FEDERAL COURT OF AUSTRALIA

Lubrizol Corp, Inc v Imperial Chemical Industries plc [2000] FCA 1464

DISCOVERY – pre-grant opposition proceedings – whether discovery should be deferred – extent of appropriate discovery – “reasonable search” – common general knowledge limited to knowledge in Australia among persons skilled in the relevant art – whether period for which discovery to be ordered to extend to latest proposed priority date – whether material which could disclose a fresh inventive step relevant to issue of fair basis – whether material relating to prosecution of similar patent applications in other jurisdictions discoverable

Patents Act 1990 (Cth)

Patents Regulations 1991 (Cth) reg 3.12

Federal Court Rules O 15 r 2, O 15 r 3, O 15 r 5

F Hoffmann-La Roche AG v New England Biolabs Inc [2000] FCA 283, discussed

Australian Securities Commission v Somerville (FC) (1994) 51 FCR 38, cited

F Hoffmann-La Roche AG v Chiron Corporation (1999) 47 IPR 516, cited

Mulley v Manifold (1959) 103 CLR 341, not followed

Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262, cited

Dart Industries Inc v Prestige Group (Aust) Pty Ltd (SC (Vic), Ashley J, 4 November 1991, unreported), cited

Schering Agrochemicals Ltd v ABM Chemicals Ltd [1987] RPC 185, considered

F Hoffman-La Roche & Co AG v Commissioner of Patents (1970) 123 CLR 529, cited

Temmler v Knoll Laboratories (Australia) Pty Ltd (1969) 43 ALJR 363, cited

THE LUBRIZOL CORPORATION, INC v IMPERIAL CHEMICAL INDUSTRIES PLC

N 1247 of 2000

E I DUPONT DE NEMOURS & CO v IMPERIAL CHEMICAL INDUSTRIES PLC

N 1248 of 2000

E I DUPONT DE NEMOURS & CO v IMPERIAL CHEMICAL INDUSTRIES PLC

N 1249 of 2000

BRANSON J

SYDNEY

18 OCTOBER 2000

THE COURT ORDERS THAT:

The applicant bring in short minutes of order to reflect these reasons for decision.

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

THE COURT ORDERS THAT:

The applicant bring in short minutes of order to reflect these reasons for decision.

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

THE COURT ORDERS THAT:

The applicant bring in short minutes of order to reflect these reasons for decision.

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

REASONS FOR DECISION

INTRODUCTION

1                     In F Hoffmann-La Roche AG v New England Biolabs Inc [2000] FCA 283 at para 47 Emmett J observed:

“The purpose of pre-grant opposition proceedings is to provide a swift and economical means of settling disputes that would otherwise need to be dealt with by the courts in more expensive and time consuming post-grant litigation; that is, to decrease the occasion for costly revocation proceedings by ensuring that bad patents do not proceed to grant (see Genetics Institute Inc v Kirin-Amgen Inc (1999) 163 ALR 761 at paragraph [19]).”

2                     After reviewing the authorities, at para 67 his Honour said:

“The language employed in the cases to which I have referred suggests that it should appear clear to the Court that no patent granted in respect of the specification would be valid. I consider that, before the Court would uphold an opposition to the grant of a patent, the Court should be clearly satisfied that the patent, if granted, would not be valid. That, however, is not to say that an opponent should not be permitted appropriate opportunity to lead evidence-in-chief as to the facts that are designed to demonstrate, with the requisite degree of clarity that a patent, if granted, would not be valid. Where the subject matter of the patent is one of complexity, of necessity, the evidence that an opponent would be entitled to adduce would itself be of considerable complexity.”

3                     The correctness of his Honour’s remarks are accepted by the parties to these three pre-grant opposition proceedings. Regrettably, however, the swift and economic hearing of the proceedings has to an extent been frustrated by debate as to the significance of his Honour’s observations on the extent of the discovery which the respondent ought appropriately to make to the applicant, and the time at which aspects of such discovery, assuming it to be required, should be given.

THE OBLIGATION TO GIVE DISCOVERY

4                     Each of these three proceedings is an “appeal” pursuant to a decision of a delegate of the Commissioner of Patents rejecting the opposition by the applicant to the grant of a patent to the respondent. The applicants argued the issue of discovery by giving particular attention to Patent Application 654176 which claims priority from British patent application GB 9108527 dated 18 April 1991.

