Federal Court of Australia
Fuchs Lubricants (Australasia) Pty Ltd v Quaker Chemical (Australasia) Pty Ltd [2021] FCAFC 65
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The appeal be allowed.
2. The declaration, orders and certification embodied in orders 1, 3 to 7 and 9 of the orders made by the primary judge on 20 April 2020 be set aside.
3. The cross-appeal be dismissed.
4. Within 14 days of these orders, the appellant file and serve proposed minutes of orders and submissions (limited to 5 pages) on the question of any consequential orders including the costs of the appeal and the cross-appeal, and on the question of the costs of the proceeding below.
5. Within 14 days of the receipt of such proposed minutes and submissions, the respondent file and serve responding minutes and submissions (limited to 5 pages) on those topics.
6. Liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
THE COURT:
1 In the proceeding below, the appellant, Fuchs Lubricants (Australasia) Pty Ltd, was sued by the respondent before us, Quaker Chemical (Australasia) Pty Ltd, for patent infringement. Fuchs cross-claimed for invalidity. The primary judge rejected Fuchs’ invalidity case and accepted Quaker’s infringement case in part.
2 Fuchs now appeals against the primary judge’s rejection of its invalidity case concerning the ground of lack of novelty. Quaker has cross-appealed, in essence saying that the primary judge should have made further findings in its favour on its infringement case.
3 There were two patents in suit. One of the patents was a standard patent, being Australian patent no. 2012304245, entitled “Method for Detecting Fluid Injection in a Patient”, with a priority date of 2 September 2011. The other patent was an innovation patent, being Australian patent no. 2013100458. The innovation patent is a divisional of the standard patent and claims the same priority date.
4 Both patents relate to a method for detecting high pressure fluid injection (HPFI) injuries. These injuries can occur where fluid is kept under high pressure in machinery, such as hydraulic machinery used in mines. For example, longwall systems are used to extract coal resources from underground and utilise many large hydraulic roof supports which operate under very high pressures, often 5000 psi and above. They require large amounts of hydraulic fluid. Fluid may escape from the machinery, for example, through a small crack in a tube carrying the fluid. When it escapes, it can emerge under high velocity as a fine stream of liquid, which is capable of injecting itself into the body of a person. Injuries of that type are difficult to detect, and can lead to severe health consequences.
5 The patents in suit are directed to a method for detecting HPFI in a patient, having certain specified steps. The method involves the inclusion in the machine fluid, such as the hydraulic fluid, of an additive. This is a dye that fluoresces in the presence of ultraviolet light. The method involves the use of that property to detect HPFI in a patient.
6 The inventor recorded in the patents is Mr Wayne Thompson. The original applicants for the patents were Thommo’s Training and Assessment Systems Pty Ltd (TTAAS) and T&T Global Solutions Pty Ltd (T&T), of which Mr Thompson was a director. In late 2014, Quaker acquired the patents from those companies.
7 Both Fuchs and Quaker compete in the supply to mine operators of fluids used for mining, including hydraulic fluid.
8 Fuchs was a supplier of fluid products including hydraulic fluid. Two categories of hydraulic fluid supplied by Fuchs were water-based fluids, which are used in longwall machinery, and mineral oils, which are used in other hydraulic machinery. Fuchs supplied water-based longwall fluids and concentrates under the “Solcenic” brand and mineral oil products under the “Renolin” brand.
9 Quaker was a supplier of two “Oil-Glo” fluorescent dye additive products: Oil-Glo WB (water-based), which was also called WD 802 or Oil-Glo 802, for use in longwall fluids; and Oil-Glo OB (oil-based), which was also called Oil-Glo 33, in mineral oil systems. These two products were later renamed FluidSafe WB and FluidSafe OB respectively. Quaker had earlier offered a water-based fluorescent dye additive product called “Quinto Glow”.
10 In the proceeding below, Quaker asserted that Fuchs had infringed the patents by supplying, or offering to supply, to Fuchs’ customers, Solcenic and Renolin containing fluorescent dye, in circumstances where the dye or product was not acquired from the patentee. So, the infringement case was concerned with the supply of Solcenic or Renolin products with a different dye that was not Oil-Glo or FluidSafe. It was said that Fuchs had infringed the patents by supplying such products in circumstances where the use of those products by the acquirers would infringe the claimed method.
11 We note that Quaker did not complain that the supply by Fuchs of Solcenic or Renolin products which included, or was later mixed by the customer with, Oil-Glo or FluidSafe sourced from the patentee was an infringement. It was accepted that the Oil-Glo or FluidSafe dye was supplied by Quaker (and previously TTAAS) on the basis that it could be used for that purpose. Accordingly, there was an implied licence or an authorisation for that use.
12 Quaker contended that Fuchs included in its products fluorescent dye additives not sourced from the patentee. In particular, Quaker said that such supply by Fuchs to three customers involved an infringement by supply. Those customers were:
(a) from 2016 onwards, BHP Billiton Mitsubishi Alliance (BMA), which was the operator of the Broadmeadow mine;
(b) from 2015 onwards, Glencore, which was the operator of, inter-alia, the Oaky North, Bulga, Ulan No. 3 and Ulan West mines; and
(c) from 2015 onwards, Yancoal, the operator of the Moolarben and Ashton mines.
13 The primary judge accepted Quaker’s infringement case concerning the Broadmeadow mine only.
14 As we have said, Fuchs cross-claimed against Quaker alleging that both patents were invalid. Fuchs asserted that they were liable to be revoked on the grounds of, inter-alia, lack of clarity, insufficiency, failure to disclose best method, lack of utility, lack of novelty and secret use. The primary judge rejected all such grounds.
15 On the present appeal, we are only concerned with the primary judge’s rejection of Fuchs’ lack of novelty challenge.
16 In particular, the present appeal concerns three public disclosures of the invention made or initiated by Mr Thompson nearly a year before the priority date. Two of the prior public disclosures were made in late 2010 by Mr Thompson to the Metropolitan mine in Helensburgh, NSW, operated by Peabody Energy Australia Pty Ltd (Peabody). The third disclosure was made in late 2010 by the Metropolitan mine to Fuchs following the disclosures Mr Thompson had made to the Metropolitan mine.
17 Below, Quaker accepted that the public disclosures would invalidate the patents as anticipating disclosures if they were not protected by statutory provisions concerning what the parties have described as a relevant “grace period”.
18 The primary judge found in favour of Quaker that the three disclosures were within the scope of the “reasonable trials” grace period exception arising under s 24(1)(a) of the Patents Act 1990 (Cth) in combination with reg 2.2(2)(d) of the Patents Regulations 1991 (Cth).
19 The principal issue before us on the present appeal is Fuchs’ challenge to this determination.
20 Now as we have said, Quaker has cross-appealed on the question of infringement. It seeks broader findings than those made by the primary judge. We will elaborate on the issues raised by the cross-appeal later.
21 For the reasons that follow, we would uphold the appeal and dismiss the cross-appeal.
22 Before we discuss the appeal, it is convenient to discuss the patents in suit in more detail.
The patents
23 We should first say something about dates.
24 The date of filing of the provisional specification for the standard patent was 2 September 2011. One significant date, besides the priority date of 2 September 2011, was 2 September 2010, being the date 12 months before that priority date, which applied to both the claims of the standard patent and the innovation patent. The date of 2 September 2010 is relevant in considering the publication or use of the invention for the purpose of reasonable trial or experiment.
25 Further, the date of filing of the complete specification for the standard patent was 2 February 2012. Accordingly, 2 February 2011 is the date which is 12 months before the filing date of the complete specification for the standard patent. That date is relevant because there is an additional grace period provided under the Act and the Regulations.
26 The date of filing of the complete specification for the innovation patent was 10 April 2013. It was certified on 25 July 2013, such certification being published in the relevant journal on 8 August 2013.
27 The specification for each patent describes the invention as relating to the detection of fluid in the human body and in particular to the detection of hydraulic fluid and fuel fluid within the human body. In terms of the body of each specification, they are not relevantly different.
28 The specification in the standard patent describes the field of the invention as follows:
The present invention relates to the detection of fluid in the human body and in particular to the detection of hydraulic and fuel fluid within the human body. The invention has been developed primarily for use in detecting the presence of hydraulic and diesel fuel in the human body as a result [of] accidental fluid injection and will be described hereinafter with reference to this application. However, it will be appreciated that the invention is not limited to this particular field of use.
29 So, it is stated that hydraulic and diesel fuel systems machinery, such as those in mining and other industrial areas, operate at very high pressures, often 207 bar (3000 psi) and above. Loose connections or defective hoses were known to cause a fine, high velocity stream of fluid.
30 It is said that the invention was developed to address accidental HPFI. The invention was intended to be used in industrial settings, such as underground coal mining, where the dangers of high pressure leaks from hydraulic or fluid lines in machinery have been well known. The danger is that a high pressure leak may penetrate the skin of a worker, resulting in an HPFI injury. Each specification also says that accidental HPFI can be difficult to confirm.
31 In this regard, it is said in the specification of the standard patent:
The injury sustained in a high pressure injection incident is usually worse than it will first appear. The injury is relatively rare and it may be that some medical practitioners or hospital services will not be alert to the severity of an injury of this type.
An accidental fluid injection beneath the skin may initially only produce a slight stinging sensation. The danger is that a victim will tend to ignore this, thinking that it will get better with time. This is not often the case and the fluid can cause serious tissue damage. Fluid injected directly into a blood vessel can spread rapidly through a victim’s circulatory system leaving the human body with little ability to purge these types of fluid.
A fluid injection injury can become very serious or even fatal if not dealt with promptly and properly. Typically the only treatment available is to surgically remove the fluid within a few hours of injection. The longer the delay in getting professional medical aid, the further the tissue damage can spread. If left untreated, the injury could result in disfigurement, amputation of the affected part or death of the victim.
Accidental fluid injections can be difficult to confirm. That is, victims may be covered by fluid externally however there may be uncertainty on whether any fluid has penetrated the victim’s skin. As discussed above any delay in treating a victim can cause sever[e] harm and as such it would be advantageous if confirmation of fluid injection can be confirmed.
32 Each of the patents are for the same method of detecting HPFI in a person. The claimed method is for detecting HPFI in a person by adding a fluorescent dye to hydraulic or industrial fluid and then, if it is suspected that fluid may have been accidentally injected into a person, shining a UV or blue light on the area, with fluorescence said to indicate the presence of the dyed fluid with the alleged benefit of identifying if the person has been injected and needs treatment. These are the essential features of the method, particularly as defined by the independent claims of each patent.
33 The independent claims of the standard patent, being claims 1 and 9, are the following:
1. A method for detecting fluid injection in a patient, the method including the steps of:
providing a fluid storage tank;
providing fluid for use in machinery and adding said fluid to the fluid storage tank;
providing a fluorescent dye and adding the fluorescent dye to the fluid such that the fluid fluoresces in the presence of ultraviolet light; and
a possible fluid injection occurring in a patient.
…
9. A method of detecting an accidental hydraulic or fuel fluid injection in a patient having a possible fluid injection, the fluid having been added to a storage tank provided for use in machinery and a fluorescent dye having been added to the fluid such that the fluid fluoresces in the presence of UV light, the method including the steps of:
examining the patient by exposing the patient to UV light; and
determining the presence of fluorescence,
wherein fluorescence indicates a hydraulic fluid injection occurring in the patient.
34 The independent claim of the innovation patent, being only claim 1, is the following:
1. A method for detecting fluid injection in a patient, the method including the steps of:
providing a fluid storage tank;
providing fluid for use in machinery and adding said fluid to the fluid storage tank;
providing a fluorescent dye and adding the fluorescent dye to the fluid such that the fluid fluoresces in the presence of ultraviolet light;
a possible fluid injection occurring in the patient; and
providing a high intensity blue ultraviolet light to detect the presence of the fluid.
35 It will be appreciated that claim 1 of the innovation patent has an additional integer as compared with claim 1 of the standard patent, being “providing a high intensity blue ultraviolet light to detect the presence of the fluid”.
36 At trial Quaker did not sue on all claims in the standard patent, but it did sue on all claims in the innovation patent. Quaker asserted that at least claims 1, 2, 3, 4, 5, 6, 7, 10, 11, 13, 14, 15 and 16 of the standard patent (claim 12 of the standard patent was abandoned in the course of oral closing submissions) and claims 1, 2 and 3 of the innovation patent were infringed.
THE APPEAL
37 It is appropriate at this point to set out the legislative provisions relevant to the appeal.
Statutory provisions
38 We note at the outset that the pre-Raising the Bar versions of the Act and Regulations apply to the disclosures relied upon, which occurred before 15 April 2013; see Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) s 3 and Sch 6 items 32, 33 and 133(4) (concerning the application of amendments to s 24) and the Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013 (No 1) (Cth) reg 4 and Sch 6 item 7 (substituting new regs 2.2 and 2.3), and reg 23.36(4) item 3 of the Regulations (concerning the application of those amendments).
39 Section 18 provided:
(1) Subject to subsection (2), an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim:
…
(b) when compared with the prior art base as it existed before the priority date of that claim:
(i) is novel;
…
(d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee’s or nominated person’s predecessor in title to the invention.
(1A) Subject to subsections (2) and (3), an invention is a patentable invention for the purposes of an innovation patent if the invention, so far as claimed in any claim:
…
(b) when compared with the prior art base as it existed before the priority date of that claim:
(i) is novel;
…
(d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee’s or nominated person’s predecessor in title to the invention.
…
40 Section 7 provided:
(1) For the purposes of this Act, an invention is to be taken to be novel when compared with the prior art base unless it is not novel in the light of any one of the following kinds of information, each of which must be considered separately:
(a) prior art information (other than that mentioned in paragraph (c)) made publicly available in a single document or through doing a single act;
(b) prior art information (other than that mentioned in paragraph (c)) made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the relevant art would treat them as a single source of that information;
(c) prior art information contained in a single specification of the kind mentioned in subparagraph (b)(ii) of the definition of prior art base in Schedule 1.
…
41 The relevant definitions of “prior art base” and “prior art information” in Sch 1 are the following:
prior art base means:
(a) in relation to deciding whether an invention does or does not involve an inventive step or an innovative step:
(i) information in a document that is publicly available, whether in or out of the patent area; and
(ii) information made publicly available through doing an act, whether in or out of the patent area.
(b) in relation to deciding whether an invention is or is not novel:
(i) information of a kind mentioned in paragraph (a); and
(ii) information contained in a published specification filed in respect of a complete application where:
(A) if the information is, or were to be, the subject of a claim of the specification, the claim has, or would have, a priority date earlier than that of the claim under consideration; and
(B) the specification was published after the priority date of the claim under consideration; and
(C) the information was contained in the specification on its filing date and when it was published.
prior art information means:
(a) for the purposes of subsection 7(1)—information that is part of the prior art base in relation to deciding whether an invention is or is not novel;
…
42 Section 9 provided:
For the purposes of this Act, the following acts are not to be taken to be secret use of an invention in the patent area:
(a) any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for the purpose of reasonable trial or experiment only;
(b) any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, being use occurring solely in the course of a confidential disclosure of the invention by or on behalf of, or with the authority of, the patentee, nominated person, or predecessor in title;
(c) any other use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for any purpose other than the purpose of trade or commerce;
…
43 The operation of ss 7 and 18 is affected by s 24.
44 Section 24 provided:
(1) For the purpose of deciding whether an invention is novel or involves an inventive step or an innovative step, the person making the decision must disregard:
(a) any information made publicly available, through any publication or use of the invention in the prescribed circumstances, by or with the consent of the nominated person or patentee, or the predecessor in title of the nominated person or patentee; and
(b) any information made publicly available without the consent of the nominated person or patentee, through any publication or use of the invention by another person who derived the information from the nominated person or patentee or from the predecessor in title of the nominated person or patentee;
but only if a patent application for the invention is made within the prescribed period.
…
45 Regulations 2.2 and 2.3 of the Regulations relevantly provided:
2.2 Publication or use: prescribed circumstances
…
(1A) For paragraph 24(1)(a) of the Act, the circumstance that there was a publication or use of the invention within 12 months before the filing date of the complete application, is a prescribed circumstance.
(2) For paragraph 24(1)(a) of the Act the following are also prescribed circumstances:
(a) the showing or use of the invention at a recognised exhibition;
(b) the publication of the invention during a recognised exhibition at which the invention was shown or used;
(c) the publication of the invention in a paper written by the inventor and:
(i) read before a learned society; or
(ii) published with the inventor’s consent by or on behalf of a learned society; or
(d) the working in public of the invention within the period of 12 months before the priority date of a claim for the invention:
(i) for the purposes of reasonable trial; and
(ii) if, because of the nature of the invention, it is reasonably necessary for the working to be in public.
…
2.3 Publication or use: prescribed periods
(1A) For information of the kind referred to in paragraph 24(1)(a) of the Act, if the applicant relies on the circumstance in subregulation 2.2(1A), the prescribed period is the period of 12 months after the information was first made publicly available.
(1) For information of the kind referred to in paragraph 24(1)(a) of the Act, if the applicant relies on a circumstance in subregulation 2.2(2), the prescribed period is:
…
(c) in the case of the circumstance mentioned in paragraph 2.2(2)(d)—12 months from the start of the first public working of the invention referred to in that paragraph.
(2) For the purposes of subsection 24 (1) of the Act, in the case of information of the kind referred to in paragraph 24 (1) (b) of the Act, the prescribed period is 12 months from the day when the information referred to in that paragraph became publicly available.
…
46 In the proceeding below, there were three grace periods that were said by Quaker to be relevant.
47 The first grace period was said to arise pursuant to s 24(1)(a) and regs 2.2(1A) and 2.3(1A), being any publication or use of the invention after 2 February 2011, being 12 months before the filing date of the complete specification for the standard patent, by or with the consent of the patentee, which cannot be taken into account for the purposes of novelty.
