FEDERAL COURT OF AUSTRALIA

Gambro Pty Ltd v Fresenius Medical Care South East Asia Pty Ltd [1999]

FCA 1848

PATENTS – amendment – disclosure – whether claims beyond matters disclosed in original specification – whether invention is sufficiently described – whether clear and succinct – whether fairly based – discretion – amendment sought after commencement of infringement proceeding – whether undue delay – whether seeking to maintain claims allegedly known to be unsustainable – whether disclosure to the Court of reasons for amendment – whether Gambro knew claim was invalid and if so the effect of this on the Court’s exercise of discretion

Patents Act 1990 (Cth) ss 40, 102, 105

Patents Act 1949 (UK)

Ethyl Corporation’s Patent [1972] RPC 169 cited

Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (No 3) (1997) AIPC 91-366 discussed

Societe des Usines Chimiques Rhone Poulenc v Commissioner of Patents (1958) 100 CLR 5 cited

Re Mond Nickel Company Ltd’s Patent [1956] RPC 189 discussed

F Hoffman-La Roche & Co AG v Commissioner of Patents (1971) 123 CLR 529 discussed

Decor Corporation Pty Ltd v Dart Industries Inc (1988) 13 IPR 385 discussed

Smith Kline & French Laboratories Ltd  v Evans Medical Ltd [1989] 1 FSR 561 discussed

Hsiung’s Patent [1992] RPC 497 distinguished

Petrolite Holings Inc v Dyno Oil Field Chemicals UK Ltd [1998] FSR cited

Mabuchi Motor KK’s Patents [1996] RPC 387 cited

Root Quality Pty Ltd v Root Control Technologies Pty Ltd (1998) 44 IPR 113

GAMBRO PTY LIMITED v

FRESENIUS MEDICAL CARE SOUTH EAST ASIA PTY LIMITED & ORS

NG 474 OF 1997

TAMBERLIN J

SYDNEY

23 DECEMBER 1999

REASONS FOR JUDGMENT

1                     This proceeding is an application by Notice of Motion to amend a patent which embodies a system for preparing fluid intended for medical procedures such as hemodialysis, which was published in Australia on 29 March 1990.

2                     The following brief background is taken from the affidavit of Mr Carl Reitz who is the Group Patent Counsel for the Gambro group of companies.  He says that one of the core areas of Gambro’s business is research, design and development of blood treatment procedures, together with the manufacture and sale of products used in the treatment of patients suffering from acute and chronic kidney failure.  Included in the products which Gambo manufactures are machines for hemodialysis, hemofiltration and other forms of dialysis, associated components, and disposable products for such equipment.

3                     The process of dialysis involves the transport of solutes across a semi-permeable membrane.  In hemodialysis, the blood of a patient suffering from impaired kidney function is conducted along one side of a semi-permeable membrane in a dialyser or artificial kidney, at the same time as dialysis fluid is conducted along the other side of the same membrane. The toxins or waste substances are removed from the patient’s blood by diffusion to the dialysis fluid through the semi-permeable membrane.  Hemodialysis, hemofiltration and hemodiafiltration are all procedures for treating patients by treating their blood externally to the patient, and this is referred to as extracorporeal treatment.

4                     Hemodiaylsis requires an isotonic fluid (dialysis fluid) into which the impurities in the patient’s blood diffuse.  Hemofiltration requires a sterile isotonic replacement fluid to replace the volume of filtrates removed from the patient’s blood during the procedure.  Hemodiafiltration is a mixture or hybrid of hemodialysis and hemofiltration and requires both dialysis fluid and sterile replacement fluid. 

5                     There are two essential elements which go to make up dialysis fluid.  The first element consists of electrolytes, which must be provided at the same concentration as those in the blood so as not to deplete them from the blood.  The second is a chemical buffer system which must be provided so that the acid balance of the blood is corrected by the treatment.  To achieve this result both acetate and bicarbonate buffers are used extensively in hemodialysis solutions.  The concentrates for hemodialysis comprise solutions which are almost saturated, and which were developed with a view to reducing the volume of solutions for handling and storage, and to substantially increasing their shelf life.  The dialysis machine dilutes these concentrates to an isotonic level at the patient’s bedside.  This means that the solution contains just enough salt to prevent the destruction of the red blood corpuscles when it is added to the blood.  Acetate buffered concentrates allow for the storage of the electrolytes and the buffer in the same container.  Around five litres of concentrate are needed for a single treatment.  Bicarbonate buffered concentrates must be stored in two separate containers as the bicarbonate will react with certain electrolytes if they are put together to form a precipitate.  The solution of electrolytes in bicarbonate buffered solutions is referred to as the “A” or “Acid” component.  The other component, which is be referred to as the “B” component, contains the bicarbonate buffer and approximately nine litres is required in addition to five litres of “A” component for a single treatment.

6                     Preparation of the “B” component prior to about 1986, entailed manual mixing of bicarbonate powder with water to produce a canister of solution.  This solution was then transported to the point of treatment in ten litre canisters.  In 1986 Gambro introduced a pre-mix “B” component in ten litre containers which alleviated the need for hospitals to mix the solution on site.  This liquid “B” concentrate was far more convenient but had the difficulty of being more susceptible to bacterial contamination. 

7                     The invention which is the subject of the present patent (“the invention”) was designed to overcome the numerous difficulties associated with the preparation of these dialysis fluids.  The difficulties included the storage space necessary and the occupational safety issues relating to the carrying by hospital staff of ten litre containers.  The invention also led to the elimination of the problem of bacterial contamination.

8                     These advantageous results are provided by producing a supply of sodium bicarbonate concentrate solution “on line”, of a constant concentration, from bicarbonate powder during the course of the treatment and for the entire duration of the treatment. The concentrate solution then is combined with water and diluted “A” component during the treatment to produce a constant supply of isotonic dialysis fluid.