5                     It is not disputed that the Court may order discovery in these proceedings. The Court has the power in any proceeding to order a party to give discovery of documents (Australian Securities Commission v Somerville (FC) (1994) 51 FCR 38 at 52). The Court also has power in any case to order that discovery by a party shall not be required or shall be restricted in such way as the Court orders (Federal Court Rules O 15 r 3). What is here in dispute is the extent, if any, of appropriate discovery by the respondent.

6                     The policy evinced by O 15 r 3 of the Federal Court Rules is that discovery should only be ordered to the extent that is necessary for the attainment of the ends of justice (F Hoffmann-La Roche AG v Chiron Corporation (1999) 47 IPR 516 at 517). When this Court makes an order for discovery, subject to the power of the Court in any particular case to override the provisions of the Federal Court Rules, the resulting obligation on a party is less onerous than that which traditionally flowed from an order for discovery.

7                     Under O 15 r 2(3) of the Federal Court Rules, a party required to give discovery must disclose –

“any of the following documents of which the party giving discovery is, after a reasonable research, aware at the time discovery is given:

(a) documents on which the party relies; and

(b)           documents that adversely affect the party’s own case; and

(c)            documents that adversely affect another party’s case; and

(d)           documents that support another party’s case; and

(e)             documents that the party is required by a relevant practice direction to disclose.”

There is no relevant practice direction within the meaning of O 15 r 2(3)(e).

8                     In determining what is a “reasonable search” for the purposes of giving discovery, a party may take into account:

“(a) the nature and complexity of the proceedings; and

(b)           the number of documents involved; and

(c)           the ease and cost of retrieving a document; and

(d)           the significance of any document likely to be found; and

(e)           any other relevant matter” (O 15 r 2(5)).

9                     The effect of the above is that, should discovery be ordered in these proceedings, the extent of the search for documents required to be made by a party giving discovery will be influenced by the nature of the proceedings. That is, that these the proceedings are intended to provide a means of swift and economic dispute resolution in which the applicants will only succeed if they can demonstrate, to use the words of Emmett J, “with the requisite degree of clarity that [the] patent, if granted, would not be valid”. Moreover, unless the Court should order to the contrary, documents the relevance of which is only that they may fairly lead to a train of inquiry which may directly or indirectly enable one party to advance its case or change that of its opponent are not required to be discovered (cf Mulley v Manifold (1959) 103 CLR 341 at 345 per Menzies J). It is thus not the case, as was argued by the respondent, that orders for discovery in these matters will be onerous and oppressive as they will necessarily involve the respondent in reviewing every document in its possession, custody or power to see if it falls within the terms of the orders. The search for documents which orders for discovery will require the respondent to make will, unless I order to the contrary, be a reasonable search, having regard to the factors identified in O 15 r 2(5), for documents in the categories identified in O 15 r 2(3).

CATEGORIES OF DOCUMENTS OF WHICH DISCOVERY IS SOUGHT

10                  The applicant has sought discovery of five categories of documents. I adopt the respondent’s summary of those categories:

“(i) All documents relating to common general knowledge relevant to the alleged invention at various dates.

(ii)               All documents relating to research, development and experimental work of the alleged invention.

(iii)             All documents relating to the decision to amend the patent specification between the specification as originally filed through to the form considered in the opposition proceedings.

(iv)             All documents relating to the prosecution of corresponding patent applications filed overseas.

(v)               All documents relating to the preparation of the examples of the patent specification.”

11                  The respondent submits that most of the documents which fall within the above categories are not relevant to the proceedings on the approach adopted by Emmett J in New England Biolabs Inc. Alternatively the respondent submits that discovery of the documents within the five categories should be deferred and considered after the applicant’s evidence on obviousness has been filed.

12                  In submitting that the discovery of documents within the five categories should be deferred, the respondent referred to paras 67-68 of the reasons for decision of Emmett J in New England Biolabs Inc. Para 67 of his Honour’s reasons for decision is set out in para 2 above. At para 68 his Honour said:

“I am not persuaded at this stage that evidence of the nature sought to be adduced from Dr Mosbaugh is such as should be excluded, subject of course to the evidence being otherwise in admissible form. On the other hand, it may be that when I have seen all of the evidence sought to be relied upon by New England Biolabs, I could form the view that, whatever evidence is adduced by the Applicant, I would not be satisfied with the requisite degree of clarity that a patent, if granted, would not be valid. Alternatively, it may be that I would be satisfied on the basis of that material, and nothing else, that a patent could well be invalid if granted. In that case, of course, it would be necessary to consider the evidence sought to be adduced on behalf of the Applicant.”