48 The second grace period was said to arise pursuant to s 24(1)(a) and regs 2.2(2)(d) and 2.3(1)(c), being any publication or use of the invention after 2 September 2010, that is, within 12 months of the priority date, by or with the consent of the patentee in the context of the working in public of the invention for the purposes of reasonable trial, where, having regard to the nature of the invention it was reasonably necessary for the working to be in public, which cannot be taken into account for the purposes of novelty.
49 The third grace period was said to arise pursuant to s 24(1)(b) and reg 2.3(2), being any publication or use of the invention after 2 September 2010 (in essence within 12 months of the filing of the provisional specification for the standard patent) without the consent of the patentee by a person who derived the information from the patentee, which cannot be taken into account for the purposes of novelty.
50 For the purposes of the present appeal we need only concern ourselves with the second grace period, which the primary judge referred to as the reasonable trials grace period; we will also use that description from time to time.
51 Further, we should note at this point that there is no dispute on appeal that the three disclosures in question that were said to be covered by the reasonable trials grace period were by or with the consent of the then patentee, and that a patent application for the invention was made within the applicable prescribed period, such that these aspects of s 24(1)(a) were satisfied.
Chronology of events
52 Relevantly to the appeal, the primary judge set out a chronology of events that no party challenged. At this point, we adopt relevant parts thereof. We will deal with events relevant to the cross-appeal later.
53 In mid-2009, Mr Thompson / TTAAS was contracted by Peabody to develop mechanical and hydraulic-based training for the mechanical trade staff at the Metropolitan mine. Mr Thompson designed and manufactured for TTAAS a fluid injection simulator as part of the practical component of his mechanical training; the significance of the simulator, which included a gelatine hand to demonstrate HPFI injuries, will become clear shortly. This mechanical training was provided from around the end of 2009 or the beginning of 2010 until around late 2010.
54 In mid-2010, an HPFI taskforce was established by Peabody. Between 6 May 2010 and 30 July 2010 the taskforce visited the Metropolitan mine.
55 Also in 2010, Mr Thompson / TTAAS were engaged to prepare and provide HPFI awareness training at the Metropolitan mine.
56 In mid to late September 2010 or in October 2010, Mr Thompson conceived of the method of using fluorescent dye in hydraulic fluid to facilitate detection of HPFI injuries. We will elaborate on his evidence later.
57 In October or November 2010, Mr Thompson disclosed the use of Oil-Glo in hydraulic fluids to facilitate detection of HPFI using a UV/blue light to Mr Andy Withers, the manager of mechanical engineering at the Metropolitan mine, and demonstrated detecting HPFI with fluorescent dye using a simulator in the car park at the Metropolitan mine. We will elaborate on the evidence in a moment. These discussions and demonstration are what are said to constitute the first and second disclosures.
58 In November 2010, Mr Thompson conducted tests using pig skin and the simulator and took photographs and videos of these tests.
59 During November 2010, there was disclosure, via in person conversation, telephone and/or emails, by Mr Ken Risk, a longwall engineer at the Metropolitan mine, to Mr Craig Roberts, an account manager for Fuchs, of the method of adding a chemical dye to the longwall fluid at the Metropolitan mine so as to enable detection of fluid under a person’s skin in the case of a suspected HPFI. We will elaborate on the evidence in a moment. This relates to what is said to constitute the third disclosure.
60 In early December 2010, Mr Thompson conducted compatibility tests of Oil-Glo 33 on a Bobcat machine.
61 On 16 December 2010, TTAAS submitted a risk assessment report for Oil-Glo 33 to be tested in the Metropolitan mine’s machinery. In December 2010, there seems to have been some testing at the Metropolitan mine on equipment, but not the longwall system.
62 On 21 March 2011, there was a suspected HPFI recurrence at the Metropolitan mine. The incident report stated, under recommendations: “Implement the oil glow to high potential equipment when trial complete. (Trial currently on 6 shooter, Eimco and Shuttle Car)”.
63 On 23 March 2011, the Metropolitan mine completed its risk assessment for the introduction of Oil-Glo 802 into its longwall emulsion mix.
64 In April to May 2011, the Metropolitan mine completed the risk assessment tasks for Oil-Glo and responsibilities around protocols and training.
65 On 31 March 2011, TTAAS provided to the Metropolitan mine a tax invoice for the supply of “six 20 litre drums of solcenic – Premix each drum with 6.125 litres of Oil Glo 802”.
66 In May 2011, Oil-Glo (WD 802 or Oil-Glo 802) was added to the Metropolitan mine’s longwall fluid. On 26 May 2011, a sample of Solcenic fluid containing Oil-Glo was taken by Fuchs from the longwall at the Metropolitan mine for testing.
67 Between May and June 2011, various supplies were made by TTAAS of Oil-Glo and related products to both the Metropolitan mine and to another mine operated by Peabody, being the North Goonyella mine.
68 In July 2011, Oil-Glo 802 or WD 802 was added to the North Goonyella mine longwall fluid.
The disclosures and the evidence
69 As we have said, three different types of grace period exceptions were identified below. But it is only the reasonable trials grace period that is in issue on the present appeal. And in that context there are three relevant disclosures to consider.
70 The primary judge analysed the issue of novelty-destroying prior disclosures at [744] to [770] of his reasons.
71 The primary judge concluded that Mr Thompson conducted reasonable trials at the Metropolitan mine, being the trial of Oil-Glo 33 in the hydraulic systems of some mobile mine equipment, and a trial some months later of WD 802 in the water-based hydraulic system in the Metropolitan mine’s longwall machinery.
72 The primary judge concluded that because of the nature of the invention, it was reasonably necessary for a working of the invention for the trial to be in public, being the trial of the fluorescent dye in hydraulic fluid in working machinery at a working mine site.
73 The primary judge stated (at [749]):
… I also accept that by virtue of the language of s 24(1) the provision relates to any information made publicly available through any publication of the invention in the prescribed circumstances. Thus it is not merely the working of the invention itself, or the actual working of the whole of the invention in public, to which the prescribed circumstances are directed.
74 The primary judge found that although none of the disclosures involved an actual working of the invention in a trial in mine equipment, each nevertheless fell within the reasonable trials grace period because each was “for the purpose of and part of the working in public of the invention as they were a necessary precursor for the reasonable trial” (at [761]).
75 The primary judge said “the disclosures were for the purpose of” and “directed towards the working in public of the invention for the purposes of reasonable trial” (at [761]).
76 Further, he said that “Mr Thompson could not carry out trials at [the Metropolitan mine] without Mr Withers’ assistance and permission and it was therefore necessary for Mr Thompson to tell Mr Withers what he proposed”. In other words, Mr Thompson made oral disclosures of the invention to Mr Withers for the purpose of attracting Mr Withers’ interest and getting him to permit subsequent physical workings of the invention to take place at the mine site in equipment belonging to the mine.
77 We will return to discuss his Honour’s reasons later. But for the moment, more needs to be said about the evidence led below.
78 Fuchs contended below and before us that the patents were invalidated by three prior public disclosures of the patented method which occurred in late 2010. It is appropriate to deal with each disclosure in turn on the facts.
First disclosure in late September or October 2010
79 It is convenient to begin with some evidence that was led before the primary judge from Mr Thompson.
80 In September or October 2010, Mr Thompson had an idea of using fluorescent dye to identify actual instances of HPFI rather than just using it as a visual aid in the gelatine hand of the simulator. He wondered whether it may be possible for the dye to also be visible under human skin which would allow detection of HPFI injuries if the dye was first mixed into the hydraulic fluid (the Method). He did not remember the precise date when he had the idea of the Method, but it was likely some time in mid to late September 2010, or potentially in October 2010.
81 He thought that the addition of the dye into hydraulic systems at a mine site had the potential to improve mine safety and the significant risks associated with HPFI. However, in order to be able to determine whether the Method would work, he considered that he would need to conduct a number of trials and experiments.
82 He was aware from his experience in the mining industry that mine operators would not agree to add materials to their hydraulic systems without at least satisfactory results from extensive testing, risk assessments and the attainment of relevant approvals to ensure that such introduction would not impact upon the machines or worker safety. To that end, he was aware that he would have to discuss with a mine site the Method in order to be able to have suitable trials and experiments undertaken. He considered that he had good relationships with people at the Metropolitan mine, particularly Mr Withers, and so he considered exploring with Mr Withers whether Peabody might consider having the Method tested at the Metropolitan mine or at any of its other mine sites. Further, he was aware that the machines at the Metropolitan mine were older and out of the original equipment manufacturer warranties which meant that the risks associated with the commercial implications were not as severe in comparison to new machines that were still within the warranty period.
83 He was also not certain whether the Oil-Glo dye would effectively show an HPFI under the skin. The gelatine hand which he had been using with the dye in his simulator was translucent, and quite different in appearance, texture and composition to a person’s skin. He considered that he would need to undertake testing to determine whether the Method would work by reference to a much better analogue for human flesh and tissue.
84 In or around October 2010, he spoke to Mr Withers about running some trials and experiments to test the Method at the Metropolitan mine. This was the first occasion on which he had told anyone at Peabody about the Method. After he had explained the proposed Method to him, they had a conversation to the following effect:
Mr Withers: That sounds interesting. What do you need to do in order to understand whether that would work?
Mr Thompson: I’m not sure at this stage but first, I would need to make sure that it’s compatible with the machines before we do anything. I can’t put anything in there unless it’s compatible with all the machines.
Mr Withers: Yes, before anything, make sure its compatible with the machines and is not going to be detrimental to the machines. Come back to me when you have something.
85 He understood Mr Withers to be saying that he, Mr Thompson, had to undertake some testing of the Oil-Glo 33 product in hydraulic systems outside of the mine site in the first instance in order to get Mr Withers to the point of even considering allowing Mr Thompson to undertake trials and experiments in Metropolitan mine site equipment.
86 At the time, Mr Thompson was aware that the Oil-Glo 33 product, which was designed for oil-based hydraulic systems, could not be safely introduced into a predominantly water-based hydraulic system, such as would be found in a longwall mine, like the Metropolitan mine, and where HPFI injuries appeared to be more prevalent. Accordingly, he considered that even if he could establish that the Oil-Glo 33 product could be introduced into an oil-based hydraulic system, he would still need to identify an alternative dye suitable for introduction into a water-based hydraulic system before he would have any real sense of whether the Method would work.
87 Mr Thompson considered that the successful introduction of the Method into the mines in a way that would benefit workers would necessarily require dyes useful for introduction into both oil-based and water-based hydraulic systems because both systems were in operation in most mines, notably most underground mines. It was already clear to him at this point that determining whether the Method would work in practice would take significant effort, planning, testing and trialling. Those things would also likely cost a lot of money that TTAAS/T&T did not necessarily have. He was concerned about whether he had or could get what he anticipated it would take to determine whether the Method would work.
88 Mr Thompson was cross-examined on relevant aspects. He gave the following evidence:
… Now, in your … second affidavit … at paragraph 40 … you say that in or around October 2010 you spoke to Mr Withers about running some trials and experiments to test the method at Metropolitan. Just to orientate you, this is the first conversation you had with Mr Withers that you give evidence about. So this is the first mention of talking to Mr Withers. And you say:
This was the first occasion on which I had told anybody at Peabody about the method. After I had explained the proposed method to him, we had a conversation in the following effect.
Then you set out a conversation. Just in relation to that, when you say, “After I had explained the proposed method to him”, presumably what you disclosed to him was that you had this idea of adding fluorescent dye to hydraulic fluid in a machine. That’s one thing you disclosed; correct?---I don’t recall exactly what I said to him, but definitely had a conversation with him about this. Yes.
Yes. Well, just trying to tease out a bit what you understood your method to be?---Right.
There’s probably a number of steps, so I will take it in steps so I don’t ask you a question that’s too long. Firstly, it required – it was an idea about the addition of fluorescent dye to a hydraulic system to detect possible fluid injuries in a human being; correct?---Not at that time.
When you say “not at that time”, what do you ---?---The first demonstration I did to Mr Withers was in the car park with the mine manager, with no dye.
Well, that’s not quite right, is it, Mr Thompson, because the demonstration in the car park did have the dye in it, didn’t it?---It was – it did have the dye in it, but it wasn’t with a UV light. It was visible to both of us … in a simulator.
Yes. Thank you. I don’t think I asked you anything about UV light. What I was asking you was what you disclosed to Mr Withers is that you had this idea of adding fluorescent dye to hydraulic fluid in a machine in order to identify whether a worker has been injected with hydraulic fluid?---Yes.
Yes. And did you also disclose to him that the fluid might fluoresce in the presence of UV light?---No.
Certainly, presumably you disclosed to him that, “When I said to detect an injury, it would detect an injury beneath the skin of the worker”?--- On the tissue … on the demonstration on the … pig skin. …
What you were disclosing to him was – the idea was you could use fluorescent dye to detect whether a person had actually received fluid into their body. In other words, they had been injected?--- No. … I didn’t know that. I couldn’t confirm that, because there wasn’t a person injected.
No. But that was your idea that that was what this was for?--- It was an idea.
Yes. And that’s what you told Mr Withers, presumably?---Yes.
I mean, you were trying to sell him on this idea. You had to make it sound like it was something that might be of use?---It was a concept. … Sale of that item wasn’t an issue then.
I understand that, Mr Thompson. I wasn’t suggesting that. I just meant, when I said “sell him on the idea”, you wanted him to assist you?---Yes.
Yes. And so one of the things you were trying to get across to him was this was a good idea you had had which might allow injuries beneath the skin of a person to be able to be detected by fluorescent dye?---Yes.
Yes. And, indeed, that’s why you later conducted a demonstration with pig skin, to show to him, “When I’m saying that this injection can be detected” – you had injected some fluid in a pig skin and you were inviting him to see that the fluid was able to be detected?---Pig skin or pig trotters?
Well, originally it was pig skin?---Yes.
Yes. Now, as you were working – you were working with Mr Withers for some time in relation to testing on machinery and matters of that sort; correct?---Yes.
And, ultimately, of course, you were – all of this was directed to not just machinery, but was directed to the longwall of the mine; correct?---Not necessarily ---
Well ---?--- directed at the longwall.
Yes. You did discuss with Mr Withers, though, that you had an idea that this would assist workers who might be injected from equipment, including equipment on the longwall?---Including equipment. Yes.
Yes. All equipment at the mine that had hydraulic fluid in it?---Yes.
89 In summary, there was a conversation between Mr Thompson and Mr Withers in late September or October 2010. The conversation took place shortly after Mr Thompson had an idea to use the fluorescent Oil-Glo dye, which was already being used by him in training being conducted at the Metropolitan mine with his simulator, to enable detection of HPFI injuries. And Mr Thompson disclosed to Mr Withers the use of Oil-Glo fluorescent dye in hydraulic fluids to facilitate detection of HPFI using UV/blue light.
90 The primary judge found (at [754]) that this was the first time Mr Thompson had told anyone at Peabody about the Method.
Second disclosure in October or early November 2010
91 Mr Thompson gave evidence that in October or early November 2010, he was still unaware of whether the Oil-Glo 33 dye would effectively highlight the injection of fluid into human skin. Further, whilst he had discussed the Method with Mr Withers, he considered that he had to do more to “sell” the idea to him to convince him to agree to have Mr Thompson working on the necessary testing and trials at the Metropolitan mine to determine whether the Method was feasible.
92 To this end, Mr Thompson prepared a demonstration using the HPFI simulator, illustrating an injection of high pressure fluid containing Oil-Glo 33 into pig skin. He decided to use pig skin as research he had done on the internet led him to believe that pig skin was similar to human skin. This testing proved to be difficult and time consuming to set up as it was difficult to get the pig skin to hold firmly in place. If not glued on properly, the impact of the high pressure would cause the piece of pig skin to fly off from the unit holding it, rather than being pierced by it. Due to these difficulties, he did not use the pig skin in the HPFI training or other training.
93 Now outside of trials and experiments he did on his own, Mr Thompson used pig skin as a “once off” to present the concept to Mr Withers.
94 The simulator Mr Thompson used to demonstrate HPFI injuries:
(a) utilised a hydraulic system similar to hydraulic systems that are used in larger pieces of machinery;
(b) had a hydraulic system that was an oil-based system and utilised a hydraulic pump;
(c) had a fluid storage tank of around 40 litres;
(d) had Oil-Glo added to it;
(e) was able to simulate HPFI injuries across a range of pressures via an industrial gauge;
(f) had a range of pressures able to be demonstrated from 150 psi to 4,800 psi; and
(g) was able to simulate an HPFI injury even at the lowest possible setting of the industrial gauge.
95 The demonstration was conducted by Mr Thompson in the carpark of the Metropolitan mine and Mr Withers and the mine manager at the time were present. Mr Thompson did not recall the exact date on which the demonstration occurred, but it occurred after the construction of the pig skin specimen but before he had undertaken any further testing of the pig skin. His best recollection was that it occurred in October or November 2010. He did not recall anyone else viewing the demonstration.
96 After conducting a simulated high pressure injection of hydraulic fluid containing Oil-Glo into the pig skin specimen, Mr Thompson took the specimen out of the simulator and showed it to Mr Withers and the mine manager so that they could observe the injection. Since the lighting in the car park was good, the fluorescent dye in the hydraulic fluid could be seen with an unaided eye, and so Mr Thompson said he did not need to shine a blue UV light over the pig skin to show the injection. Although Mr Thompson did not on that occasion use a UV light for the purpose of aiding detection of the fluorescent dye in the hydraulic fluid in the pig skin, Mr Thompson agreed in oral evidence that in his conversation with Mr Withers in October 2010 he explained the use of the UV light to aid detection.
97 Mr Thompson also gave the following evidence:
But you give evidence that you had this further idea that you could see it to detect injury in people. And what I’m suggesting to you is you understood – you well understood that to have the best chance of detection and to use this fluorescent dye the best way, you would want to shine ultraviolet light on someone. That would give the clearest indication of whether or not they had been injected?---When? At what time?
Shortly after you had your idea?---When I met with Mr Withers?
Yes?---Yes.
Yes. And it’s likely you discussed it with Mr Withers as well?---Yes.