Brief history of the patent

9                     The invention was first conceived and reduced to practice by the inventors, named on the Patent, during research and development by Gambro in Sweden over several years between 1984 and 1988.  Four applications were filed with the Swedish Patent Office, and on 28 February 1992 it issued a Notice of Intention to Grant in relation to the second application.  Some minor amendments were made and the second Swedish application proceeded to grant without opposition on 24 September 1992.  A Patent Application was prepared in the United States and issued from the Unites States Patent Office without objection on 15 November 1988.  Gambro has also applied for and been granted patents in a number of other countries.

10                  An application was made in Australia on 5 February 1988.  The Australian Patent Attorneys for Gambro, Watermark, informed them that the application had been accepted and the Australian patent ultimately issued on 29 March 1990 in accordance with the redrafted claims.

11                  During the above period a European Patent Application was lodged by Gambro covering ten countries.  This was filed on 21 December 1987.  The application was duly published on 27 August 1988 and the patent was granted on 15 July 1992.  In the ensuing period for opposition, nine oppositions were entered.  The opposition hearing was set down for an oral hearing on 22 September 1994 at which a tenth opponent intervened.  The European Patent Office (“the EPO”) issued a written decision on 31 October 1994.  The Opposition Division of the EPO found that the formal objections raised by some opponents against the granted patent were not of consequence, and it decided that the claims under the European patent were novel.  The Division, however, decided that the patent did not make the requisite inventive step having regard to the state of prior art.  Grounds of appeal were filed on 10 March 1995. During the following six months, grounds of opposition were filed by a number of opponents and, in response, on 26 January 1996, Gambro filed an answer together with amendments to the main claims.  The amendments submitted were intended to limit the field of the invention in the main claims from “a medical procedure” to “hemodialysis, hemofiltration and hemodiafiltration”.  The matter was heard by the Appeal Division in Europe and notice of the decision was given on 18 March 1997, although written reasons for the Appeal Division’s decision were not furnished to Mr Reitz until 6 June 1997.  The decision was that the European patent was invalid for want of an inventive step.

Background to present proceedings

12                  Mr Reitz of Gambro said that he first became aware of the activities of the respondent (“Fresenius”) in Australia by a letter dated 5 August 1996 from the first applicant, which is the Australian subsidiary of Gambro AB.  He said that on no occasion prior to this time did he have cause to consider the validity or otherwise of the Australian patent. After becoming aware of the activity he sought legal advice and on 19 June 1997 an Application and Statement of Claim were filed in the Federal Court seeking a declaration that Fresenius had infringed the Gambro patent by selling, hiring or otherwise disposing of dialysis machines made in accordance with the patent, together with articles containing the concentrate in powder form made in accordance with the patent.  The claims also related to other matters covered by the patent.  Relief was sought by way of injunctive relief and enquiry as to damages.  The claims were formulated in the Statement of Claim.  A Defence and Cross-claim were filed on 2 February 1998 with the Cross-claim alleging invalidity on the grounds of lack of novelty and lack of inventive step.

13                  An application was made by Gambro on 12 December 1997 by Notice of Motion to amend the patent.  On 23 December 1997 the Court ordered that the Notice of Motion to amend the patent should be heard separately from and prior to the hearing of the infringement proceedings.

Application to amend

14                  The application to amend was filed on 12 December 1997.  It was later amended on 18 December of that year. It has been varied a number of times since that date, and the final amendment was by notice of motion filed in Court on 30 September 1999.

15                  Although a large number of amendments are sought, it is not necessary to set out details of all amendments in dispute.  It will suffice, for present purposes, to set out the proposed amendments to claims 1 and 4 and to later deal with individual amendments which raise further issues.

The Specification

16                  The specification is entitled: “A SYSTEM FOR PREPARING A FLUID INTENDED FOR A MEDICAL PROCEDURE BY MIXING AT LEAST ONE CONCENTRATE IN POWDER FORM WITH WATER AND A CARTRIDGE INTENDED TO BE USED IN SAID SYSTEM.”

17                  The specification firstly describes the field of the invention which I have outlined to earlier and also sets out the background to the invention.  There is then a summary of the invention followed by a brief description of the drawings.  The nature of the drawings is described as follows:

“FIGS. 1-4  illustrate four alternative embodiments of the system in accordance with the present innvention [sic] for preparing a fluid for a medical procedure by mixing of a concentrate in powder form with water.

FIG. 5  illustrates a further alternative arrangement for the system of the present invention in which the fluid is prepared starting with one concentrate in powder form and a second concentrate in liquid form.

FIG. 6  illustrates a still further arrangement for the system in accordance with the present invention which again utilizes a concentrate in powder form and a concentrate in liquid form, the system of FIG. 6 being particularly adapted for use in connection with a hemodialysis-type of treatment.

FIG. 7  illustrates a cartridge intended to be used in any of the alternative system arrangements shown in FIGS. 1-6, the cartridge being shown mounted in a holder therefor.

FIG. 8 illustrates a still further arrangement for the system in accordance with the present invention in which two different concentrates in powder form are utilised in connection with a further concentrate in liquid form for preparing a fluid for a medical procedure.”  (Emphasis added)

18                  There is then a description of the preferred embodiments to which specific reference will be made when considering the objections to the amendments.  The claims defining the invention are then set out, with proposed amendments to the claim noted in the form of notations and deletions in handwriting.

19                  The variations to claims 1-4 are as follows (handwritten additions are shown in upper case and deletions are shown as strike-outs):

“1.       A system for preparing a DIALYIS OR REPLACEMENT fluid for a medical procedure OR A COMPONENT THEREOF by mixing of at least one concentrate in powder form with water, said system comprising:

            a source of water;

            a vessel for containing a POWDER concentrate in powder form;

            first fluid conducting means having a first end communicating with said source of water for withdrawing water from said source of water, and a second end for delivering a prepared solution DIALYSIS OR REPLACEMENT FLUID OR COMPONENT FLUID THEREOF;

            second fluid conducting means communicating with said source of water AND with an inlet for introducing water from said source if water into said vessel to THEREBY produce a concentrate fluid SOLUTION containing dissolved powder concentrate in water;

            third fluid conducting means communicating with an outlet of said vessel and with a mixing point LOCATED in said first fluid conducting means intermediate said first and second ends for conducting said concentrate fluid SOLUTION from said vessel into said first fluid conducting means WHERE IT IS to be mixed with fluid being conducted through said first fluid conducting means to thereby produce a THE prepared solution FLUID in said first fluid conducting means for delivery to said second end of said first fluid conducting means;

            measuring means LOCATED in said first fluid conducting means downstream of said mixing point for measuring the composition of the prepared FLUID solution obtained by mixing of said concentrate fluid and water in said first fluid conducting means ; and

            flow regulating means LOCATED in said third fluid conducting means AND BEING responsive to said measuring means for controlling the flow of said concentrate fluid SOLUTION from said vessel.”