13                  In New England Biolabs Inc his Honour was concerned to rule on the admissibility of one section of an affidavit sworn in support of the case of New England Biolabs Inc by an expert, Dr Mosbaugh. It was argued before his Honour that the material contained in the section was first, irrelevant, and secondly, not evidence of a nature appropriate to be entertained in a pre-grant opposition proceeding – at least at the stage that the proceeding had then reached (ie well before hearing). His Honour concluded that the material contained in the section was not irrelevant and that the nature of the proceeding did not mean that the material should be excluded at that early stage. Understandably, his Honour indicated that the weight of the material would only be able to be assessed in the light of the whole of the evidence ultimately adduced at the hearing.

14                  Nothing said by his Honour in New England Biolabs Inc seems to me to suggest support for a two staged approach to the giving of discovery. Rather, it seems that his Honour took the view that potentially relevant evidence ought not to be excluded at the pre-hearing stage of a proceeding. Moreover, in my view, it will be a rare case in which a two staged approach to the giving of discovery will be conducive to swift and economical dispute resolution. Potential embarrassment could arise if the second stage were to involve the trial judge making a pre-hearing assessment of the weight likely to be attributed to affidavit evidence filed on behalf of one party on a particular issue were the affidavit to be read at the hearing. If evaluation of the evidence were to await the hearing, delay and expense would be likely to result should it be found necessary to adjourn the hearing to enable further discovery to be given, inspection taken, and if required, additional affidavits prepared.

15                  I reject the submission that no discovery of the documents within the five categories should be ordered at this stage on the basis that consideration of the question of whether discovery of documents within those categories should be ordered should take place after the applicants’ evidence on obviousness has been filed.

16                  I turn to consider the relevance of the documents within each of the five categories and whether the ends or interests of justice suggest that they should be discovered. This requires consideration to be given to the terms of the notices of appeal. Each of the notices of appeal identifies the same grounds of appeal. They are that:

(a) the delegate acted on the basis of the wrong priority date;

(b) the invention was published before the priority date of the relevant claim or is otherwise not novel;

(c) the invention was obvious and did not involve an inventive step;

(d) the invention is not an invention which is a manner of manufacture within the meaning of s 6 of the Statute of Monopolies; and

(e) the complete specification does not comply with the requirements of s 40 of the Patents Act 1990 (Cth) (“the Act”).

17                  The first category of documents of which discovery is sought involves documents relating to common general knowledge at various dates being, on the applicants’ cases, possible priority dates. As Aiken J, with whom the other members of the High Court agreed, observed in Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 284:

“It is important, particularly in relation to convention patents, to bear in mind that the common general knowledge which is material to the question of obviousness is common general knowledge in Australia and not the common general knowledge in the country of origin.”

18                  The argument concerning discovery was conducted on the basis that the relevant areas of “common general knowledge in Australia amongst persons skilled in the relevant art” are those identified by the applicant in a notice to admit facts dated 11 February 2000 served on the respondent in Matter No 1247 of 1999.

19                  Neither in the notice to admit facts nor before me was the expertise of the “persons skilled in the relevant art” identified. I am not persuaded, however, that this failure to identify the relevant area or areas of expertise will result in any practical sense in difficulties for the respondent should an order for discovery be made. The search that the respondent will be required to make for documents, should such an order be made, will be limited to a reasonable search having regard to the criteria set out in O 15 r 2(5). I consider that any order for discovery in this area should be limited to documents directly relevant to common general knowledge in Australia. Although evidence touching on common general knowledge elsewhere might, by other evidence, be made relevant to what was obvious in Australia at the relevant date (see Dart Industries Inc v Prestige Group (Aust) Pty Ltd (SC (Vic), Ashley J, 4 November 1991, unreported; cited by Burchett J in F Hoffmann-La Roche AG v Chiron Corporation at 518), I am not satisfied that in this case the chance is sufficiently material to warrant compelling the respondent to incur the trouble and expense of giving discovery of this broader class of documents. I also consider that any order should be limited to common general knowledge concerning the matters of fact identified in the notice to admit facts dated 11 February 2000.