Yes. At the time that you met with him and first disclosed your method?---Yes.
98 After the demonstration, he recalled Mr Withers saying to him words to the following effect:
I can see that. It looks like it might work, but we definitely need to make sure it is compatible with the machines, and after that, the next step would be to engage the medical fraternity, if we’re going to pursue this.
99 In or around mid-November 2010, shortly after the presentation in the carpark to Mr Withers and the mine manager, he conducted further tests using the pig skin in his own time and took photographs and videos of the tests. He injected the fluid at different distances and at different pressures to see under what conditions HPFI would occur.
100 In summary, subsequent to the first disclosure, in October or November 2010, Mr Thompson demonstrated his invention of detecting HPFI with fluorescent dye using a simulator in the car park of the Metropolitan mine. The demonstration was to Mr Withers and the Metropolitan mine manager.
Third disclosure on 9 November 2010, and then on 17 and 18 November 2010
101 Mr Roberts gave the following evidence concerning his conversations with Mr Risk and the disclosures that Mr Risk had made to him.
102 During a routine site visit to the Metropolitan mine on 9 November 2010, Mr Roberts spoke to Mr Risk about the topic of HPFI. During that conversation, Mr Risk said to him words to the effect:
We have several fitters and operators working on the longwall who are potentially exposed to pressurised fluid. We recently brought in a guy to run a training program for all of our staff to raise awareness about the risks of fluid injections. We had to stand down a fitter for a while because he removed a hose that was under pressure and he was almost hit - he did this after he had completed the awareness training.
103 At the time, Mr Roberts was not aware of the name of the person who had delivered the HPFI awareness training described by Mr Risk.
104 During that 9 November 2010 conversation, Mr Risk also said to Mr Roberts words to the effect:
We have had people cut open who weren’t even injected and there must be a better way to determine whether someone has been injected. We are looking at introducing a dye to our longwall fluid to enable it to be detected under a worker’s skin so we can tell if there has been an injection. Can you help us with adding that chemical to the Solcenic concentrate?
105 In response, Mr Roberts said to Mr Risk words to the effect:
I will explore this with the Solcenic product manager at Fuchs to see what we can do.
106 He also said to Mr Risk words to the effect:
Adding a new chemical to the longwall fluid might void your OEM warranty for the longwall.
107 By this Mr Roberts was referring to the fact that the Solcenic 3002 longwall fluid was finely-tuned to meet the requirements of the original equipment manufacturer of the longwall, and changing its composition could take it outside the approval of that manufacturer and enable the manufacturer to escape any warranty claims if any part of the longwall equipment failed.
108 It was never stated to Mr Roberts by Mr Risk or anyone from Peabody, nor was it ever his understanding, that any of the content of his discussions with Mr Risk was in any way confidential.
109 Further, during a meeting on 17 November 2010 and/or a phone conversation on 18 November 2010 between Mr Roberts and Mr Risk, Mr Risk again raised the topic of possibly adding a dye, which he described as being “UV”, to the Solcenic 3002 longwall fluid, saying words to the effect:
I’ll send you the details of the supplier of the UV dye I would like to add to our longwall emulsion. He’s the same guy who gave the fluid injection awareness training at Metropolitan earlier this year.
110 Mr Roberts could not recall specifically whether he first became aware that the dye Mr Risk was considering adding to the longwall fluid was “UV” during their conversations on 17 November 2010 or 18 November 2010, or whether he had also mentioned it in their earlier conversation on 9 November 2010.
111 In any event, following those 17 and 18 November 2010 conversations, if not earlier, Mr Roberts understood that Mr Risk intended to introduce a UV dye to the longwall fluid at the Metropolitan mine for the purpose of enabling that fluid to be detected under the skin of a person if that person had been injected. He appreciated that a UV dye required a UV/blue light to be shone on it for it to glow fluorescently. He appreciated that using a UV dye together with a UV light source would have been likely to work most effectively if the light source was used in a darkened environment, such as a medical treatment room with the lights turned off, particularly as the glow of the UV dye needed to be seen from underneath the person’s skin.
112 Mr Roberts did not recall which, but in the conversation he had with Mr Risk on 9, 17 or 18 November 2010, Mr Risk said words to him to the effect:
It’s UV dye so it will glow when you shine a blue light on it. The dye will glow from under the skin. You need to wash the skin first to make sure what you see glowing is from under the skin.
113 Now some of his evidence was the subject of a limited use ruling under s 136 of the Evidence Act 1995 (Cth) but it is relevant to what was actually communicated and the absence of any at least express confidentiality restrictions.
114 In summary, on or about 9 November 2010 and on or about 17 and 18 November 2010, Mr Risk disclosed to Mr Roberts the Method during the course of conversations and emails.
115 The primary judge found that this disclosure had occurred with Mr Thompson’s consent. He found that Mr Risk would have been told something of the Method by Mr Withers to whom it had been communicated by Mr Thompson. At the time of this disclosure Mr Risk reported directly to Mr Withers. And Mr Risk was the primary contact for Mr Roberts at the Metropolitan mine. Mr Roberts received communications from time to time from Mr Withers, who he regarded as Mr Risk’s boss.
Later tests and other evidence
116 Mr Thompson said that based on his experience in the mining industry, he was aware that introducing any new substance into a mine’s hydraulic fluid systems posed potentially serious risks to both the operation and functionality of its machines and to the safety of workers or visitors at that mine. He knew that substances added to the hydraulic fluid system in a mine site could have an impact on the life, reliability and safety of the hydraulic systems, whether by themselves or in combination. Accordingly, in his experience not only did a new substance need to be itself compatible with the machines, it also needed to be compatible with the fluids already going into the machines.
117 In early December 2010, Mr Thompson conducted compatibility tests on a Bobcat of Oil-Glo 33, using the balance of a sample bottle of Oil-Glo 33. A Bobcat is typically a single driver operated machine capable of excavating via a hydraulic powered mechanism. Bobcats are used in mine sites. However, Bobcats suitable for underground work typically tend to be constructed slightly differently to aboveground Bobcats. Specifically, a Bobcat suitable for underground work will have flame-proofed enclosures and use fire-resistant hydraulic fluids as they operate at different temperatures underground. The Bobcat on which he conducted a compatibility test was an aboveground Bobcat.
118 The testing of the Bobcat was conducted by him alone on a farm, not in an underground environment. Although he knew that the testing would ultimately need to be conducted on underground machines, one first step he considered that he needed to undertake was to perform compatibility tests on an effectively dispensable piece of equipment that operated above ground, as the risk of disrupting production of an underground mine with so much uncertainty could not be justified.
119 His perception based on his experience with mine sites was that Mr Withers would not be prepared to consider testing Oil-Glo 33 in Metropolitan equipment until Mr Thompson was also able to present Mr Withers with a risk assessment in respect of such testing; this evidence was subject to a s 136 limitation. Equally, though, Mr Thompson wanted to be able to move quickly in the event that a risk assessment was undertaken and resulted in him being given approval to conduct trials of Oil-Glo 33 on Metropolitan equipment.
120 Mr Thompson conducted a risk assessment on or around 16 December 2010 for the Oil-Glo 33 product, and its proposed introduction into machines with oil-based hydraulic systems.
121 After the provision of this risk assessment to Mr Withers, he agreed to the conduct of trials of Oil-Glo 33 in the hydraulic systems of a roof bolting machine (called a Multibolter) and an Eimco 4 at the Metropolitan mine to carry out forensic and engineering compatibility testing. This seems to have taken place in or around December 2010.
122 Further, Mr Thompson also gave evidence that to test whether the Method would work in a longwall system, another fluorescent fluid additive compatible with water-based system was also required. He therefore sought out an equivalent dye to Oil-Glo 33 that was compatible with water-based hydraulic systems. He looked into the dyes manufactured by Spectronics Corporation and noticed that the material safety data sheet for Oil-Glo 33 was very similar to the material safety data sheet for WD 802. On that basis, he recommended that Peabody conduct a risk assessment on the introduction of WD 802 into the longwall fluid at the Metropolitan mine.
123 The trialling on the longwall system was in or around May 2011.
124 We should make reference to one other matter. Mr Christopher Bate, previously an occupational health and safety officer for Peabody, gave evidence of Mr Thompson having taken him and other members of the occupational health and safety committee through his training materials, and having given practical demonstrations of injections and the use of blue light to observe Oil-Glo under pig skin during an OHS committee meeting. But there was a problem with the time line of his evidence as the primary judge discussed (at [594] to [616]). But on the question of confidentiality generally he said that none of his one-on-one sessions with Mr Thompson, Mr Thompson’s presentation and demonstration to the OHS committee, or any of the training sessions Mr Thompson conducted at the Metropolitan mine were stated by Mr Thompson to be confidential. Mr Bate did not consider any of the content of his one-on-one sessions with Mr Thompson, his presentation and demonstration to the OHS committee or any component session of the training sessions he conducted to be confidential. Mr Bate’s understanding was that he and all others who attended Mr Thompson’s training sessions were free to discuss any and all of the content of his training sessions and practical demonstrations. He said that there was a strong culture of information sharing in the Australian mining industry when it came to matters of OHS, and competitor organisations had for decades freely shared information regarding safety issues and how they could be mitigated.
General
125 All three disclosures occurred a considerable time prior to the testing of WD 802 in the longwall system at the Metropolitan mine in May 2011. But as we have said, in December 2010 there was some testing of Oil-Glo 33 in the hydraulic fluid of some mobile mine equipment.
126 In relation to all three disclosures, the primary judge found that they were part of reasonable trials which necessarily occurred in public, and were undertaken either by Mr Thompson or by employees at the Metropolitan mine under Mr Thompson’s supervision (at [759]).
127 In respect of the first and second disclosures, the primary judge said (at [761]):
I find that these disclosures were for the purpose of and part of the working in public of the invention as they were a necessary precursor for the reasonable trial. Mr Thompson could not carry out trials at [the Metropolitan mine] without Mr Withers’ assistance and permission and it was therefore necessary for Mr Thompson to tell Mr Withers what he proposed. As I have said, the disclosures were for the purpose of [and] directed towards the working in public of the invention for the purposes of reasonable trial.
128 Further, as to the second disclosure, the primary judge accepted Mr Thompson’s evidence (at [507]), which was to the effect that he felt he needed to do more than to disclose the Method to Mr Withers to persuade him to introduce Oil-Glo in the Metropolitan mine’s longwall system, and therefore he determined he should do a demonstration of the Method, using pig skin as an analogue for human skin.
129 Regarding the third disclosure, the primary judge accepted (at [546] and [751]) the evidence of Mr Harold Kraus, the general manager and business director of Quaker, which was to the effect that mine sites would generally be unwilling to accept new technologies, particularly chemical substances, absent original equipment manufacturer approval stating that the substances could be safely used in their machinery (at [531(b)]).
130 The primary judge found (at [764]):
Third party fluid manufacturers, such as Fuchs, also needed to be consulted about the addition by way of trial of fluorescent dye to their products. The 9 November 2010 emails were thus correspondence arising from and in relation to the reasonable trial of the invention at [the Metropolitan mine]. Mr Pearce confirmed how critical the testing of FluidSafe with Fuchs’ products was in a later email dated 9 June 2016.
131 This also extended to the 17 and 18 November 2010 communications, which were along the same lines.
132 Whilst the communications that gave rise to the third disclosure did not themselves come from Mr Thompson, they came from Mr Risk at the Metropolitan mine. It is apparent that the origin of the third disclosure was Mr Thompson’s first and second disclosures.
133 The primary judge found that all of the disclosures formed part of the same conduct, and arose in the circumstances, which involved introducing fluorescent dye into the longwall systems of the Metropolitan mine and, later, the North Goonyella mine, for the purpose of reasonable trial.
134 The primary judge found that all of the disclosures were directed towards an end, which was a working in public of the invention, for the purposes of reasonable trial falling within the scope of the grace period pursuant to s 24(1)(a) of the Act and reg 2.2(2)(d) of the Regulations.
135 With respect to the primary judge, we consider that his Honour erred in his findings and treatment concerning the first and second disclosures. That being so, the patents fail for lack of novelty. It is convenient now to say something about the statutory provisions.
Preliminary observations on the statutory provisions
136 As we have set out, s 18(1)(b)(i) relevantly provided that an invention is a patentable invention if, inter-alia, the invention, so far as claimed in any claim, “when compared with the prior art base as it existed before the priority date of that claim… is novel”. And the definition of “prior art base” includes information “made publicly available through doing an act…”. As we have set out, s 7(1) relevantly provides that “prior art information”, which is defined in Sch 1 as “information that is part of the prior art base in relation to deciding whether an invention is or is not novel”, will render an invention not novel if it is prior art information made publicly available, inter-alia, through doing a single act or through doing two or more related acts.
137 In terms of whether information has been made “publicly available”, if the information was made available to at least one member of the public who was not constrained by any express or implied confidentiality obligations either in law or equity not to make use of it, then it will have been made publicly available; see Insta Image Pty Ltd v KD Kanopy Australasia Pty Ltd (2008) 239 FCR 117 at [124] per Lindgren, Bennett and Logan JJ and Damorgold Pty Ltd v JAI Products Pty Ltd (2015) 318 ALR 483 at [12] per Bennett J. So, whether such information was made known to the many or to the few is irrelevant. Indeed, one member of the public may be sufficient, so long as that person was not under a legal or equitable duty of confidence.
138 As to the relevant act in the phrase in s 7(1)(a) “made publicly available … through doing a single act”, as Insta Image and Damorgold make plain, the act must have resulted in disclosure of “each and every one” of the essential integers of the claim and be such that a person of ordinary skill in the art would perceive, understand and be able to practically apply the discovery without further experimentation.
139 It is convenient to say at this point that it was not in contest before us that each of the three disclosures that we have referred to earlier disclosed all integers of each of the claims of the standard patent and the innovation patent sued on. Conveniently, we were provided with an annexure to Fuchs’ written submissions in chief that established such matters, which was not challenged.
140 Now a patentee or inventor can invalidate the patent by anticipation if he publicly discloses the invention prior to the priority date.
141 But s 24(1)(a) exempts certain matters from being anticipations when they occur in prescribed circumstances. In general, it provides an exception for information made available in specified circumstances earlier than the time that disclosures are otherwise permitted; what is embraced by s 24(1)(a) has colloquially become known as “grace periods”, although such a label is no substitute for the statutory language.
142 It is convenient to again set out some of the legislative provisions which are relevant to the reasonable trials grace period.
143 Section 24(1)(a) relevantly provided:
(1) For the purpose of deciding whether an invention is novel or involves an inventive step or an innovative step, the person making the decision must disregard:
(a) any information made publicly available in the prescribed circumstances, by or with the consent of the nominated person or patentee, or the predecessor in title of the nominated person or patentee
…
but only if a complete application for the invention is made within the prescribed period.
144 Regulation 2.2(2) relevantly provided:
(2) For paragraph 24(1)(a) of the Act the following are … prescribed circumstances:
(a) the showing or use of the invention at a recognised exhibition;
(b) the publication of the invention during a recognised exhibition at which the invention was shown or used;
(c) the publication of the invention in a paper written by the inventor and:
(i) read before a learned society; or
(ii) published with the inventor’s consent by or on behalf of a learned society; or
(d) the working in public of the invention within the period of 12 months before the priority date of a claim for the invention:
(i) for the purposes of reasonable trial; and
(ii) if, because of the nature of the invention, it is reasonably necessary for the working to be in public.
145 Regulation 2.3(1)(c) relevantly provided:
(1) For information of the kind referred to in paragraph 24(1)(a) of the Act, if the applicant relies on a circumstance in subregulation 2.2(2), the prescribed period is:
…
(c) in the case of the circumstance mentioned in paragraph 2.2(2)(d)—12 months from the start of the first public working of the invention referred to in that paragraph.
146 Of these provisions, the relevant one is reg 2.2(2)(d), although regs 2.2(2)(a) to (c) shed some light on the proper construction of reg 2.2(2)(d). It was common ground that both patents had the same grace periods.
147 Before turning to the main appeal grounds, we would observe the following.
148 First, it is interesting to compare the language of reg 2.2(2)(d)(i) “for the purposes of reasonable trial” and the secret use provision in s 9(a) which refers to “the purpose of reasonable trial or experiment only”. There is no good reason why the phrase “reasonable trial” should have different meanings in each case. Further, it is to be noted that the word “only” does not appear in reg 2.2(2)(d)(i). So, for secret use, the stipulated purpose must be the only purpose. Contrastingly, to fit within reg 2.2(2)(d)(i) it only need be shown that what is stipulated is one of the purposes.
149 Second, whether the “purposes of reasonable trial” has been established is a question of fact and degree. Has the purpose been established? Was it reasonably necessary for the trial to be carried out in public? The test of reasonableness is objective.
150 In obiter, McKerracher J in Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4) [2015] FCA 1372 at [655] to [667] discussed the grace period provisions. His Honour applied similar concepts to the context of secret use when considering the scope of “reasonable trial”. He endorsed the approach taken by Dowsett J in Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257 at [231] and [232] that in assessing what was reasonable in the context of “reasonable trial”, one needed to consider the nature of the invention, its intended use or purpose and the conditions under which it was to be used. Further, it is also necessary to consider the period of use and the scale of use in determining what was reasonable.
151 Third, what does the word “trial” mean? It would embrace seeing how the invention works or performs. It would embrace proof of concept. It would embrace seeing whether it could be made more efficient or whether it could be improved. It would embrace seeing whether it performed in all relevant instances or to see if any changes were needed (see generally Coretell Pty Ltd v Australian Mud Company Pty Ltd (2017) 250 FCR 155 at [213] to [227] per Burley J and SNF (Australia) Pty Ltd v BASF Australia Ltd (2019) 140 IPR 276 at [1417] to [1428], albeit in the context of s 9(a) and secret use). Further, the fact that a trial did not result in any alteration to the invention did not mean that it was not a trial. Further, even if the trial resulted in a commercial benefit that did not entail that there was no trial.