…

4.         A system for preparing a DIALYSIS OR REPLACEMENT fluid for a medical procedure OR A COMPONENT FLUID THEREOF by mixing of at least one concentrate in powder form with water, said system comprising:

            a source of water;

            a vessel for containing a POWDER concentrate in powder form, said vessel including an inlet at the top thereof and an outlet at the bottom thereof;

            first fluid conducting means having a first end communicating with said source of water for withdrawing water from said source of water, and a second end for delivering a prepared solution FLUID;

            second fluid conducting means communicating with said source of water and with said inlet of said vessel for introducing water from said source of water into the top of said vessel, to produce WHEREBY a concentrate SOLUTION fluid containing dissolved power concentrate in water IS PRODUCED IN THE VESSEL; and

            third fluid conducting means communicating with said outlet of said vessel and with a mixing point LOCATED in said first fluid conducting means intermediate said first and second means ENDS for conducting said concentrate fluid SOLUTION  from the bottom of said vessel into said first fluid conducting means to be WHERE IT IS mixed with fluid being conducted through said first fluid conducting means to thereby produce a THE prepared FLUID, solution in said first fluid conducting means for delivery to said second end of said first fluid conducting means, whereby water is conducted through said vessel from the top thereof to th [sic] bottom thereof  to thereby maintain a WHEREIN THE SYSTEM IS ARRANGED SUCH THAT A relatively constant concentration level of dissolved powder concentrate IS MAINTAINED in said third fluid conducting means BY FLUID BEING CONDUCTED THROUGH SAID VESSEL FROM ITS TOP TO ITS BOTTOM.”

The Patents Act 1990  (Cth) (“the Act”)

20                  The power of the Court to direct by order amendments is conferred by s 105 of the Act which provides:

“(1)     In any relevant proceedings in relation to a patent, the court may, on the application of the patentee, by order direct the amendment of the patent, the patent request, or the complete specification in the manner specified in the order.

…

(4)       A court is not to direct an amendment that is not allowable under section 102.”

21                  There is a mandate in s 105(4) above to comply with s 102 which provides as follows:

“(1)     An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim matter not in substance disclosed in the specification as filed.

(2)       An amendment of a complete specification is not allowable after the specification has been accepted if, as a result of the amendment:

(a)       a claim of the specification would not in substance fall within the scope of the claims of the specification before amendment; or

(b)       the specification would not comply with subsection 40(2) or (3).

(3)       This section does not apply to an amendment for the purpose of correcting a clerical error or an obvious mistake made in, or in relation to, a complete specification.” (Emphasis added)

22                  There is a further mandate in s 102(2)(b) above to comply with s 40(2) and (3) of the Act which provide as follows:

“(2)     A complete specification must:

(a)       describe the invention fully, including the best method known to the applicant of performing the invention; and

(b)       … end with a claim or claims defining the invention;

            …

(3)       The claim or claims must be clear and succinct and fairly based on the matter described in the specification.” (Emphasis added)

Notice and advertisement

23                  As required by s 105(3) of the Act, Gambro gave notice to the Commissioner of the proposed amendments on 30 September 1997 and provided further details as requested by the Commissioner on 20 October 1997.  On 24 October 1997 the Commissioner gave notice that he did not intend to oppose the amendments and they were duly advertised on 11 August 1998.  In addition to Fresenius, two other parties gave notice of intention to oppose but their opposition has been discontinued.

Opposition

24                  The opposition to the amendments is essentially based on three grounds.  The first ground is that the amendments are not allowable under s 102 of the Act because as a consequence of the amendments, the specification would claim matters not in substance disclosed in the specification as filed, and that also, as a result of the amendment, certain of the claims would not in substance fall within the scope of the claims of the specification before amendment.  Second, it is submitted that as a result of the amendments the specification would not comply with subs 40(2) or (3) of the Act because each of the claims would not define the invention, would not be clear and succinct and would not be fairly based on the matter described in the specification.  The third ground for opposition is that the amendments should be refused in the exercise of the Court’s discretion because: (i) Gambro has been guilty of undue delay; (ii) Gambro has maintained broad claims which it knew it could not sustain; (iii) Gambro has commenced infringement proceedings against Fresenius on an unamended claim; and (iv) Gambro has not made full disclosure to the Court as to the reasons for the amendments.  In relation to this latter contention, it is claimed that Gambro was aware that at least claim 4 may be invalid for want of novelty, and that the misleading impression was given in Gambro’s evidence that Gambro had always believed that the patent was valid on all grounds when in fact this was not the case.

Relevant principles

25                  It is a well settled approach that the requirements of s 102 should generally be given a liberal construction. This is said to be because there is a strong public interest that inventive genius should be encouraged: see Ethyl Corporation’s Patent [1972] RPC 169 per Salmon LJ.  In that case Cross LJ said that the equivalent provision of the Patents Act (1949) (UK)using the expression “matter not in substance disclosed”, should be interpreted in “a broad common sense way”; and Lord Denning MR in the same case agreed that a liberal approach was required so as to permit any fair amendment which had previously been disclosed.  The requirement of substantial disclosure is closely similar to the requirement that a claim must be “fairly based” on matter disclosed in a specification: see Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (No 3) (1997) AIPC 91-366 at 39,781-2 per Sundberg J. 

