FEDERAL COURT OF AUSTRALIA

Stack v Brisbane City Council [2000] FCA 598

INTELLECTUAL PROPERTY - Entitlement - eligible person - whether declarations under s 34 of the Patents Act 1990 (Cth) could be made.

PRACTICE AND PROCEDURE - Setting aside declarations of the Court - application for re-opening case and leading new evidence after trial and judgment.

Patents Act 1990 (Cth) ss 15, 34

Urban Transport Authority of NSW v Nweiser (1991) 28 NSWLR 471 Cited

Hindmarsh Medical Clinic v Hindmarsh Family Practice Pty Ltd (1997) 38 IPR 616 Cited

GEORGE STACK AND GS TECHNOLOGY PTY LTD v THE BRISBANE CITY COUNCIL, DAVIES SHEPHARD PTY LTD AND DAVIES SHEPHARD (QUEENSLAND) PTY LIMITED

QG28 OF 1994

GS TECHNOLOGY PTY LTD v DAVIES SHEPHARD PTY LTD AND GSA INDUSTRIES (AUST) PTY LTD

QG29 OF 1996

COOPER J

BRISBANE

10 MAY 2000

ON APPEAL FROM THE COMMISSIONER OF PATENTS

THE COURT ORDERS THAT:

1.         Australian Petty Patent No 645740 is revoked.

2.         The notice of motion filed 21 October 1999 by the first and second applicants, to the extent that it seeks orders in terms of paragraphs 1 to 6 inclusive, be dismissed.

3.         The notice of motion otherwise be adjourned to a date to be fixed.

4.         The proceedings be adjourned to a date to be fixed to determine all consequential orders to be made in proceedings QG28 of 1994, QG11 of 1996, QG21 of 1996, QG29 of 1996, VG39 of 1996 and VG40 of 1996 consequent upon the revocation of Australian Petty Patent No 645740, including the costs of the trial of the issues of entitlement and validity, and the costs on the notice of motion filed 21 October 1999.

5.         Costs of today’s appearance be reserved until the date of the adjourned hearing in terms of paragraph 4 above.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM THE COMMISSIONER OF PATENTS

REASONS FOR JUDGMENT

Background

1                     On 17 March 1994 George Stack (“Stack”) and GS Technology Pty Ltd (“GST”) commenced proceedings QG28 of 1994 against the Brisbane City Council (“BCC”), Davies Shephard Pty Ltd (“DS”) and Davies Shephard (Queensland) Pty Ltd (“DSQ”).  The proceedings were for breach of Australian Petty Patent No 645740 (“the petty patent”) and for the fixing of terms for exploitation of the petty patent by the BCC pursuant to s 163 of the Patents Act 1990 (Cth) (“the Act”).  DS and DSQ, by their defence and cross-claim, sought revocation of the petty patent.  One of the grounds on which revocation was sought was that neither Stack nor GST were entitled to the grant of the petty patent under the Act.

2                     In addition to QG28 of 1994, other proceedings QG11 of 1996, QG21 of 1996, QG29 of 1996, VG39 of 1996 and VG40 of 1996 were commenced, which in one way or another raised the issues of, entitlement to the grant of the petty patent and the grounds of invalidity alleged by DS and DSQ in QG28 of 1994.

3                     On 6 December 1996, Kiefel J ordered that all these proceedings be heard concurrently and that the validity issues, including the issue of entitlement, be heard before the issue of infringement.  The trial of the action on the issues of validity and entitlement was set down and heard as a trial of separate issues.  The trial, in total, took thirty-seven days to complete.

4                     On the twenty-ninth day of the trial, after the cross-claimants had closed their case on the validity and entitlement issues, Stack and GST applied to the Court to entertain a submission that Stack and GST had no case to answer.  I refused to entertain such a submission and gave reasons for my refusal.  Thereupon Stack and GST, by their solicitor, advised the Court that they did not intend to call evidence on the entitlement and validity issues and sought to withdraw witness statements which had been tendered in their case at the commencement of the trial.  That course was objected to, because the cross-claimants had relied upon certain evidence in the witness statements and had conducted and closed their case on the basis that the material was in evidence.

5                     I refused leave to withdraw the witness statements, but struck out so much of those statements, including documents which were exhibited to those statements, as was objected to on the basis that the maker of the statement was not produced for cross-examination.

6                     On 15 September 1999 I made the following declarations :

“1.       George Stack is not, and was not at any material time, entitled under s 15 of the Patents Act 1990 (Cth) to the grant to him of a patent in consequence of the filing of the provisional specification PK2036.