152 Fourth, reg 2.2(2)(d) refers to the “working in public of the invention … for the purposes of reasonable trial”. So, there must be a “working in public”. This would embrace a use or display of the invention in public.
153 One issue that arises is whether the disclosure of information concerning the invention can be considered to be part of the “working”.
154 Another issue that arises is whether, if disclosure of information is not part of the working, is the regulation sufficiently broad to embrace a disclosure of information that is ancillary to the working.
155 We will address these questions later.
156 Before proceeding further we should say something about who bears the relevant onus.
157 The primary judge did not expressly resolve the debate between the parties as to who bore the onus (at [196] and [202]). Fuchs asserted that Quaker bore the onus of establishing that the relevant grace period applied. Now Fuchs accepted that it bore the onus to establish that the relevant disclosures were novelty destroying, but it said that once this had been established, the claims would be anticipated unless Quaker could establish that the disclosures should be disregarded by reason of the relevant grace period. Contrastingly, Quaker asserted that Fuchs bore the onus of proving that any disclosure or use was not for the purposes of a reasonable trial.
158 In our view, the legal onus of showing that the disclosure or use was not for the purpose of reasonable trial is on the party asserting invalidity. But the patentee may have an evidentiary onus to lead evidence which raises the point.
159 In this respect, we would at least go so far as Lee J in Innovative Agriculture Products Pty Ltd v Cranshaw (1996) 35 IPR 643 at 659 who said in dealing with the Patents Act 1952 (Cth) (the 1952 Act) which preceded the Act:
I do not agree that the matter of onus is so clear cut. Section 158 of the 1952 Act states that “objection shall not be taken to an application for a patent” and that a patent is not invalid by reason only of the use described in s 158(1)(h). Those words suggest that a party seeking revocation of a patent is obliged to show the invalidity of the patent by demonstrating that there has been anticipation of the invention by prior use by reason of the use of the invention in terms that did not meet the protection provided by s 158(1)(h). Whether any onus falls on an applicant for a patent whose application is met by an objection of lack of novelty is unnecessary to decide. The holder of a patent has the benefit of an assumption that there is a prima facie case that the grant was valid, and if there is any onus on the patentee it may be no more than an evidentiary onus to adduce some evidence to show that s 158(1)(h) is relied upon. If the holder of a patent provides evidence to show that s 158(1)(h) is relied upon, the absence of any contrary evidence, or the absence of cross-examination of a witness called by the patentee able to speak to the point, is likely to leave undischarged the onus of proof of anticipation resting on the proponent for revocation.
[Citations omitted.]
160 Now we should say for completeness that it is unclear whether his Honour proceeded on the basis that Quaker bore the onus. On one view, the primary judge’s findings at [751] to [767] are consistent with an acceptance of Quaker’s evidence and submissions as to why the disclosures relied upon by Fuchs were to be disregarded for the purposes of s 7. In any event, before us Fuchs bears the onus of demonstrating that the primary judge was wrong. In other words, irrespective of how the primary judge dealt with the question of onus, that question of onus is not determinative of any issue on appeal, although in our view Fuchs bore the legal onus at first instance, with Quaker having an evidentiary onus. And we say this notwithstanding the observation of Starke J in Paper Sacks Pty Ltd v Cowper (1934) ALR 102 at 105, a case we will return to later.
161 Finally, at a general level we should also make some observations concerning the question of statutory interpretation.
162 As to the applicable principles of construction, the question of construction must begin and end with the statutory text. But the text must be considered in context, which context may be illuminated not just by other relevant legislative provisions in the Act in question, but also by the legislative history and other extrinsic materials. Context has utility if and to the extent that it assists to ascertain the meaning of the text by, for example, illuminating the mischief that the statute was intended to remedy. Further, integral to the task of contextual construction is the objective discernment of statutory purpose.
163 Further, it is to be noted that Alphapharm Pty Limited v H Lundbeck (2014) 254 CLR 247 at [42] per Crennan, Bell and Gageler JJ stated that:
The pre-existing law and the legislative history should not deflect the Court from its duty to resolve an issue of statutory construction, which is a text-based activity.
164 Further, extrinsic material cannot displace the clear meaning of the text, assuming that the latter can be discerned. Moreover, it is desirable to exhaust the application of the ordinary rules of statutory construction as applied to the text, before one has recourse to the extrinsic material; see also SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at [14] per Kiefel CJ, Nettle and Gordon JJ.
165 In Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 381 ALR 601, Gageler J, albeit in dissent in the result, said at [66], [67] and [70]:
The pronouncement of five members of the High Court in 2010 that “it is erroneous to look at extrinsic materials before exhausting the application of the ordinary rules of statutory construction” cannot be understood to have meant more than to stress that statements of legislative intention made in extrinsic materials do not “overcome the need to consider the text of a statute to ascertain its meaning”. The “modern approach to statutory interpretation”, which was well-established before the pronouncement and which has continued in practice afterwards, “(a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief which … one may discern the statute was intended to remedy”.
Applying the modern approach to statutory interpretation, consideration of context, including consideration of legislative history and extrinsic materials, “has utility if, and in so far as, it assists in fixing the meaning of the statutory text”. The quality and extent of the assistance extrinsic materials provide in fixing the meaning of statutory text is not uniform. The quality and extent of the assistance varies in practice in ways unable to be fully appreciated without regard to the provenance and conditions of creation of the extrinsic materials.
…
Made clear by omission from s 15AB is that the Commonwealth Parliament does not contemplate that explanatory memoranda might be used by officers of the Executive Government writing them, or by courts considering them, to add to or detract from the text of an enacted provision. Axiomatically, an explanatory memorandum “cannot displace the meaning of the statutory text” and cannot be “substituted for the text”.
[Citations omitted.]
166 Further, a subordinate instrument cannot inform or dictate the proper construction of an Act. But having said that, if regulations together with the principal legislation are propounded together or form part of a legislative scheme, it may be useful to refer to the regulations to ascertain or identify the scheme (Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101 at [19]). But that does not justify using the regulations to expand upon, read down or rewrite the principal statutory provisions being construed, absent clear stipulation in the principal legislation elevating the status of the subordinate instrument.
167 Let us then turn to the appeal grounds.
Grounds 1, 2 and 4: asserted erroneous construction of relevant grace period exception
168 Ground 1 asserts that none of the three disclosures constituted a working in public of the invention and therefore did not fall within the relevant prescribed circumstances specified in reg 2.2(2)(d). It is said that to the extent his Honour so held, he was in error.
169 Ground 2 asserts that his Honour erred in concluding as a matter of construction that the exception in s 24(1)(a):
(a) extended to an oral disclosure in public of the invention prior to the working of the invention in public for the purposes of reasonable trial provided that the oral disclosure is causally related to the relevant working of the invention in public; and
(b) operated such that it is not merely the working of the invention itself to which the prescribed circumstances are directed.
170 Ground 4 asserts what it is said that his Honour ought to have concluded based upon Fuchs’ construction of s 24(1)(a) and reg 2.2(2)(d) and their proper application. We will elaborate on their contentions in a moment. It is unnecessary to set out this overly elaborate ground 4 which ran to 2 ½ pages, including 11 sub-clauses and excessive particulars.
171 Fuchs contends that the primary judge erred in concluding, as a matter of statutory construction, that the grace period exception in reg 2.2(2)(d) extends beyond the actual working of the invention itself in public for the purposes of reasonable trial.
172 Fuchs contended at trial that, on a proper construction of s 24(1)(a), the Regulations (including reg 2.2) specify and delimit the particular publications or uses through which information is made publicly available for the purposes of s 24(1)(a). The primary judge rejected that approach.
173 Fuchs points out that s 24(1)(a) relevantly excludes from novelty-defeating disclosures “any information made publicly available, through any publication or use of the invention in the prescribed circumstances”. According to Fuchs, that requires that close attention be given to the “prescribed circumstances”, as the publication or use can only be “in” those specified circumstances. The section does not speak of a publication or use “for a prescribed reason”, or “in connection with a prescribed event”.
174 Fuchs points out that the Regulations specify the prescribed circumstances with some precision, and, importantly, also specify the type of publication or use, and whether the prescribed circumstance is a publication or a use.
175 Thus reg 2.2(2)(a) refers to “the showing or use of the invention at a recognised exhibition”, whereas reg 2.2(2)(b) refers to “the publication of the invention” at the same exhibition, that is “a recognised exhibition at which the invention was shown or used”.
176 Regulation 2.2(2)(c) refers to “the publication of an invention in a paper…”.
177 Regulation 2.2(2)(d) refers to “the working in public of the invention” , that is, the use of the invention in public. Fuchs says that the specification of the particular activity that comprises the “prescribed circumstances” is precise.
178 Now at [749] the primary judge said:
I also accept that by virtue of the language of s 24(1) the provision relates to any information made publicly available through any publication of the invention in the prescribed circumstances. Thus it is not merely the working of the invention itself, or the actual working of the whole of the invention in public, to which the prescribed circumstances are directed.
179 The primary judge also held that the disclosures were within the relevant exception because they were “for the purpose of” and “directed towards the working in public of the invention for the purposes of reasonable trial” (at [761]).
180 But Fuchs contends that these conclusions involve error. It says that the relevant grace period exception is limited to information made publicly available by a use of the invention, being the working in public of the invention itself for the purposes of reasonable trial in the specified circumstances.
181 Fuchs says that the primary judge’s statement that “it is not merely the working of the invention itself, or the actual working of the whole of the invention in public, to which the prescribed circumstances are directed” (at [749]) is incorrect. It says that that is precisely the thing to which the prescribed circumstances in reg 2.2(2)(d) are directed. Further, it says that the language in s 24(1)(a) and in reg 2.2(2) does not permit of an approach whereby anything at all done “for the purposes of” or “as a necessary precursor” or “directed towards” the prescribed circumstances are “in the prescribed circumstances”.
182 Fuchs says that it appears that the primary judge has approached the phrase “through any publication or use of the invention in the prescribed circumstances” in s 24(1)(a) too broadly, and as if it covered any publication or use that was associated with an identified “circumstance”, such that any oral disclosure associated with the trial is protected. But it says that that does not have proper regard to the language and operation of the section when read in conjunction with the relevant regulation. Rather, it says that the relevant publication or use is precisely and carefully defined. And there is no scope for extending the exception to other publications and uses that are not so specified.
183 Fuchs points out that in a similar manner to reg 2.2(2), reg 2.2(1A), which provides a broader exception in a later time period, provides that “the circumstance that there was a publication or use of the invention within 12 months before the filing date of the complete application, is a prescribed circumstance”. Again, it says that the regulation specifies the nature of the publication or use, and whether it is a publication or use; that is, the publication or use is itself part of the prescribed circumstances.
184 Further, Fuchs says that it is apparent from a consideration of the exceptions in reg 2.2(2) that they are limited exceptions that support a particular need for, or aspect of social utility arising from, early disclosures. So, for example, it is understandable why there might be a policy in favour of a disclosure at an exhibition, or in a reading before a learned society.
185 But Fuchs says that the relevant exception in reg 2.2(2)(d) is one based on necessity. This is apparent from the requirement that “it is reasonably necessary for the working to be in public”.
186 So, this particular exception to the normal principle that a disclosure will anticipate is a narrow one. It is confined to a working in public where it is reasonably necessary to work the invention in public for the purposes of reasonable trial. This imports a test of necessity for performance of the invention to take place in public, because, having regard to the nature of the invention, that is the only way that the working for the purposes of reasonable trial can be undertaken. None of that is concerned with associated oral disclosures, which are not a “working” and generally do not need to be in public at all.
187 Further, Fuchs says that the use of the word “any” in s 24(1)(a) – “any information made publicly available, through any publication or use of the invention in the prescribed circumstances...” – does not expand the scope of the exception beyond the particular prescribed act, here the “working”. The word “any” might contemplate something less than disclosure of all the integers of the invention, but such disclosure must emanate from the “working”.
188 Fuchs accepts that the “information” referred to in s 24(1)(a) can constitute something less than the entirety of the claimed invention. This is correct. Having regard to the language of s 24(1)(a) and also given that the relevant grace periods apply to both novelty and inventive step, the disclosure of information in the latter case will necessarily be something less than the entire invention. If it was the entire invention, then absent the grace period applying, it would be novelty destroying in any event. So, there would not be much work for the option in s 24(1) of “… deciding whether an invention … involves an inventive step …”. It would have little work to do. The very reference to that option connotes that something less is envisaged than disclosure of all integers. Further, we note that s 24(1) was amended in 2012 to remove any doubt that the disclosure could be something less than all of the features of the invention subsequently claimed in a patent specification. Indeed, in the Explanatory Memorandum, Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) at item 32 it was stated:
The first problem with the current provision is that it only applies to publication or use of the invention. This means that the grace period could be taken only to apply to information that could deprive an invention of novelty, not to information that could deprive an invention of an inventive or innovative step. For example, the grace period would not apply in a circumstance where the patentee disclosed the work they had done, or a prototype that led directly to their invention.
Item 32 addresses this problem by replacing the existing reference to ‘information made publicly available, through any publication or use of the invention’ in paragraph 24(1)(a) with a reference only to ‘information made publicly available’. This will allow circumstances to be prescribed to align the grace period with similar periods of one form or another that apply in the United States, Japan and Canada.
189 Further, Fuchs resorted to some aspects of the legislative history and contended that such history of the reasonable trials exception did not support the primary judge’s expansive construction.
190 It pointed out, correctly, that the current provision can be traced back to s 51(3) of the Patents Act 1949 (UK) (the 1949 UK Act). The Parliamentary debate at the time of introduction of this provision makes clear that it was introduced to deal with the specific need to test an invention in circumstances where public disclosure cannot be avoided (see HL Deb 16 May 1949, vol 162, cols 651 to 719 and HL Deb 30 May 1949, vol 162, cols 1203 to 1233). No suggestion was made that the exemption would extend beyond the specific acts that were required to be done in public in order to carry out the trials.
191 In terms of the Australian legislative history, the predecessor s 158 of the 1952 Act provided, inter-alia, various exemptions for an inventor’s own self-disclosure when assessing novelty or inventive step, being the showing, use or publication at a recognised exhibition, readings and publications in the context of learned societies, and workings in public for the purposes of reasonable trial.
192 Fuchs says that it appears that when s 24 of the Act was enacted in 1990, the intention was to maintain these same limited exemptions, but also to provide flexibility to expand the scope of the exemptions for self-disclosure by making additional regulations in the future. We agree. We note that it was said in the Explanatory Memorandum, Patents Bill 1990 (Cth) at [38]:
Paragraph (1)(a) operates in respect of information made publicly available in certain prescribed circumstances, through any publication or use of the invention by or with the consent of the “nominated person” or the patentee. Paragraph (1)(b) operates in respect of information made publicly available without the consent of the “nominated person” or patentee or the predecessor in title of the nominated person or patentee. (“Nominated person” is defined in the Dictionary in Schedule 1 as meaning the person who is identified in the request for the grant of the patent as the person to whom the patent is to be granted.) These paragraphs will apply to an invention only if a patent application for the invention is made within the prescribed period. It is envisaged that regulations made under paragraph (1)(a) will initially reflect the present provisions of the Patents Act 1952 in respect of inventions exhibited at certain international exhibitions, inventions published to or by learned societies, and inventions which were necessarily worked in public for the purpose of testing. A wider range of circumstances may be prescribed at some stage, however, particularly if international moves to recognise a “grace period” before the application date proceed.
193 Now initially, the circumstances prescribed in the Regulations made under s 24(1)(a) for self-disclosure were confined to substantially the same limited exemptions under s 158 of the 1952 Act. But on 1 April 2002, the Regulations were amended to insert the general grace period provision in reg 2.2(1A) and 2.3(1A) (see items 1 to 6 of Sch 1 to the Patents Amendment Regulations 2002 (No 1) (Cth)).
194 At this point we should say something about Quaker’s competing contentions.
195 Quaker says, which we accept, that the starting point of the analysis is that s 24 governs the nature of disclosures to be disregarded. Accordingly, focus must first be had on the contents of the Act, not on the contents of the Regulations. We agree.
196 And as Quaker points out, it is not in doubt that a regulation may not be used to change the construction of the Act pursuant to which it is made and it is to be construed subject to the relevant enabling legislation; see also s 13(1)(c) of the Legislation Act 2003 (Cth). Further and expressly, s 228 of the Act provides that the “Governor-General may make regulations, not inconsistent with this Act”. We also agree.
197 Quaker points out s 24 expressly refers to the requirement for “any information” to be disregarded. The use of both of those words is significant. It is “information” that is to be disregarded, not particular uses or publications of the invention themselves. This is underscored by the use of the word “any”.
198 Consistently with this, s 7 of the Act is concerned with, inter alia, “information” being “prior art information”. In short, the character of the information that is to be disregarded may be something distinct from, but related to, the publication or use of the invention itself.
199 Accordingly, it says that the protection conferred by s 24(1)(a) is not, in this respect, limited to information made publicly available by the actual “working” in public of the invention itself. It extends to any information made publicly available through any publication or use of the invention in those circumstances.
200 Quaker gave a hypothetical example. Suppose there was an apparatus the subject of subsequent claim in a patent application which, for whatever reason, was necessarily in a public space. It would be expected that, in order to be in that public space, it may be necessary for public liability reasons to disclose to the public to keep away from such apparatus and the risks associated with the operation of that apparatus by way of signage proximate to that apparatus. That signage may convey information which, when combined with the common general knowledge, renders the subsequent claim obvious, quite aside from an inspection of the apparatus made possible by its presence in the public space. Clearly, according to Quaker, pursuant to s 24, that information is intended to be excluded from consideration as much as is “information” gleaned from the apparatus itself.
201 Further, Quaker points out that s 24 also expressly provides that any information made publicly available “through any publication or use of the invention” must be disregarded. Again, the words used are of broad import. In particular, the section provides that any information made publicly available through either (or both) of a publication or use of the invention in the prescribed circumstances is to be disregarded. This is a further indication that it is not a particular publication or use of the invention which is to be disregarded, but rather, any information made publicly available through any publication or use of the invention in the prescribed circumstances.