26                  The requirement that a claim must be “fairly based” on a matter described in the specification is not limited to cases where the subject matter at the later application has been actually claimed in the earlier application.  Another helpful way of expressing the test is that there must be “a real and reasonably clear disclosure”: see Fullagar J in Societe des Usines Chimiques Rhone-Poulenc v Commissioner of Patents (1958) 100 CLR 5 at 11. 

27                  A further approach to the question of substantial disclosure or fair basis is to pose the three questions framed by Lloyd-Jacobs J in Re Mond Nickel Company Ltd’s Patent [1956] RPC 189 at 184 in these terms:

(1)       Is the alleged invention as claimed broadly (ie in a general sense) described in the provisional specification?

(2)               Is there anything in the provisional specification which is inconsistent with the alleged invention as claimed?

(3)               Does the claim include as a characteristic of the invention a feature as to which the basic application is wholly silent?

28                  Although by no means a universal prescription, this approach was seen as helpful by Gibbs J in F Hoffman-La Roche & Co AG v Commissioner of Patents (1971) 123 CLR 529.

29                  Further guidance is found in the following remarks of Sheppard J in Decor Corporation Pty Ltd v Dart Industries Inc (1988) 13 IPR 385 at 400, when after reviewing the relevant authorities his Honour said  so far as relevant for present purposes:

“(1) The claims define the invention which is the subject of the patent. These must be construed according to their terms upon ordinary principles.  Any purely verbal or grammatical question that can be answered according to ordinary rules for the construction of written documents is to be resolved accordingly.

(2) It is not legitimate to confine the scope of the claims by reference to limitations which may be found in the body of the specification but are not expressly or by proper inference reproduced in the claims themselves. To put it another way, it is not legitimate to narrow or expand the boundaries of the monopoly as fixed by the words of a claim by adding to those words glosses drawn from other parts of the specification.

(3) Nevertheless, in approaching the task of construction, one must read the specification as a whole.

(4) In some cases the meaning of the words used in the claims may be qualified or defined by what is said in the body of the specification.

(5) If a claim be clear, it is not to be made obscure because obscurities can be found in particular sentences in parts of the document.  But if an expression is not clear or is ambiguous, it is permissible to resort to the body of the specification to define or clarify the meaning of words used in the claim.

(6) A patent specification should be given a purposive construction rather than a purely literal one.”

30                  I now turn to the specific matters raised in the respondent’s revised letter of objections to the amendments.

Objection 1 - Claims 1 and 4 – “dialysis or replacement fluid”

31                  Fresenius firstly submits that there is no disclosure in the body of the specification which describes the way in which to make a dialysis or replacement fluid with the addition of powder from one source to water. 

32                  This is a reference to the first paragraph in claim 1 which reads:

“A system for preparing a dialysis or replacement fluid or a component fluid thereof by mixing of at least one concentrate in powder form with water.” (Emphasis added)

33                  It is said that the above amended version of the claim is not fairly based on the specification as filed.  Nor, so it is said, does it describe the invention fully.

34                  In describing the field of the invention the specification refers to preparing a fluid by mixing at least one concentrate in powder form with water.  The next sentence under that heading refers to the system being intended, in particular, for the preparation of fluids for use in connection with medical procedures such as dialysis fluids for hemodialysis, hemofiltration and hemodiafiltration operations, and the system is described mainly with reference to such an operation.  In addition, it is stated that those skilled in the art will appreciate that with minor modifications, the system of the invention may also be used for the preparation of replacement fluids used in connection with other medical procedures or treatments where a fluid is obtained from a mix of water with at least one concentrate in powder form.  An example is given of the production of fluid for cleaning wounds.

35                  The Description of the Preferred Embodiments describes a system whereby one concentrate is used in Figure 1 and this is then elaborated by adding fluids to achieve a two or three component system as described in Figures 5 through 8.   It is also stated in the specification that in certain instances the solution for a medical procedure or treatment is to be prepared from one or more than one concentrate such as, by way of example, a dialysis solution, and reference is made to Figure 5.

36                  In addition, in discussing figure 8 it is stated that there is shown an arrangement for a system in which two different substances in the form of powder concentrates as well as a liquid concentrate are used to prepare a solution for a medical treatment.  Reference is made to the system of figure 8 being particularly useful in connection with preparing a dialysis fluid for a dialysis operation including two columns or vessels of powder material as well as a liquid component such as acid.  There is also reference to water withdrawn from the reservoir being introduced into the top of a vessel to produce a concentrate fluid.  In the final paragraph of the specification there is reference to those skilled in the art finding it readily apparent that the invention may be used in other specific forms and that the components could be varied within wide limits with regard to form and function.  Such variation can readily be modified by combinations of one of more powder concentrates either alone or in further combination with one or more liquid concentrates for producing a desired prepared solution. The specification points out that the preferred embodiments are illustrative and not restrictive.

37                  In my view, the specification sufficiently describes how to prepare a fluid for a medical procedure, mainly dialysis or replacement fluids, by mixing concentrate in powder form with water.  It is apparent from the cross-examination of Professor Schindhelm, that he accepted that there are a number of components which make up a dialysis fluid, namely a fluid being a solution of sodium bicarbonate, a fluid being a solution of sodium chloride and other fluids which may contain salts and acid.  He also agreed in relation to Figure 1 that if there was a single concentrate in the vessel, say sodium bicarbonate, the circuit there shown was making one component of the dialysis fluid, namely a sodium bicarbonate solution, provided that the mixture was properly done. 

38                 In my view this first objection as to the making of a dialysis or replacement fluid is not made out.

Objection 2 - All remaining claims – “dialysis or replacement fluid”

39                  The second submission for Fresenius is that the applicant has offered no credible explanation as to delay in seeking amendment of the claims by the addition of “dialysis or replacement fluid”, and that they should be refused on a discretionary basis.  This will be discussed later when considering discretion.

Objection 3 – claims 1, 2, 3 and 4 – “or a component fluid thereof”

40                  This is a reference to the deletion, in the first line of the above claims, of the words “for a medical procedure” and the substitution of the expression “or a component fluid thereof”.