20                  On the above bases, there will be an order that the respondent give discovery to the applicants of documents in its possession, custody or power within category (i).

21                  The second category of documents are those relating to research, development and experimental work of the alleged invention. In F Hoffmann-La Roche AG v Chiron Corporation, a revocation proceeding, Burchett J at 517-518 said:

“… in Murex Diagnostics Australia Pty Ltd v Chiron Corp (No 2) at FCR 425-6; 33 IPR 37, I noted the observation of Hoffmann LJ (as he then was), in Unilever plc v Chefaro Proprietaries Ltd [1994] FSR 135 at 142:

‘When validity is challenged on the ground of obviousness, it is standard practice to ask for discovery of the research and development which went into the defendant’s product. The object is to demonstrate, by reference to the work of the defendant’s own researchers, that the subject matter of the patent could not have been obvious to them.’

Of course, what was obvious in Australia at the relevant time can only be determined by reference to the factors required to be considered under Australian law. For this reason, it was suggested in argument that research and development carried out in other countries might be irrelevant. However, in Dart Industries Inc v Prestige Group (Aust) Pty Ltd (SC (Vic), Ashley J, 4 November 1991, unreported) it was held ‘that research and development conducted overseas in connection with a product patented in Australia might, by other evidence, be made relevant to what was obvious in Australia at a given time’. His Honour referred, as authority for that proposition, to the often cited judgment of Aickin J, speaking for the High Court of Australia, in Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262; 1A IPR 268, where what was in question was discovery of a patentee’s research and experiments, the converse of the situation mentioned by Hoffmann LJ. A passage in that judgment does appear to support Ashley J’s proposition. Aickin J said (at CLR 284-5; IPR 280):

‘It is important, particularly in relation to convention patents, to bear in mind that the common general knowledge which is material to the question of obviousness is common general knowledge in Australia and not the common general knowledge in the country of origin. No doubt occasions may occur where there may be no difference or no significant difference in the common general knowledge of the ordinary skilled worker in one country from that of his counterpart in another. However, that cannot be assumed and there is certainly no presumption that it is so. What must be proved is common general knowledge in Australia and the inventiveness or otherwise of the alleged invention must be judged against that background. Care must be taken to judge the foreign experiments and developments not against their own background but against the proved background of common general knowledge in Australia.’

So far as the discovery of documents on this basis is concerned, it should be borne in mind that, as Aickin J also pointed out (at CLR 287; IPR 282) ‘the test is wider that the test of admissibility’. While, even as regards admissibility, Aickin J considered, ibid, ‘that evidence of research and experiments (if any) of a patentee leading up to his claimed invention is generally admissible though not always likely to be helpful’, he also made it clear (at CLR 283; IPR 279) that the issue of obviousness ‘must be judged at the priority date’, so that discovery of documents by a patentee on this ground should be limited to a period ending then.”

22                  Should a different approach to that adopted by Burchett J in F Hoffmann-La Roche AG v Chiron Corporation be adopted here because of the nature of the proceedings? I am not satisfied in the circumstances of these cases that it should. It may be that little, if any, of the documentation discovered will be admissible at the hearing, or if admitted it may prove of little weight having regard to the nature of the proceedings. Nonetheless, I conclude that the interests of justice make it appropriate for the respondent to give discovery of its research, development and experimental work in connection with the alleged inventions. The documents, or some of them, so discovered may throw light on the issue of obviousness and O 15 r 2 of the Federal Court Rules will protect the respondent from the need to engage in a search which is oppressive in character.

23                  However, it is necessary to determine the period for which such discovery should be ordered. Obviousness is to be judged at the priority date. As the applications are Convention applications, the priority dates are governed by reg 3.12 of the Patents Regulations 1991 (Cth) which relevantly provides:

“3.12 (1) … the priority date of a claim of a specification is the earliest of the following dates:

(a)               the date of filing of the specification;

(b)               if the claim is fairly based on matter disclosed in 1 or more priority documents, the date of filing of the priority document in which the matter was first disclosed; ….

(2)               For the purposes of paragraph (1)(b):

…

(b)   if the application that relates to the specification containing the claim is a Convention application, a document of any of the following kinds is a priority document:

(i) a basic application that is related to the Convention application; ….”