202 So, according to Quaker, the regulations made under s 24(1)(a) could not provide for a result in which only a particular use of the invention itself is to be disregarded, as distinct from any information made publicly available through that use, or through any other use or publication of the invention, in the prescribed circumstances.
203 Quaker then said that reg 2.2(2)(d) provides that the prescribed circumstances are the “working in public of the invention” within the period of 12 months before the priority date for the purposes of reasonable trial if, because of the nature of the invention, it is reasonably necessary for the working to be in public. Thus, it says that what s 24 requires, when read with reg 2.2(2)(d), is that any information made publicly available through any publication or use of the invention in the circumstances of the working in public of the invention (if it is reasonably necessary for the working to be in public) within the period 12 months before the priority date for the relevant purposes must be disregarded.
204 So, Quaker says that the legislative regime necessarily embraces something more than the mere use of the invention itself in public.
205 Thus, according to Quaker, the primary judge was correct when he found (at [749] and [761]) that the relevant grace period in terms is not confined only to excluding the actual working in public of the invention.
206 Further, and in any event, Quaker says that his Honour was also correct in finding (at [761]) that disclosures of the kind relied on by Fuchs were properly characterised as being part of the working in public of the invention, being a necessary precursor for the reasonable trial.
207 Indeed, it says that the reasonable trials grace period has never been confined to disclosure brought about by the precise use of the method or product claimed.
208 Quaker referred to Longworth v Emerton (1951) 83 CLR 539 where Dixon, McTiernan and Kitto JJ referred with approval to the decision of In re Newall and Elliot (1858) 4 C.B.N.S. 269 and said (at 549) that a disclosure “in the course of testing an invention or employing it experimentally” did not amount to prior public use. The Court went on to succinctly summarise the facts of In re Newall as follows:
The invention in that case related to a device for use in laying submarine telegraph cables. As the cable was uncoiled it was passed round a cone or several cones for the purpose of preventing it kinking. Thence it passed through a pulley and so to the break wheel before going over the stern of the ship. Experiments made on land to test the invention were not found satisfactory. The plaintiff who became the patentee had a contract to lay a cable in the Black Sea. He determined to employ the invention in carrying out work and so to test it. This involved fitting the device upon the cable-laying vessel. The first ship to sail with it was met with an accident owing to bad weather and was forced to put into the Thames where the cable was transferred to another ship. Precautions were taken to prevent what was going on being known, but persons neither employed by the plaintiff nor by the government visited the ships and had the opportunity of becoming acquainted with the apparatus, and when the second ship reached the Black Sea and the apparatus was set up for use its nature was necessarily seen by those aboard or connected with the work. …
209 Quaker says that by Fuchs’ logic, only the latter of those two disclosures would suffice, whilst the former would not be a “working” of the invention. The disclosure came about because the vessel was laid up whilst the device was transferred between vessels and nothing was “worked” at the time. It says that Fuchs’ view would have been wrong then, and it remains wrong. Quaker says that when properly construed, the grace period provisions cover actions undertaken to bring about the use of the method or device in public.
210 Further, Quaker says that its construction also accords with the policy underlying the Act.
211 It says that the grace period in s 24 is a beneficial and remedial provision designed to avoid harsh or unjust outcomes. It is an intentional departure from the position that an invention must be novel and involve an inventive step based on a comparison with the prior art base before the priority date.
212 Quaker points out that in the context of s 223, it was stated that such a provision should be given a broadly protective and remedial operation; see Alphapharm at [64] per Crennan, Bell and Gageler JJ. Quaker says that its construction is supported by such an approach.
213 Quaker says that in broad terms, when read with reg 2.2(2), s 24 excludes information from consideration where its public disclosure before the relevant priority date is necessary or useful for particular purposes. This acknowledges the reality that patentees may reasonably make disclosures for such purposes, and recognises that such disclosures should not be available to disentitle them from obtaining a valid patent.
214 It says that in the context of the circumstances prescribed in reg 2.2(2)(d), it would be a harsh and unjust result for disclosures of the kind relied on by Fuchs in this case to be treated as novelty destroying disclosures, in circumstances where they were made for the purposes of, and in the circumstances of, the trialling of integers of the invention.
215 Further, Quaker says that Fuchs’ narrow interpretation of s 24 and reg 2.2(2)(d) would lead to absurd and unjust outcomes.
216 It points out that Fuchs accepts that the trialling of elements of the Method by means of the introduction of Oil-Glo 802 or WD 802 into the longwall fluid at the Metropolitan mine and the North Goonyella mine was a reasonable trial which necessarily occurred in public and would satisfy reg 2.2(2)(d). But according to Quaker, the effect of Fuchs’ logic is that no one working at the mine site or any visitors to the mine site could be told about that trial, or be told, for example, how to use the Method if someone was to suffer a suspected HPFI injury during the trial, absent them being sworn to secrecy.
217 It prays in aid what the primary judge found (at [763]), that this would not be reasonable, and would be contrary to the ethos of information sharing and health and safety in mine sites.
218 It points out that his Honour found (at [763]) that it was necessary for the workers to be informed of the fact of the hydraulic fluid being dyed and the purpose of that dye, which would have disclosed the Method, and that it would not have been reasonable for them to be required to enter into a confidentiality deed.
219 Thus, on Fuchs’ logic, so Quaker said, the primary judge should have found that disclosures of the Method associated with the introduction of Oil-Glo into the longwall systems, which necessarily had to occur based on health and safety policies, and necessarily had to occur in order for the Method to be carried out, were novelty destroying absent them having been made confidential, despite the fact that they could not have been made confidential because of those health and safety policies.
220 Quaker says that Fuchs’ interpretation is “liable to rob” the provisions of much of their useful practical effect. It is said that in order to bring about a use of a method in public, or the deploying of a product in public, it is almost inevitable that there will have to be disclosures of information regarding that use, in the circumstances of, but in advance of, that use or deployment. Quaker says that on Fuchs’ case, it is unclear what policy end is said to be achieved by excluding the use of the method (or integers of it) from consideration, but not excluding disclosures which form a necessary part of that use, particularly where disclosures of that kind may not be able to be made confidential. Doing so robs the grace period provisions of their intended practical effect.
221 Further, Quaker says that insofar as Fuchs submits that reg 2.2(2) delimits whether information can be disclosed by way of a publication or a use, that would be inconsistent with the breadth of s 24. It would involve the regulation impermissibly varying the scope of the section.
222 Further, it is said that whatever may be the case regarding regs 2.2(2)(a) to (c), the relevant provision here does not use the words “use” or “publication”. It refers to the “working in public of the invention”, which is something other than “use” of the invention per se.
223 Further, Quaker says that Fuchs’ position appears to be that the grace period only protects against a narrow conception of the “working” itself, which wrongly equates a “working” of the patented method only with a “use” of the patented method per se.
224 Further, Quaker says that the fact that the time periods prescribed by regs 2.2(2)(d) and 2.3(1)(c) are measured from the time of the first “working in public of the invention”, rather than a particular publication or use of the invention, or a particular disclosure of information, does not assist Fuchs.
225 First, it is the text of the Act that is paramount in considering the scope of s 24(1)(a), not that of the Regulations.
226 Second, in any event, measurement of the time period from the first “working in public of the invention” does not give rise to any difficulty.
227 In the present case, as the primary judge found, the disclosures relied on by Fuchs were properly characterised as part of the “working in public of the invention”. The disclosures occurred within the relevant period, so no difficulty arises.
228 But Quaker says that even if the disclosures were not themselves regarded as part of the “working in public of the invention”, it would remain necessary for the information in question to have been made publicly available through any publication or use of the invention in the prescribed circumstances, as was the case here, in order for the grace period to apply. There is a link between the information the subject of the disclosure and the circumstances of the “working in public of the invention” prescribed by the Regulations. On either view, the grace period is not open ended on this construction, as suggested by Fuchs.
229 Finally, Quaker says that the disclosures relied on by Fuchs were part of one course of conduct that involved, and arose in the circumstances of, the working in public of the invention for the relevant purposes. Quaker says that there is a real danger in focusing on individual disclosures divorced from the particular context in which the conduct occurred. To do so risks obscuring the critical element of the circumstances of the disclosures, including their purpose, and the specification in s 24(1)(a) that any information made publicly available through any publication or use of the invention in those circumstances is protected.
Analysis
230 In our view, s 24(1)(a) is not to be read as expansively as Quaker suggests or as his Honour found.
231 The subject matter in s 24(1)(a) is “any information made publicly available”. And the particular focus is on how it was “made publicly available”. The mode is then stated to be “through any publication or use of the invention in the prescribed circumstances”.
232 So, in the present context, the prescribed circumstance is “the working in public of the invention … for the purposes of reasonable trial … and … if, because of the nature of the invention, it is reasonably necessary for the working to be in public” (reg 2.2(2)(d)).
233 So, the mode for s 24(1)(a) in the present context is “through [the working in public of the invention]”.
234 If you like, one could take any of regs 2.2(2)(a) to (d) and fit them into the language of s 24(1)(a) as “through [words of reg 2.2(2)(a), (b), (c) or (d) (as the case may be)] …”.
235 In this respect, we would not accept a reading that involves taking any of regs 2.2(2)(a) to (d) and fitting them into the language of s 24(1)(a) as “through any publication or use of the invention in [words of reg 2.2(2)(a), (b), (c) or (d) (as the case may be)] …”. That tortures the grammar, involves duplication and in some respects simply does not work. The better reading is as we have suggested in the preceding paragraph. Such a reading does not rewrite s 24(1)(a). But of course the prescribed circumstances are limited to and must describe a “publication or use of the invention”. They cannot be broader. Putting it another way, the regulations are there to stipulate the categories of “publication or use of the invention” upon which s 24(1)(a) then operates.
236 Further, there is no broader concept such as to justify reading into s 24(1)(a) language such as “relating to” or “for the purposes” of, or as a “necessary precursor” to, the prescribed circumstances (see the primary judge’s reasons at [761]).
237 Further, it is erroneous to take the language of “purposes of reasonable trial” in reg 2.2(2)(d)(i) and read that into the language of s 24(1)(a). The stipulations of purpose and reasonable necessity in reg 2.2(2)(d)(i) and (ii) are all about identifying the relevant “working in public of the invention”. Once that working in public has been identified satisfying these stipulations, that is then what is used to meaningfully apply the phrase “through any publication or use of the invention in the prescribed circumstances”.
238 Further, what should also not be overlooked in s 24(1)(a) is the precise wording of “in the prescribed circumstances” [our emphasis]. The wording is not “relating to the prescribed circumstances”. And the wording is not “for the purposes of the prescribed circumstances”. The word used is “in”.
239 In our view, the primary judge’s reasons, for example at [749] (last two sentences) would appear to disclose a broader approach to s 24(1)(a) than in our view is appropriate.
240 Now a different question then arises, accepting our construction, as to how broadly one reads the words “working in public of the invention” and the extent to which this embraces ancillary disclosures, for the purposes of then considering under s 24(1)(a) whether information has been made publicly available through such a working. We will return to this question later. But first we should say something more on the primary construction point.
241 There are various additional textual and contextual matters that support our construction.
242 First, the “prescribed period” for the purposes of s 24(1)(a) is, in relation to the “prescribed circumstances” in reg 2.2(2)(d), specified in reg 2.3(1)(c) as “12 months from the start of the first public working of the invention referred to in that paragraph”. So, the fact that the grace period starts at the first public working, rather than from any prior disclosure leading up to the working, emphasises that the exempted disclosure is the public working itself. Otherwise, anomalous results could occur, including that the actual grace period could be significantly longer than the 12 months specified if, for example, the oral disclosure occurred months or even years before the first public working. On Quaker’s primary construction, a disclosure could occur at an indefinite time before the commencement of the 12 month period specified in the Regulations within which a patent application must be filed. And indeed, on Quaker’s interpretation it seems there is no need for a trial to take place at all in order for the reasonable trials exception to be engaged, provided that the invention is disclosed in circumstances where the inventor intends in the future to seek a third party’s assistance with trials.
243 In summary, on Quaker’s approach, given the time periods in reg 2.2(2)(d) and 2.3(1)(c), both measured by reference to the time of the working in public of the invention, the associated oral disclosure could be at a potentially unlimited time prior to that. That is not consistent with the statutory intention in s 24(1)(a) of setting a time limit between publication or use and the filing of the patent application.
244 Second, if any associated disclosure, or disclosure “for the purposes of” the prescribed circumstance, was caught, then reg 2.2(2)(b) would be redundant. Regulation 2.2(2)(a) identifies “the showing or use of the invention at a recognised exhibition”. But if the primary judge’s approach was correct, then any associated publication would also be exempted. But reg 2.2(2)(b) makes specified provision for a prescribed circumstance, being “the publication of the invention during a recognised exhibition at which the invention was shown or used”. But putting to one side the redundancy point, in any event the words “during a recognised exhibition” tightly restrict the time at which the publication may be made.
245 Third, if s 24(1)(a), in conjunction with reg 2.2(2)(d), operated to exempt any disclosures made “for the purposes of” or “directed towards” a proposed working in public as part of a reasonable trial, then difficult questions would arise if the trial did not proceed for some reason, and there was no working in public at all.
246 Fourth, our preferable construction does not entail that the relevant exception is unworkable. And it does not mean that it would be “absurd” to suggest that any ancillary information arising in respect of the working of the invention which was disclosed to the public would invalidate the patents. Two points can be made at this point.
247 In the present case, Mr Thompson accepted that if he had wanted to keep his disclosures secret he could have asked the Metropolitan mine to enter into some confidentiality arrangement.
248 Further, Quaker’s hypothetical example of a safety sign does not assist it. Clearly, the outcome in any given case will depend on an examination of the precise factual matrix in issue. Let it be supposed that one can envisage a scenario where it would be necessary to disclose on signage at a trial site the nature of an invention at the level of detail residing in patent claims. The question will then turn on what is comprised in the particular case in a “working in public of the invention”, because it is information disclosed through that activity that is exempted. We have no difficulty with necessary and associated signage and instructions to the workers being covered under the concept of “working”. But Quaker’s example is far removed from the present case, which involves disclosures of the invention for the general purpose of introducing it to a third party. The first and second disclosures have nothing to do with such an example.
249 Fifth, a difficulty with Quaker’s approach is that s 24(1)(a) sets up a framework (“any information made publicly available, through any publication or use of the invention in the prescribed circumstances”), where the prescribed circumstances are specified with particularity in the Regulations. But as Fuchs has pointed out, the Regulations do not just specify an occasion or a topic (a “recognised exhibition”, a meeting of “a learned society”, a “reasonable trial”), but also specify the manner in which the information is disclosed, being the relevant publication or use. So, reg 2.2(2) refers to “the showing or use of the invention at a recognised exhibition”, “the publication of the invention during a recognised exhibition”, “the publication of the invention in a paper”, “the working in public of the invention”.
250 Sixth, and as we have indicated, s 24(1)(a) does not permit a “publication or use” on top of, or in addition to, the prescribed publication or use. Quaker appears to contend that the relevant information is “any information made publicly available through any publication or use of the invention in the circumstances of the working in public of the invention” for the purposes of reasonable trial. But that involves duplication, that is, any publication or use of the invention in the circumstances of the publication or use of the invention for a particular purpose. Rather, reg 2.2(2) prescribes the circumstances in a manner that includes the relevant publication or use. And as we have indicated, it is to be read back into s 24(1)(a) as the relevant publication or use.
251 Seventh, Quaker pointed out that s 24(1)(a) disregards “information” rather than a disclosure. Now literally that is true. But it does not take Quaker anywhere concerning the first and second disclosures, the content of which is the information imparted.
252 Eighth, the legislative history does not support Quaker’s approach.
253 Section 158(1)(h) of the 1952 Act stated that:
Objection shall not be taken to an application for a patent … and a patent is not invalid … by reason only of –
…
(h) the invention, so far as so claimed, having been publicly worked in Australia, within one year prior to the priority date of that claim –
(i) by the patentee or applicant …
…
if the working was for the purposes of reasonable trial only and if it was reasonably necessary, having regard to the nature of the invention, that the working for that purpose should have been in public; …
254 The boundaries and content were to a public working rather than Quaker’s expansive approach.
255 Now the reasonable trials grace period of s 158(1)(h) was imported from s 51(3) of the 1949 UK Act; see the Commonwealth of Australia, Report of the Committee Appointed by the Attorney-General of the Commonwealth to Consider what Alterations are Desirable in the Patent Law of the Commonwealth (1952) at [87] where it was said “… we have followed the provisions of the British Act”.
256 Section 51(3) provided:
(3) An invention claimed in a complete specification shall not be deemed to have been anticipated by reason only that, at any time within, one year before the priority date of the relevant claim of the specification, the invention was publicly worked in the United Kingdom—
(a) by the patentee or applicant for the patent or any person from whom he derives title ; or
(b) by any other person with the consent of the patentee or applicant for the patent or any person from whom he derives title,
if the working was effected for the purpose of reasonable trial only and if it was reasonably necessary, having regard to the nature of the invention, that the working for that purpose should be effected in public.
257 The 1949 UK Act was itself introduced to address an acknowledged gap in the preceding legislation and case law and to “give protection to the inventor who must, by the nature of his invention, make some experiments in public” (see HL Deb 30 May 1949, vol 162, cols 1203 to 1233 (Lord Lucas of Chilworth)); see also the earlier debate on 16 May 1949 (HL Deb 16 May 1949, vol 162, cols 651 to 719), where the examples of testing a golf ball or an atom bomb were colourfully discussed between Viscount Maugham, Lord Lucas of Chilworth and Viscount Simon.
258 Now the enactment of s 158(1)(h) of the 1952 Act represented a significant departure from the previous regime in s 124 of the Patents Act 1903 (Cth) which was in issue in Longworth.
259 Section 124 provided that:
The fact that an invention has been exhibited or tested either publicly or privately shall not in itself be deemed a ground for refusing a patent.