41                  The objection is that on their proper construction the original claims were for fluids for “medical procedures” in the sense of final fluids which could be used immediately and that this was the whole point of the invention.  Therefore, it is said, a claim for a component of a previously claimed fluid is a broader claim.  It is submitted that the invention was never contemplated as one for components of fluids as distinct from the end or final fluid and that there is no disclosure of a component fluid the sense of disclosing how that component fluid is to be included in an overall system designed to produce the final product.  Therefore the conclusion must be that the reference to “component fluid” is not fairly based.

42                  Gambro submits that the wording which refers to ‘a fluid for a medical procedure’ is sufficiently comprehensive to include both the final fluid used in the procedure and a fluid which is a component of such a fluid.  The question is essentially one of construction.  Gambro submits that the point of the invention as disclosed in the claim as originally framed is to make both types of fluid and that it is common ground that the descriptions of Figure 1, and the drawing itself, do not produce a final dialysis or replacement fluid and the specification would be so interpreted by a skilled addressee.

43                  The objection raised is that the addition of the phrase broadens the claims; takes them outside the scope of the claims as originally framed; and renders the amended claims not fairly based on the specifications: see subs 102(1) and 102(2) and 40(2) and (3).

44                  The question is whether each system referred to in both the original and amended forms of the claim relate only to the production of what might be described as a “final fluid”.

45                  In evidence, as noted earlier, it is apparent that Professor Schindhelm accepted that a dialysis fluid or replacement fluid is made from a number of component fluids.  In my view, the reference to a “a fluid for a medical procedure” in its ordinary and natural meaning is sufficiently broad to cover not only a “final” fluid but would also cover any other fluids forming part of it so that they can properly be described as fluids for use in a medical procedure.  A component fluid in this sense is properly described as a fluid for a medical procedure if it is one of a number of fluids which go to make up a fluid which is to be is used for that procedure.  To adopt the interpretation advanced for Fresenius involves the insertion of language into the expression “a fluid for a medical procedure” which operates to change the reference to “a fluid” to a reference to “a final fluid” or “end fluid” produced by the system.

46                  As pointed out for Gambro, the later mixing of a component from Figure 1 is outside the scope of the patent except where it is specifically claimed or described in for example Figures 5, 6 and 8.  In the description of outlet 17 in Figure 1 there is a reference to the fact that this outlet for the prepared solution may be passed directly to one side of the dialyzer unit.  In other parts of the specification there are references to the prepared solution being passed from the outlet to the actual point of treatment: for example, a dialyzer.  This occurs in the discussion of Figure 5 for example.  There is a similar specific reference to delivery to the dialyzer in relation to Figure 8.  In relation to the objection that there was no disclosure as to how the component fluid is to be included in an overall system, it is pointed out for the applicant that this objection was not previously raised and was only notified on the day of the hearing began.  I am not satisfied that there is any substance in the objection that there has been no disclosure of a component fluid or the way in which it is to be included in an overall system to produce a product

47                  Accordingly, I consider that the reference to “fluid” disclosed in the unamended specification was sufficiently wide to encompass component fluids

Objection 4 – claims 1, 2 3 and 4  - deletion of “for delivery to said second end of said first fluid conducting means”.

48                  This is an objection that the presence of these words supports the construction of the pre-amendment claims as being for final products because they suggest delivery to the end of the system.  It is said that this amendment is designed to support the “component” amendment which is a broader claim and should not be permitted.

49                  Again this is a late objection. It lacks substance because it is evident that both before and after amendment the prepared fluid is delivered to the same point 7 in Figure 1, for example, and that thereafter it must be delivered to the second end of the first fluid conducting means, namely to point 17.  This has no bearing on what happens at point 17 in the sense of whether the fluid is an ultimate or component fluid.  In my view, the words objected to are mere surplusage and can appropriately be deleted without broadening or relevantly varying the original claim

Objection 5 - claims 1, 2, 3, 4, 42, 57, 62, 67 – insertion of “located”, replacement of “to be mixed” with “where it is mixed”, deletion of “obtained by mixing of said concentrate fluid and water in said first fluid conducting means”.

50                  It is said that these changes to the claims have the effect of altering the meaning of the claims by extending them to include systems which provide for commencement and achievement of the mixing of the first and second fluids at a specific site, namely the “mixing point”.  It is said that in their present form the claims suggest that mixing occurs shortly after the mixing point.  Therefore, so it is claimed, the amendments will make the claim broader because there is no disclosure in the specification of a system which provides for such mixing and these claims would therefore not be fairly based on the matter described in the specification.

51                  In my view there is no material difference between the expression “located in” and the expression “in”.  The word “in” refers to a place and serves to locate an action, thing or person in time or space.  Nor is there any significance in the temporal difference between the expression “where it is mixed” and the expression “to be mixed”.  I agree with Gambro’s submission that the latter expression conveys a connation of purpose rather than referring to the present operation of a system and for this reason it should be deleted.  The remaining deletion, namely “obtaining by mixing of said concentrate fluid and water in said first fluid conducting means” is surplusage and does not change either the scope of the claims nor their basis in any relevant or significant way.   The words are simply descriptive of the expression “prepared fluid”, which is left in the amended form, and such a description is not necessary.

Objection 6 - Claims 1-4, 24-25, 35-38, 42-43, 56-58, 68, 73 and 77 – “powder concentrate”

52                  The objection is that the use of the expression “powder concentrate” after the use of the words “concentrate in powder form” earlier in the claims make the claim ambiguous.  I do not think there is any substance in this assertion.  It is common ground that the expression is more succinct and it is no answer to say that if there is no difference there should be no change.  It is only a question of clarification and a succinctness.  The objection also lies against the replacement of the word “vessel” with “powder concentrate” in claim 58, on the basis that they are not in any way equivalent.  Claim 58 provides as follows:

“The system of claim 57 wherein said first POWDER CONCENTRATE vessel contains a bicarbonate material in powder form and said second vessel POWDER CONCENTRATE contains a salt material in powder form.”