2.         George Stack is not, and was not at any material time, entitled under s 15 of the Patents Act 1990 (Cth) to a grant to him of a standard patent in consequence of the filing of application 85236/91.

3.         George Stack was not entitled under s 15 of the Patents Act 1990 (Cth) to the grant to him of Australian Petty Patent Number 645740.

4.         GST Technology Pty Ltd was not entitled under s 15 of the Patents Act 1990 (Cth) to a grant to it of Australian Petty Patent Number 645740.

5.         GS Technology Pty Ltd is not entitled to Australian Petty Patent Number 645740 within the meaning of s 138(3)(a) of the Patents Act 1990 (Cth).

6.         The invention claimed in each of the claims of Australian Petty Patent Number 645740 is a patentable invention within the meaning of s 18 of the Patents Act 1990 (Cth).

7.         The specification of Australian Petty Patent Number 645740 complies with the requirements of s 40(2) and s 40(3) of the Patents Act 1990 (Cth).”

7                     The cross-claimants, including DS and DSQ, have appealed against declarations 6 and 7.

8                     The matter was listed to determine what orders ought to be made in relation to the questions of revocation and infringement consequent upon the making of the declarations, and to determine the question of costs.

The Notice of Motion

9                     On 21 October 1999 Stack and GST filed a notice of motion seeking the following relief :

“1.       That it be Declared that GS Technology Pty Ltd is and was at all material times an eligible person in relation to the invention the subject of the following and entitled under s15 or s34 of the Patents Act 1990 (Cth) to the grant to it :

a.         of a patent in consequence of the filing of the provisional specification PK 2036;

b.         of a standard patent in consequence of the filing of application 85236/91;

c.         of Australian Petty Patent 645740.

2.         Alternatively, it be Declared that RUSSELL PLASTICS PTY LTD is and was at all material times an eligible person in relation to the invention the subject of the following and entitled under s15 or s34 of the Patents Act 1990 (Cth) to the grant to it :

a.         of a patent in consequence of the filing of the provisional specification PK 2036;

b.         of a standard patent in consequence of the filing of application 85236/91;

c.         of Australian Petty Patent 645740.

3.         As a consequence of orders in 1 and/or 2 above an amendment of the Patent, Petty Patent and/or Patent Request (as the case may be) to record the Patentee pursuant to s105 of the Patents Act 1990 (Cth).

4.         That the Registrar serve an office copy of this Order upon the Commissioner of Patents.

5.         Upon service of this Order the Commissioner of Patents grant a petty patent or patent, as the case may be, in accordance with this Order pursuant to s34 of the Patents Act 1990 (Cth).

6.         That in so far as it is necessary to give effect to the Orders in 1 to 5 above :

a.         ALAN JOSEPH GRIEVES be added as a Fifth Respondent;

b.         RUSSELL PLASTICS PTY LTD be added as a Sixth Respondent;

c.         leave be given to amend the Application and Statement of Claim in QG28 of 1994 and QG21 of 1996.

7.         All further and necessary directions to enable the hearing and determination of the claims of the Applicants in QG28 of 1994 and QG21 of 1996 (as claimed in the further amended and consolidated Statement of Claim filed 6 October 1997) and including the filing and serving of such further evidence and expert reports and completion of discovery.

8.         Such further or other relief as the Honourable Court may determine.

9.         Such order as to costs as the Honourable Court shall in the circumstances deem fit.”

10                  The proceedings QG21 of 1996 involves the second petty patent number 662284 and is against the State of Queensland alone. 

11                  In support of the application, Stack and GST relied upon an affidavit of Alan Joseph Grieves (“Grieves”), a co-inventor with Stack of the invention claimed in the petty patent, consenting to be joined as a respondent and purporting to give evidence of his dealings with Stack in relation to the patent applications in suit.  There was also exhibited to his affidavit a document which purported to be a Deed of Agreement dated 22 October 1996 between GST, Stack, Russell Plastics Pty Ltd (“Russell Plastics”) and Grieves.  Reliance was also placed on an affidavit of Hugh Russell Tweedale, a director of Russell Plastics, recording a resolution of the Board of Directors of Russell Plastics of 19 October 1999 that in consequence of the filing of provisional specification PK2036, the filing of application 85236/91 and the grant of Australian Petty Patent 645740, a patent should be granted to and in the name of GST.  It was further resolved that in default of the Court so ordering, that Russell Plastics seek the grant of the patents, and that it be joined as a party in QG28 of 1994 and QG21 of 1996.  Mr Tweedale also exhibited a copy of the Deed of Agreement dated 22 October 1996.  An affidavit of Stack was also relied upon.