Provided that any public exhibition or testing must have been within one year of the date of the inventor lodging his application for a patent.
260 In Paper Sacks the High Court rejected the contention that s 124 had no operation except to take away a ground or grounds upon which the grant of a patent could be refused and held that it was available as a defence to proceedings for revocation. On appeal, the Privy Council observed in obiter (Paper Sacks Pty Ltd v Cowper (1935) ALR 461 at 462 and 463) that they found much support for the view that s 124 contained no words protecting a patent after its grant. These cases do not assist in addressing the issues that we must resolve.
261 Further, the s 124 formulation did not extend to any disclosures associated with, or causally connected to, the public working.
262 Let us then move forward from the predecessor ss 124 and 158(1)(h) to the genesis of the present s 24.
263 As we have already set out, the Explanatory Memorandum, Patents Bill 1990 (Cth) stated at [38], in relation to what became s 24(1)(a):
… It is envisaged that regulations made under paragraph 1(a) will initially reflect the present provisions of the Patents Act 1952 in respect of inventions exhibited at certain international exhibitions, inventions published to or by learned societies, and inventions which were necessarily worked in public for the purposes of testing. A wider range of circumstances may be prescribed at some stage, however, particularly if international moves to recognise a “grace period” before the application date proceed.
264 It is apparent that s 24(1)(a) was not intended to effect any significant change to the existing law, other than to give greater flexibility to add exempted circumstances. Contrastingly, on Quaker’s approach, s 24(1)(a) effected a radical change to the 1952 Act and significantly widened the protection, a proposition that we would reject.
265 Ninth, Quaker seeks to justify a wide operation of the relevant statutory language to avoid harsh or unjust outcomes due to the “beneficial and remedial” nature of the provision. But given that an important aspect of the general scheme of the Act, including ss 7, 18 and 24 and the definitions of “prior art base” and “prior art information” in Sch 1, is that only inventions which are novel are patentable, exceptions to the requirement for novelty should be construed in accordance with the text, context and purpose of the provisions rather than expansively as Quaker suggests. Cases that have considered s 223 are not on point.
266 More generally, the legislature has chosen to prescribe particular circumstances which are the subject of the grace period exceptions. It has deliberately selected precision of language that puts into effect the legislative policy for the exclusion of potentially invalidating prior disclosures through its grace period exceptions. Quaker’s approach invites and injects uncertainty.
267 Let us then turn to the scope of reg 2.2(2)(d) in terms of the “working in public of the invention … for the purposes of reasonable trial … and … if, because of the nature of the invention, it is reasonably necessary for the working to be in public”.
268 First, Quaker’s “course of conduct” approach must be rejected. Such an approach does not accord with the statutory language. The language is concerned with the “working” of the invention in public in particular circumstances. It does not speak of “course of conduct” or “context”.
269 Second, we reject Quaker’s “necessary precursor” approach to the effect that any necessary precursors are part of the working. How far back do you go? And are you ascertaining this with the benefit of hindsight or ex ante? In any event the statutory language does not support this. And even if it did, the first and second disclosures do not sensibly fit into such a description.
270 Third, it is said that the concept “working in public” is broader than actually carrying out or performing the method, and that the concepts of “working” and “to work” are broad. Let this be accepted to some extent. That still does not assist Quaker to bring within such concepts the first and second disclosures or to show that the relevant information was made publicly available through such working.
271 Now we accept that the phrase “working in public” may embrace written or oral communications that are part of the working, say, signs or instructions to employees who are, say, involved in physically performing all or part of, for example, the method to be patented. Indeed, such communications may be earlier in time than the actual physical working, although there ought to be some direct or close connection with the physical working. But they have to be sensibly said to be part of the working, with such communications (as part of the working) satisfying limbs (i) and (ii) of reg 2.2(2)(d).
272 It is not necessary for us for present purposes to define or set any boundaries to these communications. Howsoever they could be reasonably set, we have reached the clear view that the first and second disclosures clearly fall outside such boundaries. That is sufficient to find that the patents are invalid for lack of novelty, without troubling ourselves about the third disclosure.
273 As to the first and second disclosures, we would observe the following.
274 They were too distant in time from May 2011 which involved longwall trials and such a context to be sensibly considered to be part of the working. Now there was trialling on some equipment in December 2010, namely, a Multibolter and an Eimco 4 that both use fluids under high pressure; we have referred to these earlier in our reasons. But it could not sensibly be said that the first and second disclosures were part of such a working or that the relevant information was made publicly available through such a working.
275 Further, it was not reasonably necessary that they be in public. They could easily have been subject to confidentiality constraints.
276 In our view, his Honour’s conclusions in [759] to [761] and [767] insofar as they concern the first and second disclosures reflect a view of reg 2.2(2)(d) which was too broad and in any event were not maintainable on the evidence.
277 Further, although in some respects his Honour’s occupational health and safety concerns (at [763]) may be accepted, such as to justify why some communications may not be able to be kept confidential, those observations have little to do with the first and second disclosures in issue before us. There is no good reason why they could not have been kept confidential.
278 Fourth, Quaker seeks to construe the reasonable trials exception by reference to what was said in an early English case, namely, In re Newall, which pre-dates the introduction of a statutory grace period, referred to in the High Court’s decision in Longworth. But In re Newall and Longworth do not involve the statutory language presently in issue. In any event, these cases do not support Quaker’s position. As Fuchs points out, the invention in In re Newall related to a device for laying submarine telegraph cables. The invention required the device to be installed on a ship in particular way. Hence the installation of the device on the ship, and the transfer of it to be installed on another ship, was part of the working of the invention. This is reflected in the statement in In re Newall that “… a necessary and unavoidable disclosure to others, such as here appears, if it be only made in the course of mere experiments, is no publication… ” (quoted in Longworth at 549). These cases are of little if any assistance to Quaker. Honiball v Bloomer (1854) 2 Web Pat Cas 199 is also of no assistance to Quaker.
279 In summary, we uphold grounds of appeal 1, 2 and 4 concerning the first and second disclosures, and the appeal must be allowed on this basis. It is unnecessary to say anything further on the third disclosure. If we are correct that the patents fail for lack of novelty because of the first and second disclosures, then nothing further is added by addressing in detail the consequences of the third disclosure. And if we are wrong concerning the consequences of the first and second disclosures then we do not readily see how the third disclosure alone could show lack of novelty. First, the third disclosure was derivative from the first and second disclosures. Second, it is doubtful that the inventor, Mr Thompson, consented to or authorised the third disclosure (cf the primary judge’s reasons at [766]); see potentially s 24(1)(b) and the grace period thereunder.
Grounds 3 and 3A
280 Ground 3 contends that his Honour erred in concluding that the disclosures were part of the reasonable trials and the working in public of the invention because they were a necessary precursor for the reasonable trial.
281 An additional ground 3A asserts that to the extent to which the primary judge found that any of the disclosures was reasonably necessary to be in public, the primary judge erred in that there was no basis for any conclusion that each of the disclosures could not have been made confidentially or the subject of an obligation of confidentiality.
282 In a sense, we have already addressed aspects of these grounds.
283 Fuchs contended that the primary judge (at [759] and [761]) made unexplained references to the disclosures being “part of” the working in public of the invention.
284 It says that if that was meant to convey that they were themselves a working in public of the invention within the meaning of reg 2.2(2)(d), that is, for the purposes of a reasonable trial and where, because of the nature of the invention, it was necessary for the working to be in public, then there was no justification for that conclusion. We agree.
285 The reasonable trial found by the primary judge to render it necessary for the invention to be worked in public was the trial of the dye in hydraulic fluid in “working machinery at a working mine site where the invention would be used in public”, being a trial in “real world conditions” (see at [762]). But even if it be assumed that what his Honour had in mind was the December 2010 equipment testing (see also at [753]) and the May 2011 longwall systems testing, such trial(s) post-dated the first and second disclosures that had been made for which we have set out the evidence. And as we have said, at the least the first and second disclosures were not themselves part of any working in public of the invention where it was necessary to do so within the meaning of reg 2.2(2)(d).
286 Indeed, and as we have indicated by the evidence set out earlier, the first and second disclosures concerned no more than Mr Thompson’s attempts to create interest in the Method, with the hope that the Metropolitan mine might then take steps towards rigorous investigation and, potentially, implementation. One can accept the observations made by the primary judge at [753] for example. But they do not assist Quaker concerning the first and second disclosures.
287 Now Quaker says that the first working in public of the invention did not begin when the Oil-Glo was added into the longwall systems in mid-2011. Rather it says that it began earlier, including the antecedent steps undertaken to bring about the introduction of Oil-Glo into those systems, being:
(a) the conversations between Mr Thompson and Mr Withers and the demonstration of the Method to Mr Withers that we have mentioned earlier;
(b) the trials of injecting Oil-Glo in pig skin by Mr Thompson that we have mentioned earlier;
(c) the consultation between the Metropolitan mine and Fuchs regarding the addition of Oil-Glo to its Solcenic fluid; and
(d) the addition of Oil-Glo into the Multibolter and the Eimco 4 to test the effect of the dye on that machinery and to conduct a risk assessment.
288 And it says that reg 2.2(2)(d) does not use the word “use in public of the invention”, but rather uses the phrase “working in public of the invention”, which is distinct from, and broader than, the use of the invention itself.
289 Quaker says that the disclosures formed part of the “working in public of the invention”, and they all still had to be (and indeed were all) made within 12 months of the priority date of a claim for the invention.
290 But we reject Quaker’s arguments concerning the first and second disclosures.
291 Both its submission and his Honour (at [760]) have impermissibly rolled up various concepts. And as we have said, the first and second disclosures were not part of any relevant “working”, and the information made publicly available was not through the working in public of the invention.
292 Further, a considerable difficulty with Quaker’s contention that the disclosures are themselves a “working in public of the invention” is the requirement in reg 2.2(2)(d)(ii) “if, because of the nature of the invention, it is reasonably necessary for the working to be in public”.
293 The first and second disclosures could have been the subject of an express or implied confidentiality obligation.
294 His Honour set out (at [503]):
Mr Thompson was asked if, during this process of testing the dye in pieces of mine machinery and then the introduction of the dye into the longwall, he had wanted it all to be a secret, he could have entered into some form of confidentiality agreement with Metropolitan. He answered that he was not aware that he could have and he was not thinking about that at the time. The communications that he had with the mine were between himself and that specific mine, the same as every other mine that he had done training for.
295 But there was no evidence that justified any finding that it was reasonably necessary that the first and second disclosures be in public, which in the present context meant disclosure to Mr Withers without any confidentiality constraint; see our earlier discussion concerning the cognate concept “publicly available”.
296 Further, the reasoning of the primary judge (at [761]) which utilised the concept of “necessary precursor”, and “for the purpose of” and “directed towards the working in public”, involved error.
297 At [761], his Honour said:
I find that these disclosures were for the purpose of and part of the working in public of the invention as they were a necessary precursor for the reasonable trial. Mr Thompson could not carry out trials at Metropolitan without Mr Withers’ assistance and permission and it was therefore necessary for Mr Thompson to tell Mr Withers what he proposed. As I have said, the disclosures were for the purpose of [and] directed towards the working in public of the invention for the purposes of reasonable trial.
298 But with respect, none of that addressed the question of whether the first and second disclosures needed themselves to be public, assuming them to be “part of the working in public”. They could have been the subject of an express or implied confidentiality obligation.
299 Quaker put the submission that there was no challenge to his Honour’s findings as to the necessity for the trial(s) to be in public. But such references to trial(s) concerned trials taking place in and on equipment actually used in the mine(s). This is made apparent from his Honour’s reasons. This is no answer to the point concerning the lack of confidentiality concerning the first and second disclosures, which disclosures did not need to be in public.
300 Now we were taken to some observations of his Honour at [765], but they concerned explaining and justifying the third disclosure. But they are no answer to the lack of confidentiality concerning the first and second disclosures.
301 We would also uphold grounds 3 and 3A concerning the first and second disclosures.
302 We propose now to turn to the cross-appeal, although this must be dismissed given that the patents are invalid for lack of novelty.
THE CROSS-APPEAL
303 Quaker has raised two grounds on its cross-appeal.
304 As to the first ground, Quaker has contended that the primary judge erred in applying s 117(2)(b) of the Act by focusing on Fuchs’ subjective understanding of what the fluids supplied to Glencore and Yancoal would be used for, rather than on the objective question of Fuchs’ reason to believe, or what a reasonable person in Fuchs’ position would have believed.
305 At trial, Quaker’s case centred on allegations of indirect infringement made under ss 117(2)(b) and (c) of the Act. Those allegations only succeeded with respect to s 117(2)(b) and (c) in relation to Fuchs’ supplies to the Broadmeadow mine operated by BMA of a product developed by Fuchs at a high dye concentration suitable for HPFI detection. The ss 117(2)(b) and (c) cases failed with respect to leak detection product supplies to four mines, namely, the Ulan No. 3, Ulan West, Bulga, Oaky West mines, operated by Glencore, and to two mines, namely, the Ashton and Moolarben mines, operated by Yancoal.
306 Quaker’s first cross-appeal ground only concerns the primary judge’s failure to make s 117(2)(b) infringement findings with respect to the Glencore and Yancoal mines.
307 As to the second ground, Quaker has contended that the primary judge erred in his approach to the question of additional damages for Fuchs’ infringement concerning supplies to the Broadmeadow mine. It contends that his Honour treated as dispositive the fact that Fuchs had a reasonably arguable defence to infringement. But it was said that this was based on a misapplication of Oxworks Trading Pty Ltd v Gram Engineering Pty Ltd (2019) 154 IPR 215. It was said that there was no evidence that Fuchs contemplated any such defence at the time of supply. To the contrary, Quaker contends that the contemporaneous evidence showed that Fuchs thought its actions would infringe the patents and attempted to disguise its conduct from Quaker as a result.
Ground 1: section 117(2)(b)
308 Quaker contends that s 117(2)(b) enshrines an objective test which the primary judge failed to apply.
309 Section 117 relevantly provides:
(1) If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent.
(2) A reference in subsection (1) to the use of a product by a person is a reference to: …
(b) if the product is not a staple commercial product—any use of the product, if the supplier had reason to believe that the person would put it to that use;
…
310 Section 117(2)(b) directs attention to whether the supplier the subject of s 117(1) “had reason to believe” that the person to whom the product was supplied would use the product in a way which would infringe a patent. It is an objective test. We will address the nature of this objective test later.
311 Quaker submitted that the primary judge’s failure to apply an objective test was demonstrated by a series of related findings.
312 Quaker referred in particular to what the primary judge had stated at [780]:
2. “Reason to believe”
Said by Fuchs to be relevant to this issue in respect of each mine site is the question of product concentration. In broad terms Fuchs contended that there was a clear difference between low concentration products, supplied for leak detection, and high concentration products promoted as suitable for HPFI detection. But the context is Fuchs’ reason to believe that the products would be used in the patented method. The most direct way of addressing that issue is to examine whether the operator of the mine sites in question said that HPFI detection was the purpose for which it wanted to buy the product. Quaker submitted that the product for use in leak detection was in effect substitutable and the same product could be used for HPFI. As part of its defence, Fuchs submitted that a product supplied for the purpose of leak detection had a different and substantially higher [sic – lower] concentration of the dye in the fluid, it being the case that fluorescent dye had for many years been added and used for leak detection.
313 The primary judge also stated (at [787]):
Where a third party dye was used by Fuchs in respect of the relevant mines apart from Broadmeadow, Mr Knight’s evidence, which I accept, was that 8g of dye was added per 100L of Solcenic concentrate, 0.24g per 100L of Solcenic emulsion (containing 97% water), or 1g per 100L of Renolin mineral hydraulic oil. In the case of Broadmeadow, Fuchs added 180g of dye per 100L of Solcenic concentrate. In that case, Mr Knight’s evidence was to the effect that the treat rate had been selected to match the colour, light absorbance, light transmittance, and saturation in Solcenic of FluidSafe at Quaker’s recommended treat rate for HPFI detection. At least as regards Solcenic, I find that there is a clear difference between the treat rate adopted for third party dyes at Broadmeadow, developed as suitable for HPFI detection, and those at other relevant mines. The evidence does not go so far as to establish that the non-Broadmeadow Solcenic products could not be used for HPFI detection, but because of the stark difference in treat rates it cannot simply be assumed that they could. The question of whether Fuchs had reason to believe they would be put to that use thus falls to be determined by reference to what I have already described as the most direct evidence on that topic, being its communications with customers around the time of the supply.
314 But it is necessary to read these passages in the context of the whole of the reasons, in particular the structure of the reasoning in relation to s 117(2)(b).
315 At the commencement of the primary judge’s analysis at [780], his Honour recorded a submission made by Fuchs that it was relevant to have regard to the level of product concentration required respectively for leak detection (low concentration) and HPFI detection (high concentration). He also recorded a submission made by Quaker that the product used for leak detection was substitutable and the same product could be used for detecting HPFI.
316 The primary judge recorded that Quaker had provided to the Court a list which was said to identify requests made by mines to Fuchs for Fuchs to supply dye for HPFI and concluded that many of them were “no more than enquiries” ([783]) about the possibility of use of the dye, and that there were many instances where there was in any event no supply.
317 His Honour stated (at [781] to [783]):
Quaker provided a list or table in the proceedings of what it described as requests made to Fuchs for dye for HPFI. There were 44 such instances in Quaker’s document. Nine of the 44 were referable to BMA’s Broadmeadow mine site where, as I explain in more detail below, I find that Fuchs did have reason to believe that the product, not using the FluidSafe dye, would be used for HPFI.
Leaving aside Broadmeadow, I do not accept Quaker’s submission that where Fuchs supplied product containing fluorescent dye for leak detection it had reason to believe that the operator of the mine would use the product for HPFI detection. In my opinion, while aware of what occurred in relation to Broadmeadow, each supply is to be looked at on its own terms. In other words, hindsight should be put to one side and I would not accept that what occurred in relation to Broadmeadow showed that Fuchs had a propensity to make such supplies.