53                  It is clear that “powder concentrate” operates to replace “in powder form” and simply clarifies the description.  This objection must therefore also be rejected.

Objection 7 – claims 1-4, 49, 61, 70 and 77 – deletion of “for” from the phrase “vessel for containing” and from “fluid lines for interconnecting”. 

54                  It is said that the reason for the exclusion of “for” is not clear and that there is ambiguity and possibly the claim may be broader. In my view, this is a strained semantic objection which lacks merit and substance.

Objection 8 - claim 4 – “fluid” and “water”.

55                  Fresenius says that, as a matter of construction, the term ‘fluid” is broader than “water” and therefore that the proposed amendment would permit the introduction of a fluid to the vessel in addition to water and that such a system would not fall within the original claims.  However, the meaning of the term “fluid” is apparent from the context.  There is reference in claim 4 to “concentrate solution” instead of “concentrate fluid”.  The expression “concentrate solution” refers to what is produced from the vessel and “fluid” refers to what is present in the vessel, namely the solution building up in concentration with the addition of powder to water as the water passes through the vessel.  In my view, there is no broadening of the claim by this substitution.

56                  Objection is also made to the amendment to claim 4 which inserts the words “wherein the system is arranged”.  It is said the reference to the system being arranged is ambiguous and adds matters not disclosed elsewhere.  This is said to be so because when read in conjunction with the use of “fluid” at the end of the amended claim in lieu of “concentrate solution”, which is used earlier to describe the same liquid, there is greater ambiguity. 

57                  Questions were asked of Professor Shindhelm in relation to the words “the system is arranged” in clause 4 and it is apparent from his evidence that he understood the expression “the system is arranged” to mean that one could basically insert various control parameters or measurement systems that will then allow the system to work.

58                  In my view this amendment is not ambiguous and the amendment should be permitted.  I also consider that the amendment does not provide a basis for saying that the claims would claim matter not disclosed in the specification, and that they would not in substance fall within the scope of the claims before amendment, or support a submission that the claims are not fairly based.

Objection 9

59                  This was not pressed.

Objection 10 – claims 29 and 83 – replacement of “said inlet and said outlet” with “an inlet and an outlet”.

60                  The change in wording is said to broaden the claim because the amendment contemplates a possibility of additional inlets and outlets distinct from those in the existing claims.  Gambro says this amendment is only to improve clarity because there is no antecedent for the expression “said”.  I agree.

Objection 11 – claims 44 and 59 – replacement of “a substance” with “one or more substances”.

61                  The objection is that the original claims were clearly limited to one substance chosen from a specified list of substances such as acid or calcium.  Therefore it is submitted that the claims were clearly limited to one of those substances.  Accordingly, there is said to be broadening the scope of the claims.

62                  I do not accept this objection. The words “contains a substance selected from the group consisting of an acid, calcium, potassium, magnesium and glucose” does not mean “contains only”.  For example, if the liquid concentrate contained three of those five  substances it could also properly be described as containing “a substance” selected from the group.  It is unduly technical to interpret this expression as the substance to include only a substance.

Objection 12 – Claims 80-82 – replacement of “intended to be used” by “arranged for use”

63                  This is said to lead to ambiguity for the same reason that “system is arranged” is objectionable.  I reject the objection on the same grounds.

Objection 13 - Claim 88 (formerly proposed claim 95)

64                  This claim reads:

“A system according to any one of claims 28 to 30, wherein the powder concentrate is arranged as a column between the inlet and outlet of the cartridge so that, in operation, the powder concentrate becomes dissolved in water flowing through the vessel, and the cartridge is so dimensioned, as to produce a substantially saturated solution of the powder concentrate in water.”

65                  The objection is that there is said to be insufficient support for this claim in the specification.  It is contended that the body of the specification makes it clear that a conductivity meter or other metering device is essential to successful working of the system in order to produce an ultimate product.  It is submitted that this amended claim attempts to cover a system which does not include a measuring means, therefore the claim is broader and not supported by the specification.  Second, it is submitted that there is no support in the specification for the “powder concentrate” to be arranged as a column because the original wording refers to “suitably dimensioned”.  This refers to the vessel which contains the powder and not the powder itself.  Third, it is said the specification refers to a concentrate line and column being suitably dimensioned, whereas this claim provides that the column of powder concentrate alone is so dimensioned.  Moreover, it is said that the expression “suitably dimensioned” is not used in the original description of the term “cartridge” and that the drawing of the cartridge shows a vessel which is of a different shape.

66                  Evidence was given by Professor Schindhelm that the time taken for the fluid to pass through the outer container was of particular importance because the longer the passage of time the higher the concentration of dissolved powder in the fluid emerging from the outlet.  He said that gradually by reducing the flow rate of water through the powder the solution would be saturated and that reducing the flow beyond this point would not result in a higher concentration.  His evidence was that it is only when the solution is saturated that it can be said the that concentration of effluent from the container will be independent of the flow rate. 

67                  In the light of this evidence, when a saturated solution is obtained, as anticipated by the specification, the fluid would not necessarily require to be monitored, although that may be appropriate in the case of some claims to measure differential degrees of saturation.  Accordingly, it is not essential, but it may be desirable, to use the monitoring devices.  However, this does not mean, in my view, that claim 88 is not fairly based on the application or is a broader claim than that disclosed in the specification.  The specification contemplates the production of a “substantially” saturated solution.

68                  In relation to the other objections to this claim I agree with Gambro’s submission that the powder concentrate is accurately described as being arranged as a “column” by reason of the shape of the vessel. In relation to the objection concerning the reference in the specification to “the concentrate line and column”, I do not think that there is any merit in this objection but in the interest of clarity I would grant leave to amend the claim by adding a reference to the line as well as the column being so mentioned.