12                  Finally, reliance was had on an affidavit of Gordon Lambert Miles, a director of Russell Plastics, GST and HM Russell & Co Pty Ltd, as to the arrangements between the parties concerning the intellectual property in a water meter assembly invention invented by Grieves and Stack and, the acquisition of, and shareholding in, GST.

13                  At the commencement of the trial, witness statements of Stack and Grieves were tendered and a copy of the Deed of Agreement was one of the documents exhibited to those statements.  When Stack and GST refused to produce Grieves for cross-examination, and when Stack refused to make himself available for cross-examination, their statements and the exhibits, to the extent that they were objected to, were struck out.  The Deed of Agreement was one of the documents struck out.

14                  What GST and Stack now seek to do is to go to evidence again, after the trial has been concluded and judgment given, to make out a case which denies the entitlement of Russell Plastics, as employer, to the invention, and its entitlement to the grant of a patent in respect of the said invention.  They now seek to prove that ownership of and property in, the invention, at the time of its making, vested in Stack and Grieves alone.  They then seek, by a series of alleged assignments, to assign the interest of Grieves in the invention to Stack, or, to have Stack acting as trustee of Grieves’ interest, when making the various patent applications, to regularise his conduct in seeking a grant in his own name prior to the acquisition of GST.  The title of GST to the petty patent which remains sourced in Stack is, it is said, relieved of any defect which may have arisen because of the interests of Grieves or Russell Plastics by operation of the Deed of Agreement dated 22 October 1996, and by the resolution of the Board of Directors of 19 October 1999.  This is because Russell Plastics denies, waives or assigns any intellectual property it may have had in the invention to GST and Grieves assigns any interest he had to GST.

15                  The declaration which Stack and GST now seek in paragraph 1 of the notice of motion is totally inconsistent with Declarations 4 and 5 which I made on 15 September 1999.  To the extent that GST relies upon the entitlement of Stack as the source of its title, the declaration sought in paragraph 1 is inconsistent with Declarations 1 to 3 inclusive made on 15 September 1999.  The declaration sought in paragraph 1, and the consequential orders said to flow from it, cannot be made in the face of the declarations which were made on 15 September 1999.

16                  In order to overcome this difficulty, it was put by Counsel on behalf of Stack and GST, that declarations 1 to 5 inclusive should be set aside and Stack and GST be given leave to re-open their case and call further evidence on entitlement.  In this regard, reliance was had on O 35 r 7(1) of the Federal Court Rules. 

17                  Order 35 r 7(1) provides :

“7        Setting Aside

1(a)     The Court may vary or set aside a judgment or order before it has been entered.”

18                  In the present case the declarations made on 15 September 1999 had not been entered as orders of the Court at the time the notice of motion was heard.

19                  What Stack and GST seek to do is to set aside declarations which, although not yet entered, have taken effect as and from the date of their making as orders of the Court:  O 35 r 3.  They also seek to set aside on the entitlement issue all findings of fact made on that issue, to re-open their case to tender the evidence on the entitlement issue, which was previously struck out, and to call additional evidence which, on its face, was available at the time of the trial.  This they seek to do to overcome matters determined adversely to them in a trial which has concluded and after judgment has been given.  In my view, no demonstrable basis for the making of such an order has been made out, or is even attempted to be made out, on the material filed in support of the notice of motion.

20                  The decision not to call Grieves and Stack to give evidence, I have no doubt, was a tactical decision taken on the trial of the issues.  Stack was present for most, if not all, of the trial.  There is no reasonable basis to suggest that Stack and GST and their legal adviser did not understand what was being done and the consequences of not producing the witnesses for cross-examination.  This is not an application to re-open before judgment, where the taking of such a decision may not carry so much weight against allowing re-opening:  Urban Transport Authority of NSW v Nweiser (1991) 28 NSWLR 471 (CA) at 475-6, 478-479.  See also Hindmarsh Medical Clinic v Hindmarsh Family Practice Pty Ltd (1997) 38 IPR 616.

21                  In the present case there is no attempt to explain why the evidence now relied upon was not left to the Court on the trial of the issue.  Further, Stack and GST seek to retain the benefit of the declarations of validity in declarations 6 and 7 by contending that those issues were found in their favour, and that, having regard to my findings on them, Grieves and Stack would not be subject to cross-examination on those issues.  To take such a position smacks of the earlier conduct being a deliberate attempt to deny the cross-claimants an opportunity to cross-examine the inventors on the invalidity issues, and to now seek to retain the benefit of having taken such a course without accepting the consequences which flowed in terms of the entitlement issue.

