

25    The question as to the costs incurred in the present application should also be resolved by the Full Court.

THE ORDERS OF THE COURT ARE:

1.    The application pursuant to s 158(2) of the Patents Act 1990 (Cth) for leave to appeal is referred pursuant to s 25(2)(e) of the Federal Court of Australia Act 1976 (Cth) to a Full Court of this Court.

2.    The question of the appropriate order to be made in respect to the costs of the present application is also referred to the Full Court.

Associate:

Dated:    12 April 2013