Discretion – principles

69                  The appropriate principles to take into account when exercising the Court’s discretion under s 105 were considered by Sundberg J in Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (No 3) (1997) AIPC 91-366 at 39,789-39,790.  His Honour considered that the accepted approach to an exercise of discretion whether to refuse an amendment is that set out in Smith Kline & French Laboratories Ltd  v Evans Medical Ltd [1989] 1 FSR 561 at 569 by Aldous J in the United Kingdom Patents Court who said:

“The discretion as to whether or not to allow amendment is a wide one and the cases illustrate some principles which are applicable to the present case.  First, the onus to establish that amendment should be allowed is upon the patentee and full disclosure must be made of all relevant matters.  If there is a failure to disclose all the relevant matters, amendment will be refused.  Secondly, amendment will be allowed provided the amendments are permitted under the Act and no circumstances arise which would lead the court to refuse amendment.  Thirdly, it is in the public interest that amendment is sought promptly. Thus, in cases where a patentee delays for an unreasonable period before seeking amendment, it will not be allowed unless the patentee shows reasonable grounds for his delay.  Such includes cases where a patentee believed that amendment was not necessary and had reasonable grounds for that belief.  Fourthly, a patentee who seeks to obtain an unfair advantage from a patent, which he knows or should have known should be amended, will not be allowed to amend.  Such a case is where a patentee threatens an infringer with his unamended patent after he knows or should have known of the need to amend.  Fifthly, the court is concerned with the conduct of the patentee and not with the merit of the invention.” (Emphasis added)

70                  The above passage was approved by the Court of Appeal in Hsiung’s Patent [1992] RPC 497 at 522.  In the latter case the Court of Appeal dismissed the appeal from Aldous J below in which he refused leave to amend because there was no evidence as to whether there had not been “culpable delay” over a period of six years between 1980, when the patentee first became aware of the need to amend, and 1986 when the application to amend was actually filed.  The present case is, of course, factually different because there was evidence as to what took place over the period of the alleged delay.

71                  I now turn to consider the specific grounds on which it is said the discretion should be exercised against the applicant.

Maintenance of overly broad claims 

72                  Fresenius submits that Gambro was aware since 1993 that the claims should be narrowed to “dialysis or replacement fluids” but has sought to maintain the broader unjustified claims since that time.  It is said that Mr Reitz decided to seek a narrowing in early 1995, and that by that time, he must have appreciated that it was advisable to amend in Australia.  The submission is that there was no justification for Mr Reitz to await the outcome of the European appeal proceedings and that he ought to have removed from the public record the overly broad claims which it is alleged could adversely affect unknown third parties such as researchers.  There was no evidence to the effect that in fact any adverse effects had been occasioned to anyone over that period.  In addition, Fresenius claims that Gambro pursued for a substantial period method claims numbered 88-94 which are now abandoned and that this should also be taken into account in the exercise of the Court’s discretion.

73                  It is necessary to briefly revisit the history of the European Patent.  The European Patent Application was published on 27 August 1988 and granted on 15 July 1992.  On 22 September 1994 an oral hearing was held concerning the revocation of the patent and on 31 October the EPO issued a written decision.  The formal objections were dismissed and it was held that the claims to the European patent were novel.  However, the Division found that the patent did not take the requisite “inventive” step having regard to the state of the prior art.

74                  Advice was also sought from the United States Patent Attorneys in relation to the possibility of disclaimer, re-examination or a re-issue under United States patent law.  On 17 February 1995 Gambro was advised by those attorneys that the United States patent claims were not invalid having regard to the prior art but they recommended that a request for examination should be filed.  Instructions to take this step were given by Gambro on 23 February 1995.  On 10 March 1995 Gambro filed grounds of appeal in the Appeals Division of the EPO and decided to await the results of the European Patent Appeal before taking any further action in relation to the Australian patent.

75                  On or about 15 May 1995 Mr Reitz received advice from European patent attorneys to the effect that it would be prudent to include in its forward planning the eventuality that the patent would be maintained but only with claims restricted to hemodialysis.

76                  In response to matters relied on by the applicants in the European Appeal, Gambro filed a response to matters raised by the various opponents in those proceedings in January 1996.  The solicitors for Gambro first gave instructions to Australian patent attorneys in relation to the activities of Fresenius concerning the Australian patent at the end of July 1996.  As noted earlier, Mr Reitz says and I accept that he first became aware of the Fresenius activities in August 1996.  Gambro then considered its position in the light of advice from its solicitors and the Australian patent attorneys.  The Australian patent attorneys received a copy of the decision of the EPO shortly after 22 October 1996.  The possibility of amending the Australian patent was first canvassed by the Australian patent attorneys in November 1996 and further advice was sought.  In February 1997 Mr Franke, of Watermark, the Australian patent attorney, visited Europe in order to consider the prior art and during this visit, in about mid-February 1997 Mr Reitz made a decision to amend.

77                  Further advice was sought and obtained and the written reasons for dismissal of Gambro’s European appeal were obtained by Mr Reitz in June 1997.  Gambro’s solicitor first gave notice that it would apply to amend the patent at a directions hearing on 11 July 1997.

78                  Fresenius has not identified any area where the maintenance of the claims in the original form has in fact caused any prejudice or inconvenience.  The history of events outlined above indicates that Gambro was active in seeking advice as to its position and it made a commercial decision to await the outcome of the European appeal.  Mr Reitz says that he wished to have the benefit of the views of the European Appeals Division on the European patent amendments before finalising amendments to the Australian patent.  Infringement proceedings were filed on 19 June 1997.  The decision to amend was foreshadowed on 11 July 1997 at the first directions hearing.   The Notice to Amend was filed six months later after Gambro had taken steps to obtain further advice and had carried out the necessary procedures. 

79                  While the absence of detriment is not controlling, as pointed out by Aldous J in the Smith-Kline case, it is a relevant factor to take into account and none has been demonstrated by Gambro.  In the Smith-Kline case, Aldous J found that the substantial delay in bringing the amendment application from the time from which the applicant was aware of difficulties was sufficient to justify refusal on discretionary grounds.  However, no investigation had been made in that case during the period of delay.  Clearly the great delay and the absence of any action or developments during that period was decisive in that case.