Many of the instances in Quaker’s document are not requests made to Fuchs for dye for HPFI but are no more than enquiries in circumstances where, as I find, the possibility of using fluorescent dye for HPFI detection was a matter of great interest at the time to those concerned with mine safety. Even where there were requests, in many instances such as the Xstrata (Glencore) mine site at Ravensworth it was not established that there was any supply by Fuchs of dyed fluids. In other instances although dyed fluids were supplied, the dyes were FluidSafe and it appeared to be accepted by Quaker that the supply by the patent holder of FluidSafe carried with it an implied licence to use the method in the Patents. I consider the correspondence relating to the specific mines relevant to these proceedings in more detail below.
318 The primary judge examined each of the 44 customer “requests” relied upon by Quaker, which it said were relevant to the question of “reason to believe” whether products supplied by Fuchs would be used for HPFI detection (see at [328], [421], [781] and [783]). Having reviewed the communications relevant to those “requests” and the cross-examinations which related to them, the primary judge found that (save for communications concerning the Broadmeadow mine) they did not support Quaker’s contention (at [783] and [790]); see also [811] to [823] (for the Glencore mines) and [824] to [834] (for the Yancoal mines).
319 His Honour accepted (at [784]) that Quaker’s FluidSafe (formerly Oil-Glo) dye could be used for both leak detection and HPFI detection, but that for HPFI detection, the dye had to be used in a higher concentration.
320 He accepted that Mr Stuart Knight, the deputy managing director of Fuchs, had that understanding. The primary judge did not accept (at [790]) Quaker’s contention that references to the supply of dyed product for leak detection should be taken as code for the supply of dyed product for HPFI detection. The primary judge also rejected (at [790]) Quaker’s submission that the references to leak detection in the documents in the tender bundle “constituted or contained a covert reference to HPFI detection”. His Honour found (at [791]) that “Fuchs was conscious of the possibility of infringing the Patents by its supplies and, Broadmeadow apart, took steps to communicate to the operators of the relevant mine sites that the product in question was not to be used for HPFI detection”.
321 His Honour also concluded (at [785] and [786]) that Quaker’s marketing material distinguished between the different uses based on concentration.
322 Having made these observations about the question of whether Fuchs “had reason to believe”, the primary judge then considered the question separately in relation to BMA concerning the Broadmeadow mine ([798] to [810]), Glencore concerning the Ulan No 3, Ulan West, Bulga and Oaky North mines ([811] to [823]) and Yancoal concerning the Ashton and Moolarben mines ([824] to [834]).
323 In relation to the Broadmeadow mine, the primary judge accepted (at [801]) that Fuchs “had reason to believe” that BMA would use the product in a way which would infringe a patent.
324 In relation to the supplies relevant to the Glencore and Yancoal operated mines, such supplies were not of a product with a high concentration of dye. His Honour did not accept that Fuchs “had reason to believe” that the recipients of the supplies relevant to those mines would put the product to an infringing use.
325 In relation to Glencore, his Honour said (at [812], [813] and [815]):
Quaker accepted that supplies to the Ulan No 3, Ulan West and Bulga mines were said to be for the purpose of “leak detection” but submitted that the Court should find that, despite such public statements, Fuchs had reason to believe that those mine sites would, if a suspected fluid injection occurred, use the products supplied by Fuchs in an infringing manner.
I do not accept that submission and I do not accept Quaker’s reading of the correspondence …
…
In my opinion it is unlikely that Glencore communicated with its supplier Fuchs by stating that it proposed to use a product supplied for one purpose, leak detection, but that in truth it intended to use the product for another purpose, HPFI. There was no plain evidence to this effect and the clear statements are to the effect that the supply was the purpose of leak detection. I decline to draw the inferences for which Quaker contended. It is to be recalled that HPFI related to the safety of employees.
326 Now Quaker’s principal complaint is that the primary judge’s reasons as a whole revealed that the primary judge treated the communications between Fuchs and its customers as determinative. Accordingly, Quaker complains that his Honour did not consider the issue objectively, in light of all of the circumstances required by s 117(2)(b).
327 We have already set out [780] and [787]. Quaker also referred to other passages of his Honour’s reasons at [813] to [815], [821] to [822], [832] and [834].
328 Further, Quaker submitted that the primary judge found that, where Fuchs supplied a product purportedly for one purpose, being leak detection as suggested in the communications with the relevant mines, it could have no reason to believe the mines might use the product for another purpose, being an infringing use. Quaker referred to [782], [787], [791], [812] to [813], [815], [821] and [832] of his Honour’s reasons.
329 Quaker also referred to the primary judge’s findings which addressed the subjective understanding of Fuchs or that of Mr Knight including (at [791] and [821]):
I find that Fuchs was conscious of the possibility of infringing the Patents by its supplies and, Broadmeadow apart, took steps to communicate to the operators of the relevant mine sites that the product in question was not to be used for HPFI detection. I do not infer from these references that Fuchs proceeded on the basis that the product having a concentration of fluorescent dye suitable for leak detection could be used for HPFI detection.
…
In relation to Mr Knight, I accept in particular his evidence that Fuchs did not support the HPFI dye methodology, that Fuchs was only providing the dye for HPFI where it was requested by the customer and that the only HPFI dye that Fuchs were supplying at that time, that is other than at Broadmeadow, was FluidSafe. I also accept Mr Knight’s evidence that he did not agree, by reference to an email of 18 December 2015, copied to him, that a Fuchs products [sic] containing a dye for leak detection purposes could also be capable of being used for HPFI detection. Mr Knight considered it clear that a dye for leak detection had a much lower concentration than a dye for HPFI detection.
330 In our view there was no error by the primary judge in considering whether the correspondence relied upon by Quaker established that Fuchs in fact believed that the recipient of the product would use the product in a way which would infringe a patent. That was a central feature of the case which Quaker had put. Accordingly, it is unsurprising that the primary judge addressed subjective understanding in detail given the focus which Quaker had given to the point in its submissions.
331 Further, the primary judge’s reasons at [780] do not establish that the primary judge applied a subjective rather than objective test. Because s 117(2)(b) directs attention to whether a supplier “had reason to believe” that the person to whom the product was supplied would use the product in a way which would infringe a patent, it is relevant to take into account what the recipient of the supplied product stated about the intended use of the product. Whether or not this is the “most direct way” of establishing that the supplier “had reason to believe” can be put to one side. All that the primary judge intended was to say that pre-supply statements made by a recipient of the supplied product that the product was to be used in a way which infringed the patent would be highly probative of whether the supplier “had reason to believe” that the recipient would so use the product. That proposition is correct.
332 Further, Quaker’s principal case at trial was that Fuchs both knew and intended that its products would be used for HPFI detection at various mine sites, and that the documents suggesting otherwise were somehow manufactured to provide false cover. The primary judge rejected that case on the facts. The primary judge’s reasoning, rather than involving any legal error, was responding to the case actually run by Quaker.
333 Indeed, we were provided with a copy of Quaker’s written closing submissions below on the question of infringement which ran to 49 pages. A cursory examination reveals heavy reliance by Quaker on Fuchs’ actual purpose, knowledge and conduct including its contemporaneous documents and communications; see [27], [51], [91], [92], [108] and [116] as examples. In our view his Honour addressed the case as forensically put by Quaker on s 117(2)(b), which was then rejected.
334 Further, in our view the analogies Quaker seeks to draw with cases such as Generic Health Pty Ltd v Otsuka Pharmaceutical Co Ltd (2013) 100 IPR 240 and AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 are inapposite.
335 In the present case, not only did Fuchs specify that the relevant leak detection products were not for use for HPFI detection and were not suitable for use for HPFI detection, but the relevant products were entirely different products from those sold as suitable for HPFI detection. The leak detection products sold by Fuchs had a dye concentration 22.5 times weaker than the products sold for HPFI detection. Unlike the position in Generic Health or AstraZeneca, there was no evidence that the Fuchs leak detection products, which had a low dye concentration, were capable of detecting high pressure fluid injections, and the primary judge (at [787]) concluded that “it cannot simply be assumed that they could”. Further, we are dealing here with different products (i.e. with different concentrations), rather than with the one product put to different uses.
336 Further, Quaker’s assertion that there was a possibility that a miner, faced with an injured fellow worker, might at that time grab a UV light and work the method of the invention (contrary to mine instructions in evidence to use the leak detection product only for leak detection) reflects the wrong legal test.
337 Further, in AstraZeneca the Full Court contrasted the trial judge’s finding that there was only a “risk”, with a factual finding that there was a reason to believe that people “would” undertake the relevant activity. The Full Court said (at [438] and [439]):
On the primary judge’s analysis of the evidence, AstraZeneca established that the generic parties were aware (or, objectively, should have been aware) that there was a risk that consumers would split the generic parties’ 20 mg tablets in order to save money. However, her Honour stopped short of holding that they had reason to believe that consumers would engage in such a practice.
It is difficult to draw any precise conclusions as to how widespread the practice of 20 mg tablet splitting might become (at the time of trial the generic parties’ products were not yet on sale) without knowing what developments might occur in the marketplace with respect to the pricing of both the generic parties’ 20 mg products and AstraZeneca’s 10 mg product. The more AstraZeneca’s 10 mg product costs relative to the generic parties’ 20 mg products, the more likely it is that consumers would buy and split the generic parties’ 20 mg products. However, in our view, contrary to the finding of the primary judge, the evidence established that the generic parties had reason to believe that some consumers would put the generic parties’ 20 mg products to an infringing use.
338 But the evidence in that case is far removed from the present case. Quaker has not even established that Fuchs’ leak detection product could be used for HPFI detection, let alone that people were in fact doing that. We note that in AstraZeneca there was considerable evidence that people were splitting tablets (see [435] and [436]).
339 We should make another point. We agree that Bennett J’s reasoning at [103] and [106] of Generic Health is not reflected in the reasons of the other members of the Full Court.
340 Emmett J said (at [35]):
The question is whether there were factual matters known to Generic Health that would lead a reasonable person to believe that the GH products would be put to an infringing use. It is not to the point that Generic Health, through its relevant officers, did not actually have such a belief. The question is whether there was material before the primary judge that could support a finding that a reasonable person in the position of Generic Health would have reason to hold such a belief.
341 Further, Greenwood J’s reasons (at [221] to [230]) reflect Emmett J’s approach.
342 We also note that French J in Collins v Northern Territory (2007) 161 FCR 549 at [64] to [66] said:
The words “reason to believe” in s 117(2)(b) have long standing statutory antecedents. They and similar formulae frequently condition the exercise of statutory powers and require at least, an objective basis for the relevant belief and, according to context, require actual belief: WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 at 185-186; 30 ALR 559 at 571 and authorities there cited. On the other hand the formula may be taken, according to its statutory context, to convey a requirement for an objective basis for belief without the necessity of actual belief: eg George v Rockett (1990) 170 CLR 104 at 112.
Where the words “reason to believe” condition a power they are used to ensure that the exercise of the power is justified by reference to objective facts and is not to be exercised simply upon unsupported belief. The same term in s 117(2)(b) defines a necessary condition of liability for contributory infringement in relation to the supply of non-staple commercial products. It could be construed as purely objective in the sense that there were factual matters known to the supplier which would lead a reasonable person to believe that the product would be put to an infringing use. An alternative construction would additionally require the supplier to actually believe that the person supplied would put the product to such a use. The analogous provision in § 271(c) of the Patents Act 1952 (US) is satisfied by actual knowledge without requiring reasonable grounds for the knowledge. Section 60(2) of the Patents Act 1977 (UK) would also be satisfied by actual knowledge without reasonable grounds. But it provides an alternative basis for liability, namely that “… it is obvious to a reasonable person in the circumstances that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom”.
To construe s 117(2)(b) as requiring actual knowledge supported by reasonable grounds would render the scope of liability for contributory infringement under Australian law narrower than that under United States or United Kingdom law. Unlike those jurisdictions, it would require both subjective belief and the objective basis for it to be proven. The better construction, consistent with the harmonisation purpose of the legislation, would appear to be objective. In the present case his Honour’s finding as to the Northern Territory’s reason to believe that ACOC would use the timber from the trees for the purpose of producing cypress oil appears to have been supported by reference to purely objective criteria. His finding in that respect is not in issue in this appeal. The preceding observations about the proper construction of the “reason to believe” requirement are therefore strictly obiter.
343 Bennett J in Generic Health said (at [106]):
The proper construction of s 117(2)(b) must be that there is a reasonable belief of a significant likelihood that a person will put a product to that use. This construction is assisted by the use of the words “reasonable belief”, rather than “knowledge”. A person may have a reasonable belief that an event will or would happen without having knowledge that the event will or would necessarily happen. A reasonable belief that an event would happen arises from a belief in the likelihood of that event. That likelihood must be significant. A belief that an event is of a low likelihood would amount to a reasonable belief that the event may happen. The word used by s 117(2)(b) is that that a person would put the product to that use.
344 In our view, her Honour’s reasoning reads into s 117(2)(b) words which do not appear in that provision. It states “any use of the product, if the supplier had reason to believe that the person would put it to that use”, not, as her Honour poses, “a reasonable belief of a significant likelihood that a person will put a product to that use”.
345 Perhaps her Honour’s conclusion in [106], in the light of [104] and [105], may be driven by considerations arising from Grimme Maschinenfabrik GmbH & Co KG v Scott (2010) 89 IPR 631 referred to by her Honour. But the equivalent section in the UK legislation, which was s 60(2) of the Patents Act 1977 (UK), provided that a person infringes a patent for an invention if he supplies or offers to supply:
… any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect …
346 That is a different standard than s 117(2)(b). In any event we do not need to linger on this aspect. We prefer the approach of the other members of the Court in Generic Health and also that of French J.
347 As we have indicated, the present case involves different products with different uses, not just a single product with multiple uses.
348 Further, this was not a case like AstraZeneca where the evidence established that consumers would use the generic parties’ 20 mg products for an infringing purpose in some cases under doctors’ instructions. Nor was it a case like Generic Health where the evidence established that aripiprazole had been used by a “not insignificant number of clinicians ... as a realistic and legitimate option to treat patients” including for the patented method; see Otsuka Pharmaceutical Co Ltd v Generic Health Pty Ltd (No 4) (2015) 113 IPR 191 at [246] and [247] per Yates J, with the discussion on appeal in Otsuka Pharmaceutical Co Ltd v Generic Health Pty Ltd (2016) 120 IPR 431 not being relevant.
349 Further, since 2015, Fuchs has supplied to the Glencore and Yancoal operated mines a number of fluid products which included fluorescent dye. The five products supplied, being four Solcenic water-based longwall fluid products and one Renolin hydraulic mineral oil product, by Fuchs to Glencore and Yancoal were expressly marketed for use for the purpose of detecting leaks in high pressure fluid lines of equipment used in mining operations. Leak detection serves an important safety function in mining operations since early detection will avoid catastrophic failure of fluid lines. Fluorescent dyes in high pressure fluids when combined with UV light are used to facilitate the identification of potentially dangerous leaks.
350 Consistently with this, an internal Ulan No. 3 (Glencore) document titled “Toolbox Talk” dated 2 April 2014 referred to by the primary judge (at [99]) stated:
To assist to reducing cost to the operation Fuch (sic) our oil supplier are introducing Fluoresceine LT dye into the hydraulic oil and solcenic fluid. This dye will assist in locating leaks.
…
• Similar to the dye used previously on the longwall (lower concentration), this dye CAN NOT be used for detecting fluid injections.
…
351 But we accept that his Honour did not expressly rely on this document in making relevant findings. Further, that document related to only one of Glencore’s mine sites being the Ulan underground mine. Further, the document’s status suggests that it was a draft and not promulgated to Glencore’s workers.
352 Further, the primary judge observed (at [787]) that whilst the evidence did not go so far as to establish that the leak detection products could not be used for HPFI detection, “because of the stark difference in treat rates it cannot simply be assumed that they could”.
353 Quaker’s submission that Mr Russell Smith, a longwall hydraulics consulting engineer who was called as an independent expert by Fuchs, accepted that in some circumstances a dye at a concentration appropriate for leak detection could be used as part of the claimed method is problematic. Mr Smith did not accept that Fuchs’ leak detection products, which had a low dye concentration, would be readily suitable for such a purpose.
354 Mr Smith was cross-examined and gave the following evidence:
Q: Now, you referred in your summary of your view on this topic a short while ago, Mr Smith, to the concentration of dyes used in fluids for leak detection not being sufficient for use in the method of the patents. Do you recall?
A: Not necessarily sufficient.
Q: Yes, not necessarily sufficient is an important qualification, isn’t it.
A: Yes.
Q: Because it may well be that a product which is a fluid that includes a fluorescent dye at a particular concentration that’s supplied for leak detection could also be capable of being used in a method for detecting a fluid injection injury; correct?
A: In some circumstances I think it would.
Q: And it would depend on, among other things, the concentration, the intensity of the UV light and the like.
A: And the nature of the injury.
Q: Thank you. So you’re not able to say, are you, categorically, that a product supplied for use in leak detection, including a particular concentration of dye would not be capable of being used in the method of the patents.
A: That is right.
355 Further, the primary judge, as he was entitled to do, accepted (at [821]) the evidence of Mr Roberts and Mr Knight, both of whom were cross-examined at the trial, including Mr Knight’s evidence that he did not agree that a dye for leak detection could also be capable of being used for HPFI detection.
356 His Honour was not persuaded that Fuchs had any “reason to believe” that, at the time products were supplied, they would be used for HPFI detection purposes. In reaching that conclusion, he found that the concentrations of dye required for HPFI detection and leak detection were very different. Indeed, the concentration of fluorescent dye in fluid provided by Fuchs for leak detection was 22.5 times less than the equivalent amount of FluidSafe that Quaker directed was suitable to create fluids for use in HPFI detection.