22                  All respondents to the notice of motion oppose all of the relief sought including setting aside declarations 1 to 5 inclusive and permitting Stack and GST to re-open their case.  DS and DSQ also submit that if declarations 1 to 5 are set aside, then declarations 6 and 7 should also be set aside so that they too could re-open their case on all issues. 

23                  The cross-claimants have been forced to conduct the case on the issues tried without the benefit of cross-examining Grieves and Stack as the inventors.  Whether or not cross-examination would have assisted them on the other issues is a moot point.  However, to set aside all declarations and all findings would involve a substantial waste of time and costs.  The parties litigated the issues to judgment on the basis of the evidence before the Court the content of which, was in no small way, determined by the way in which GST and Stack conducted their case at trial.  Even assuming that GST and Stack are in a position to pay the costs thrown away if all of the declarations are set aside, and leave is given to all parties to re-open their cases, there is no offer to pay such costs, whether they be with respect to all issues or limited to the issues which arose on the entitlement of Stack and through him GST, to the grant of the petty patent.

24                  There must be finality to litigation, unless some good reason is shown to the contrary.  In my view, no such reason has been shown.  Nor am I persuaded on the material produced in support of the notice of motion that to re-open the trial would necessarily lead to any different result, so far as the entitlement of Stack or GST to the grant of the petty patent is concerned.  I decline to set aside any of the declarations made on 15 September 1999.

25                  If Stack and GST are not permitted to have the declarations made set aside and to re-open their case, it follows that GST cannot obtain the orders sought in paragraph 1 of the notice of motion pursuant to ss 15 of the Act.  This follows because declaration 4 declares that GST had no entitlement under s 15 of the Act to the grant of the petty patent.  In the face of that declaration, Stack and GST cannot obtain the declaration sought in paragraph 1 of the notice of motion based on s 15 of the Act. 

26                  Declaration 4 made on 15 September 1999 also precludes the declaration sought in paragraph 1 of the notice of motion being made under s 34 of the Act. 

27                  Section 34 of the Act provides :

“34      Applications by eligible persons arising out of court proceedings

(1)       Where, in any proceedings in a court relating to a patent, the court is satisfied that a person other than the patentee is an eligible person in relation to the invention, so far as claimed in any claim, the court may, in addition to any other order it may make in the proceedings, by order, declare the person to be an eligible person in relation to that invention, so far as so claimed.

(2)       The Commissioner must, if a complete application is made under section 29 by a person so declared, grant the person a patent for the invention, so far as claimed in any claim of the patent mentioned in subsection (1), and the claims of that patent have the same priority date as that of the first-mentioned claim.”

28                  In the present case the patent the subject of the Court proceedings is the petty patent.  By declaration 4, I found that GST was not entitled under s 15 of the Act to a grant to it of the petty patent.  That declaration carries with it the finding that GST was not an eligible person in relation to the invention claimed in the petty patent.  In any event, s 34 of the Act in terms, cannot lead to a declaration of entitlement in GST.  The focus of the section is entitlement in a person other than the patentee.  For the purpose of the section, GST is the patentee.

29                  Absent the obtaining of a declaration in terms of paragraph 1 of the notice of motion in favour of GST, no issue arises of obtaining consequential orders for amendment under s 105 of the Act.

30                  For the above reasons, Stack and GST are not entitled to the relief sought under paragraphs 1 and 3 of the notice of motion

31                  So far as the relief sought in paragraph 2 of the notice of motion is concerned, that relief is sought by Stack and GST only;  Russell Plastics is not a moving party to the notice of motion.  The evidence as to the present position of Russell Plastics comes from the affidavits of Mr Tweedale and Mr Miles

32                  Mr Tweedale sets out the resolution of the Board of Directors of 19 October 1999.  That resolution said :

“(a.)    that the grant of a patent

i.          in consequence of the filing of provisional specification PK2036

ii.         the filing of application 85236/91;

iii.        Australian petty patent 645740

            should be granted to and in the name of G.S. Technology Pty Ltd;  and

(b.)      that in the event that the Federal Court of Australia in proceedings QG28 of 1994 and QG29 of 1996 does not make orders in terms of, or in conformity with the resolution in (a.) above then :-

i.          Russell Plastics Pty Ltd seeks the grant to it of the patents referred to in (a)(i)(ii) and (iii) above;  and

ii.         that Russell Plastics Pty Ltd be joined as a party preferably as a respondent in QG28 of 1994 and QG21 of 1996.”