80                  Hsiung’s Patent was also referred by Fresenius.  In that case there had been a six year delay and no evidence as to what happened between 1980 and 1986.  In the light of that particular evidence Aldous J considered that he had been left “completely in the dark” as to whether there had been culpable delay and therefore he declined to exercise his discretion in favour of the amendments.

81                  In the present case although some criticism was levelled at the evidence given by Mr Reitz, I consider that the circumstances are clearly different from those in the above two cases.  A detailed explanation has been furnished as to the course of conduct taken by Gambro and I am not persuaded that it was unreasonable to await the outcome of the European appeal before commencing infringement proceedings or making an application to amend in Australia.  To use the language of the authorities, there was no “culpable delay” by Gambro in the present case.  Accordingly, I do not accept the submissions made in relation to delay.

Proceeding on an unamended claim

82                  It is submitted that the fact that Gambro proceeded on the unamended claim supports a refusal of the amendment because it should be inferred that this course was adopted for the purpose of securing a market advantage.

83                  The evidence does not establish in my view that the substantial purpose or effect of the amendments was to strengthen its infringement case against the system of Fresenius.  In particular, I accept the evidence of Mr Reitz, during cross-examination and in his letter of 2 September 1997 to Mr Franke, that the substantial purpose of the amendments was to improve the clarity and succinctness of the claims, and that while he was, of course, aware of the infringement proceedings, a desire to improve the company’s position in those proceedings was not an operative purpose.  Moreover, the extent of permissible amendments are defined by s 102 of the Act and that section contemplates a limited broadening within the parameters laid down in the section.  The principal question is whether the amendment comes within those terms and not with the state of mind or motives of the amending party.  Again, I take into account that Fresenius has not demonstrated any prejudice or disadvantage by reason of the allegedly broader claims being maintained.

84                  In Petrolite Holings Inc v Dyno Oil Field Chemicals UK Ltd [1998] FSR 190, Laddie J, at 195, considered the position of a patentee who sued on an unamended patent and relied on claims which it knew full well were unmaintainable, and then declined to seek amendment of those claims in the proceedings or, at least, at an early stage in the proceedings.  At 195 his Honour pointed out that:

“… the use that the plaintiffs have made of the patent in its broad form for the purpose of bringing its claimed monopoly to the attention of customers and its refusal to seek to amend the patent in the current proceedings, I have come to the conclusion that these proceedings are an abuse of process.  If they had so wished, the plaintiffs could have stayed their hand and waited until after the amendment proceedings had been determined in the European Patent Office.  They chose not to do so.  Having chosen to bring proceedings before this court, it is my view incumbent upon them to ensure that these proceedings can be conducted speedily and fairly to the defendant.  Their present proposed course of conduct [in refusing to amend until a certain date] makes that impossible.”  (Emphasis added)

85                  The foregoing illustrates the nature of considerations which it is appropriate to take into account in the exercise of the Court’s discretion.  These considerations are not present in this case.

86                  Moreover, the Court does not approach the exercise of its discretion on an amended application in a manner hostile to amendment.  A patentee who proposes an amendment with a view, on the one hand, to catching an infringement and on the other to steering clear of the prior art is not acting in a blameworthy manner: see Mabuchi Motor KK’s Patents [1996] RPC 387 at 400.  See also Root Quality Pty Ltd v Root Control Technologies Pty Ltd (1998) 44 IPR 113 at 119.  I am not satisfied that in the circumstances of this case proceeding on the unamended claim is a ground either taken alone or cumulatively with other grounds which would warrant refusal.

Non-disclosure

87                  Fresenius submits that Mr Reitz ought to have disclosed to the Court that his belief as to the validity of the patent in Australia was not based on advice on all issues.

88                  The evidence indicates that Mr Reitz had in fact received advice on some of the issues relating to the validity of the patent.  There was for example advice contained in a letter of Watermark to Blake Dawson Waldron of 22 November 1996.  The evidence, however, does not establish that Mr Reitz believed that, for example, claim 4 was invalid.  The basis for the amendments is set out in a letter from Watermark to Blake Dawson Waldron of 26 September 1997.  I am satisfied that substantially these were the operative reasons for the amendments.

89                  It is also submitted for Fresenius that while an amendment to catch the product of a competitor or to avoid novelty problems are permissible motives, these were not in fact disclosed as reasons for the amendment.  It seems to me that even if these were the motives for the amendment there is no necessity to disclose them to the Court.  The evidence satisfies me that the question of novelty in relation to claim 4 and questions of infringement were present to the mind of those acting of Gambro.  However, I am not satisfied that the non-disclosure of these considerations warrants discretionary refusal of the amendments.

90                  A further matter raised by Fresenius, in relation to discovery, is that Gambro was reluctant to produce documents before and even during the course of the hearing. Gambro’s response is that there were difficult issues as to the extent of privilege which needed to be resolved.  It is also pointed out that Fresenius had obtained discovery of Gambro’s documents several years ago, but it was not until a very late stage, shortly before and even during the hearing, that further discovery with respect to basing a discretionary case on motive was sought.  The documents have been produced and privilege has been waived on a conditional basis.  As Gambro points out, the main categories of documents required to be discovered on the initial orders were those relating to the decision to apply to amend the patents.  The explanation given by Gambro, which I accept, is that the category of documents to be disclosed was originally restricted to documents of that class.  It was not evident to it until later that a detailed investigation was proposed to be undertaken in relation to the motivation of Gambro in seeking the amendments. When the documents were sought they were produced to the Court and privileged was waived for the purpose of the hearing on the question of amendment.  I am not persuaded that this approach to the discovery process is such as to warrant disallowance of the amendments on discretionary grounds.

91                  In my view, the application to amend should be granted and the respondents should pay the applicant’s costs in relation to the application to amend.  At this stage I publish my reasons and direct the applicant to bring in Short Minutes of Orders and to provide a copy to the respondent.  The matter is stood over to 10 February 2000 to settle the form of the orders and to make appropriate directions with respect to the future conduct of the matter.

Associate:

Dated:              23 December 1999