357 The evidence revealed that the concentration of fluorescent dye was significantly higher in products supplied and used for HPFI detection than for leak detection purposes. The primary judge found (at [787]) that there was a “clear difference” between the treat rate adopted as suitable for Fuchs’ Solcenic products used for HPFI detection at the Broadmeadow mine compared to those supplied to the Glencore and Yancoal mines for leak detection. The clear difference between HPFI and leak detection concentrations was reinforced by the fact that Quaker’s own marketing materials likewise distinguished between different uses based on concentrations (at [785] and [786]). The practical significance of the difference in dye concentration is clear. If the dye concentration is not sufficient to be detected under the skin once injected, the risk of a “false negative” arises, where a worker is believed not to have suffered an HPFI injury when in fact they have, which could have very serious safety and treatment consequences as his Honour said.
358 Although different uses could be based on different concentrations, since Fuchs had never tested whether its leak detection fluids were suitable for HPFI detection, the primary judge considered (at [787]) that the evidence did “not go so far as to establish that the non-Broadmeadow Solcenic products could not be used for HPFI detection, but because of the stark difference in treat rates it cannot simply be assumed that they could”.
359 We agree with his Honour that it is difficult to see how Fuchs could have “reason to believe” that a product would be used for a purpose where it has not been established that the product is realistically capable of use for that purpose.
360 Further, Quaker appeared to put a case that both Fuchs and Glencore had fabricated a self-serving paper trail, not only in communications between the two companies, but also in Fuchs’ and Glencore’s internal communications, including Glencore’s internal communications to its employees. Such a case had no substance to it and the primary judge rightly rejected it. Quaker’s theories were rejected by the primary judge (at [811] to [834]). No challenge has been made to such findings.
361 Further, to the extent Mr Knight’s subjective understanding was mentioned in the primary judge’s reasons, that was responsive to the way Quaker conducted the trial, which required the primary judge to make findings as to whether the evidence of Fuchs’ witnesses, namely, Mr Knight and Mr Roberts, on Fuchs’ communications with Glencore and Yancoal ought be accepted.
362 Generally, the primary judge did not just focus on any subjective belief of Fuchs, but rather considered a range of matters that bore on the question whether, considered objectively, a person in Fuchs’ position would have “reason to believe” its products would be put to an infringing use. That included the objective communications, including those from the mines.
363 The primary judge (at [787]) said that because the evidence did not go so far as to extinguish the possibility that leak detection products could be used for HPFI detection, the question whether Fuchs had “reason to believe” they would be used for HPFI purposes “thus falls to be determined by reference to what I have already described as the most direct evidence on that topic, being its communications with customers around the time of the supply”. So, the nature of Fuchs’ communications with customers played a pivotal role in determining whether a reasonable person in Fuchs’ shoes would (objectively) have reason to believe that the relevant products would be used for HPFI detection purposes. These communications were relevant to what a reasonable person in the position of Fuchs would objectively have understood from them. They concerned steps taken by Fuchs to communicate with the operators of the relevant mine sites that its products in question were not suitable to be used for HPFI detection, and confirmation by Fuchs’ customers that they would not use the relevant products for that purpose.
364 For the above reasons, in our view it has not been shown that the primary judge made any error.
365 But even if we were to have accepted that the primary judge erred in placing too much emphasis on subjective questions, or in not addressing the issue raised by s 117(2)(b) on an objective basis, his Honour’s ultimate conclusion is unlikely to have been any different. And we would, on the correct application of s 117(2)(b), have reached the same conclusion as the primary judge in any event.
366 The primary judge accepted that the concentration of dye for HPFI detection was significantly higher than for leak detection. In the case of the Broadmeadow mine, Fuchs used 22.5 times the amount of dye to develop the fluid as suitable for HPFI detection, as was used for leak detection. Whilst the evidence did not establish that the lower concentration products could not be used for HPFI detection, the primary judge was not prepared to assume that they could in light of the different concentrations used. As Fuchs submitted, a reasonable person would not assume that a mine, with numerous employees, would use for HPFI detection a product expressly sold as being unsuitable for that purpose, in circumstances where if a lower concentration dye product were used for HPFI, and no injury were detected (because of the weak dye) and the worker did not receive proper medical attention, the worker could suffer very serious illness, including amputation or death. Again as Fuchs submitted, no mine would use a product sold only for leak detection for the purposes of medical diagnosis, and the evidence did not establish that any mine contemplated such a course.
367 Accordingly, if the primary judge erred in the way Quaker contended, we would in any event have reached the same conclusion. This ground must be rejected.
Ground 2: additional damages
368 This ground of cross-appeal concerns the question of whether the primary judge erred in his approach to the question of additional damages concerning Fuchs’ infringement for supplies to the Broadmeadow mine.
369 Section 122(1A) of the Act provides:
(1A) A court may include an additional amount in an assessment of damages for an infringement of a patent, if the court considers it appropriate to do so having regard to:
(a) the flagrancy of the infringement; and
(b) the need to deter similar infringements of patents; and
(c) the conduct of the party that infringed the patent that occurred:
(i) after the act constituting the infringement; or
(ii) after that party was informed that it had allegedly infringed the patent; and
(d) any benefit shown to have accrued to that party because of the infringement; and
(e) all other relevant matters.
370 The award of additional damages pursuant to s 122(1A) involves the exercise of discretion. To succeed on this ground, Quaker must establish an error of the type identified in House v The King (1936) 55 CLR 499 at 504 and 505.
371 The discretionary nature of the question whether to award additional damages, by reference to the various factors articulated in s 122(1A), was set out by the primary judge at [847] to [855].
372 The primary judge cited (at [848]) Oxworks for the proposition that where an alleged infringer has a reasonably arguable defence to the allegation of infringement based on its construction of the claims of the patent and continues to pursue its own commercial interests in the face of allegations of infringement that could objectively be considered to be reasonably defensible, that is a strong factor telling against the award of additional damages.
373 Now Quaker based its claim for additional damages on three matters. The first matter was that Fuchs’ infringing supplies to the Broadmeadow mine were made in the knowledge that its conduct infringed the patents. The second matter was that Fuchs’ supplies to Glencore and Yancoal for leak detection were a “front” intended to conceal its infringing conduct. And the third matter concerned what was said to be an improper claim by Fuchs of privilege over documents relating to its dealings with BMA and Glencore.
374 The second of these matters went nowhere in light of the primary judge’s factual findings to the contrary.
375 The primary judge found that the claim for additional damages was only potentially maintainable in respect of the supplies to the Broadmeadow mine, which was the only infringement found by his Honour. But he found that Fuchs’ supplies to the Broadmeadow mine were “reasonably defensible, objectively considered” (at [851]). The primary judge found that Fuchs had a reasonably arguable defence to the allegation of infringement based on its construction of the claims.
376 He also took into account matters which weighed against Fuchs, and found that it had “attempted to disguise its potential infringement with respect to Broadmeadow so as to make it less likely to be discovered in any subsequent litigation involved in the Patents” (at [851]). Other matters which reflected adversely on Fuchs were also set out by the primary judge.
377 His Honour also took into consideration the question of Fuchs’ conduct in claiming privilege over documents concerning supplies to the Broadmeadow mine, and found that whilst such claims ought not to have been made, he did not draw an inference that Fuchs claimed privilege in documents that it knew were not privileged ([851]), and Fuchs’ conduct did not “ground a liability to additional damages” (at [854]).
378 Ultimately, his Honour found that it was not appropriate to award additional damages. But he did record various findings which could have supported a conclusion that an award of additional damages was appropriate (at [851]).
379 He referred to Mr Knight’s view that at the time that Fuchs supplied product including a fluorescent dye to the Broadmeadow mine for use in HPFI detection, the supply would be in violation of the patents in the absence of a licence from the owner of the patents for such supply.
380 Mr Knight under cross-examination gave the following evidence:
And in particular on your understanding – Quaker did not have a licence to use the patent from TTAAS; correct?---To my knowledge – they did not.
Yes. It follows – does it not – that it was your view at that time – that is the date of this email, 26 March 2013 – that the supply of a product including fluorescent dye for use in [HPFI] detection without a licence from the owner of the patent would be in violation of the patent?---Yes; that’s correct.
And that remained your view – did it not – subsequently, when Fuchs supplied product including a fluorescent dye to Broadmeadow mine for use in [HPFI] detection?---Yes.
381 Further, he referred to the fact that Fuchs attempted to disguise its potential infringement with respect to the Broadmeadow mine so as to make it less likely to be discovered in any subsequent litigation involving the patents, including by ensuring that requests specified that the dye was sought for leak detection when the customer had indicated that it wanted the dye for HPFI detection.
382 But notwithstanding these findings, as we have said his Honour considered that Fuchs’ supply to the Broadmeadow mine was reasonably defensible because Fuchs “had a reasonably arguable defence to the allegation of infringement based on its construction of the claims of the patent” (at [851]). This was apparently based on his Honour’s understanding of Oxworks.
383 His Honour stated (at [848]) that the Full Court’s decision made it clear:
[T]hat where an alleged infringer had a reasonably arguable defence to the allegation of infringement based on its construction of the claims of the patent, a strong factor telling against the award of additional damages is that the decision of the alleged infringer to continue to pursue its own commercial interests in the face of allegation of infringement could objectively be considered to be reasonably defensible.
384 We should say something about Oxworks.
385 The patent in Oxworks concerned a plinth for use in fencing. The patent was owned by Gram Engineering Pty Ltd. At first instance, it had been concluded that a plinth manufactured by Oxworks infringed the patent and that Oxworks was liable to pay additional damages. On appeal, Oxworks contended that it had a view, at the time of infringement, that its plinth did not infringe Gram’s patent. It was contended that this view was reasonable, it being based on a reasonable construction of the claims made in the patent.
386 The Full Court (at [67] and [68]) referred to Zetco Pty Ltd v Austworld Commodities Pty Ltd (No 2) [2011] FCA 848 at [267] and [268] and Industrial Galvanizers Corporation Pty Ltd v Safe Direction Pty Ltd (2018) 135 IPR 220 at [132] and [133]. The Full Court then stated (at [69], [72] and [73]):
The authorities show that the reasonableness of arguments as to why there was no infringement is a relevant factor to take into account in considering whether the infringement was “flagrant” in the sense that word is used in s 122(1A) of the Patents Act. “Flagrant” in ordinary usage connotes conduct which could be described as “glaring, notorious, scandalous” (Oxford English Dictionary) …
…
More than copying is required to enliven the application of s 122(1A). Patent infringement may occur whether or not there is copying. It is not illegitimate, or flagrant, for a competitor to examine the disclosure of a patent and to attempt to work around the monopoly claimed in the claims. …
A competitor may take the patent, examine the scope of the claims, and endeavour to produce something that does not fall within them. Often, infringement cases are determined by having regard to contestable constructions of the claims. The fact that an alleged infringer fails to defend its reasonably arguable view as to the correct construction of the claim, and continues to produce infringing products in the face of that view, may result in an award for damages, but would not of itself trigger an entitlement to additional damages within s 122(1A) of the Patents Act.
387 The Full Court accepted that Oxworks’ non-infringement argument, based on its construction of the claims in the patent, was reasonably arguable. It concluded (at [77]):
In the present case it is apparent from the content of Mr Hosking’s email of 29 May 2017 that, as at that date, a non-infringement argument addressing the “formed from sheet material” integer of claim 1 was contemplated. As may be apparent from the reasons set out in addressing grounds 1 and 2 of the present appeal, whilst that argument has been resolved in favour of Gram, we are satisfied that the non-infringement contention based on this integer was reasonably arguable. In this instance this weighs heavily against an award of additional damages. It diminishes the force of the submission that the act of copying was flagrant, because it provides a legal basis for Oxworks to pursue that conduct, and it provides an explanation for the decision on the part of Oxworks to continue making and selling the Oxworks plinth after the cease and desist letter. While giving great deference to the discretionary nature of the decision, when the reasonableness of the arguments against infringement are taken into account, we do not think that the circumstances warrant the award of additional damages under s 122(1A) of the Patents Act. Accordingly, the first basis upon which this ground of appeal is advanced is accepted.
388 Quaker says the principle which emerges from Oxworks is that an infringer may defend a claim for additional damages where it has a reasonably arguable defence of infringement based on a construction of the claims which the infringer had in contemplation at the time of its infringing conduct.
389 Quaker says that given that the primary judge found (at [851]) that Fuchs was aware at the time of its supply to the Broadmeadow mine that a product including fluorescent dye for use in HPFI detection, without the licence of the patent owner, would fall within the scope of the claims of the patents, Fuchs cannot avail itself of the benefit of the Oxworks principle since at the time it made its supplies to the Broadmeadow mine it knew it was infringing the patents. Accordingly, Quaker says that the primary judge proceeded on an incorrect understanding of Oxworks.
390 Quaker’s argument is that the Oxworks principle can only be utilised if at the time of the infringing supply the supplier considers that, by reason of its construction of the claims of the patent, its conduct does not fall within the scope of the patent.
391 But Fuchs counters that well before the infringing supplies to the Broadmeadow mine which commenced in August 2015, Fuchs held the view from at least 30 July 2014 that both patents were invalid.
392 Fuchs says that the primary judge recorded (at [427]) the evidence at trial to this effect, which included an internal Fuchs’ email from Mr Pearce to Mr Knight dated 30 July 2014 which demonstrated Fuchs’ awareness that Quaker itself considered the patents were invalid. We interpolate that Quaker itself had originally attacked the validity of the patents before later acquiring them. Further, it was pointed out that on 3 December 2015 Fuchs had requested re-examination of both patents in the Patent Office. This was days before BMA renewed a request for information from Fuchs regarding Solcenic GM20 and the use of dye for safety reasons and more than 6 months before Fuchs commenced its supply of its Solcenic GM20 LD product to the Broadmeadow mine in July 2016.
393 Further, Fuchs points out that consistently with its view that the patents were invalid, Fuchs filed a cross-claim for invalidity in the proceeding before the primary judge.
394 Further, Fuchs says that Oxworks itself makes clear that whilst in that case the relevant matter was the respondent’s belief its product did not fall within the scope of the claims, the same consideration arises where the respondent believes the patent to be invalid. We agree with that last proposition.
395 We note that in Zetco and Industrial Galvanizers, the respondent’s reliance on a reasonably arguable defence, albeit unsuccessful, of invalidity was significant in finding that an award of additional damages was not appropriate. As Bennett J noted in Zetco, “an unsuccessful defence of invalidity is not of itself sufficient to warrant the award of additional damages” (at [268]). Burley J referred to this passage in Industrial Galvanizers at [131] and [132].
396 But we agree with Quaker that it is not correct that for an extended period of time Fuchs believed that the patents were invalid, including before the supply to the Broadmeadow mine, and that this view continued until trial.
397 There were three items referred to by Fuchs in support of that proposition, but these did not assist Fuchs.
398 First, the email dated 30 July 2014 concerned Quaker’s position as to the validity of the patents, not Fuchs’ position. It is not evidence of Fuchs’ state of mind.
399 Second, even though Fuchs sought re-examination of the patents, that does not prove anything about Fuchs’ state of mind as to whether such request would succeed; no document was discovered or evidence led by Fuchs regarding any advice it received on this point. Further, by the time of the supply to the Broadmeadow mine, Fuchs knew that the standard patent had been granted.
400 Third, although Quaker did not cross-examine Mr Knight on Fuchs’ belief from at least 30 July 2014 that the patents were invalid, Mr Knight did not give any evidence in his affidavits as to his or Fuchs’ state of mind on the issue. Contrastingly, Mr Knight did make it clear in cross-examination that he thought that Fuchs’ supply at the Broadmeadow mine would infringe the standard patent. Moreover, he did not suggest that he thought that the standard patent was invalid. Indeed, his acceptance of such infringing conduct was contrary to such a view. We have set out some of his evidence earlier.
401 In summary, there is no evidence to establish that Fuchs considered the patents to be invalid at the time of its supply to the Broadmeadow mine, or otherwise considered that it had a reasonably arguable defence to infringement at that time.
402 But we do not need to elaborate further on these matters as there is another difficulty with his Honour’s reasons that justifies setting aside his ruling on this aspect.
403 The error by the primary judge in the present case was to focus on the reasonableness of the defence in the proceeding before his Honour as opposed to whether, at the time of relevant infringing conduct, Fuchs had a reasonably arguable defence which was relevant to its conduct and the question whether an award of additional damages was appropriate.
404 This is exposed in the first two sentences of [851] where his Honour said:
I consider that Fuchs’ supply to the Broadmeadow site was reasonably defensible, objectively considered. Fuchs had a reasonably arguable defence to the allegation of infringement based on its construction of the claims of the patent.
405 Now Fuchs tries to explain away this passage by saying that the primary judge took account of whether, at the time of trial Fuchs had a reasonably arguable defence based on construction of the claims in respect of invalidity. But that is not what his Honour meant. The reference to “construction of the claims” related to a defence to infringement, not a defence based on invalidity. But in any event, the existence of a defence at trial is not what was seen in Oxworks (at [66]) as “a strong factor telling against award of additional damages” (cf [848]). As the reasoning in Oxworks shows, it is the state of mind of the infringer at the time of the infringement that is relevant in this context. Of course, the existence of a defence at trial may be another relevant factor, but at this point of his Honour’s reasons he was purporting to deal with Oxworks.
406 In our view his Honour’s approach displayed a House v The King error.
407 The parties submitted that the Court was in a position to re-exercise the discretion on appeal. In this regard, Fuchs made a submission that there was material before the primary judge, which had not been referred to, which furnished a basis for concluding that Fuchs did hold a view that it had a reasonably arguable defence at the time of infringement. But in circumstances where the appeal should be allowed, it is preferable not to embark on a fact intensive analysis to express a view as to whether, if the appeal had not been allowed, an award of additional damages under s 122(1A) would have been appropriate.
Conclusion
408 For the foregoing reasons, the appeal should be allowed and the cross-appeal dismissed. We will make orders to reflect our principal conclusions and otherwise give the parties an opportunity to make submissions on any necessary consequential orders and on costs.
I certify that the preceding four hundred and eight (408) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Beach, Moshinsky and Thawley. |