33                  He also deposes that Russell Plastics was a party to a Deed of Agreement dated 22 October 1996, the effect of which, he says, was that any patents granted in consequence of the filing of provisional specification PK2036 and application 85236/91 should be granted to GST. 

34                  Similar, and more detailed, evidence is given by Mr Miles in his affidavit.

35                  The Court may only make a declaration under s 34 of the Act where it is satisfied that :

“a person other than the patentee is an eligible person in relation to the invention.”

The relevant invention is the invention claimed in the patent in suit.  In the present case, that is the invention claimed in the petty patent. 

36                  The consequence of a declaration under s 34(1) of the Act is that if an application is made under s 29 of the Act for a patent for the invention claimed in the patent in suit by the person named in the declaration, the Commissioner must grant such a patent in accordance with s 34(2).  Section 34 does not operate to substitute one person for another in respect of the patent in suit.  Rather, it enables the person who is entitled to the grant to bring an application notwithstanding that a patent has previously been granted in respect of the invention claimed to a person who was not entitled under s 15 of the Act to such a grant. 

37                  The patent which issues in consequence of the operation of s 34(2) is a new patent.  It issues subject to the operation of ss 34(2), 65 and 68 of the Act and Regulation 6.3(c) of the Patents Regulations.  For these reasons, the entitlement referred to in s 34(1) is a present entitlement to receive a patent as a result of any application brought under s 29 of the Act consequent upon the making of the declaration.  Section 34(1) does not cover a situation where at the time of the declaration the person is not then an eligible person in terms of s 15 of the Act.  A person not then entitled would be incapable of being named in the patent request as the nominated person to receive the grant of the patent as required by Reg 3.1(2)(a) of the Patent Regulations.  Consequently, such a person could not make a valid application under s 29 of the Act.

38                  On the material disclosed in Mr Tweedale’s and Mr Miles’ affidavits, I could not be satisfied that Russell Plastics is an eligible person in relation to the invention claimed in the petty patent, irrespective of what the position was on 25 August 1993 when Stack applied for the petty patent or on 20 January 1994 when the petty patent granted to Stack was sealed.

39                  It follows that the Court cannot make the declaration sought in paragraph 2 of the notice of motion, even if I was of the view that such a declaration could or should be made on the application of Stack and GST.  As no declaration will be made in terms of paragraph 2 of the notice of motion, no issue as to amendment arises under s 105 of the Act in terms of paragraph 3 of the notice of motion.

40                  The joinder of Grieves and Russell Plastics was sought in terms of paragraph 6 of the notice of motion on the ground that they were necessary parties to give effect to the declarations and orders sought in paragraphs 1 to 5 of the notice of motion.  As I am not prepared to make the declarations and orders sought in paragraphs 1, 2 and 3 of the notice of motion, and as the orders sought in paragraphs 4 and 5 are consequential upon making such declarations or orders, neither Grieves nor Russell Plastics is a necessary party to proceedings QG28 of 1994 and QG21 of 1996.  Accordingly, I refuse to order their joinder.

Revocation of Australian Petty Patent Number 645740

41                  I am satisfied that, in consequence of the declarations numbered 1 to 5 inclusive made by the Court on 15 September 1999, I should order that Australian Petty Patent No 645740 be revoked.

Other Matters

42                  On the last occasion that these matters were before the Court, argument was concerned with the issues raised on the notice of motion of Stack and GST.  Although the other issues were referred to, there was no proper consideration of what should follow in terms of the various proceedings if the declarations stood and an order for revocation was made.  Those issues and the issue of costs, both of the trial of the issues of entitlement and validity and generally, remain to be determined after substantive argument.

43                  I make the following orders :

1.         Australian Petty Patent No 645740 is revoked.

2.         The notice of motion filed 21 October 1999 by the first and second applicants, to the extent that it seeks orders in terms of paragraphs 1 to 6 inclusive, be dismissed.

3.         The notice of motion otherwise be adjourned to a date to be fixed.

4.         The proceedings be adjourned to a date to be fixed to determine all consequential orders to be made in proceedings QG28 of 1994, QG11 of 1996, QG21 of 1996, QG29 of 1996, VG39 of 1996 and VG40 of 1996 consequent upon the revocation of Australian Petty Patent No 645740, including the costs of the trial of the issues of entitlement and validity, and the costs on the notice of motion filed 21 October 1999.

5.         Costs of today’s appearance be reserved until the date of the adjourned hearing in terms of paragraph 4 above.

Associate:

Dated:              10 May 2000