24                  In two of the proceedings, the applicant claims that the earliest priority date of each claim of the complete specification of the patent application is the date of filing of the patent application. In the other proceeding, the applicant claims that the earliest priority date of each claim of the complete specification of the patent application is either the date of the second or first Statement of Proposed Amendments or the date that the patent application was filed. In each case the respondent will, as I understand it, contend that the priority date of each claim of the complete specification is the date of filing of the basic application related to the Convention application.

25                  The Court will at the hearing be required to determine whether it appears clear that the relevant priority dates are not those for which the respondent will contend. That is, whether the applicant has demonstrated, with the requisite degree of clarity, that the claims of the complete specifications are not fairly based on matter disclosed in the respective basic applications.

26                  I am satisfied that there is a genuine dispute between the parties as to the priority date of the claims of the complete specification of each patent application and that the identification in each proceeding of the priority date of the claims may prove to be of crucial importance to the outcome of the proceeding. In these circumstances, I conclude that the interests of justice require that the respondent give discovery of documents relating to its research, development or experimental work concerning each of the alleged inventions up until the latest (ie the nearest in time to the present) priority date for which the applicant in the relevant proceeding contends in respect of the relevant claims.

27                  The applicants also sought to support their claim for discovery of documents falling within category (ii) by reference to their contentions that in each proceeding the claims are not fairly based on matter disclosed in the priority document. In F Hoffmann-La Roche AG v Chiron Corporation at 518 Burchett J noted that Terrell on the Law of Patents,14 ed, 1994 at para 12.148 states:

“The question of fair basis is entirely a matter of construction for the court. The fact that foreign patents had claims which were more restricted is irrelevant and accordingly documents which related to the restriction of the claims in other jurisdictions are not discoverable.”

28                  His Honour observed that the authority cited for the above proposition is Schering Agrochemicals Ltd v ABM Chemicals Ltd [1987] RPC 185 where Falconer J at 187 said:

“[T]he question of lack of fair basis is entirely a matter of construction for the court …. I think that such documents cannot be of any possible relevance to the matter which the court has to decide on the issue of lack of fair basis. What the plaintiffs or any of their officers or people acting on their behalf may have thought about the extent of the disclosure or the width of the claim is nihil ad rem to what this court has to decide on this objection.”

29                  Although it is not necessary, because of conclusions that I have already reached, for me to reach a concluded decision on this aspect of the applicants’ claims for discovery, it seems to me to that the present proceedings may well fall outside the principle espoused in Schering Agrochemicals Ltd.

30                  The delegate in considering Patent Application No. 654176 identified three differences between the claim and the basic document:

a)                  the claim makes the use of a lubricant essential, while the basic document foreshadowed the use of a lubricant as an optional feature;

b)                  the claim calls for a lubricant that is a mixture, while the basic document states:

“[a]ny conventional lubricant may be employed but polyalkylene glycols and especially esters are preferred”.

c)                  the basic document refers to the refrigerant as a binary or ternary mixture while the claim focuses on ternary or higher mixtures.

Nonetheless the delegate concluded that the claims are fairly based on the basic document.

31                  The applicants contend that the Court, in considering the issue of fair basis, may be assisted by knowing, as a matter of fact, how the change or development in respect of the above three differences occurred in order to determine whether it constitutes a sufficient departure to deny fair basis. They argue that discovery may disclose, for example, that later experimentation relevant to Patent Application No. 654176 revealed that the binary mixtures claimed in the basic application in fact lacked utility and had to be discarded in the case of the application in suit. That is, as I understand it, the applicants suggest that the claims in suit may be based on a fresh inventive step, or fresh inventive steps, leading to one or more of the differences identified above (see F Hoffman-La Roche & Co AG v Commissioner of Patents (1970) 123 CLR 529 at 540-542). This seems to me to be a different kind of situation from that to which Falconer J gave consideration in Schering Agrochemicals Ltd. However, as mentioned above, it is not necessary on the present application for a considered decision to be reached as to the discoverability of documents relating to the respondent’s research, development and experimental work generally, by reason of the allegation of lack of fair basis.

32                  The applicants’ claim for the respondent to give discovery of the documents sought by categories (iii) and (v) is similarly sought to be justified on the issue of fair basis. It seems to me that the documents in categories (iii) and (v) may throw light on the issue of fair basis by disclosing a fresh inventive step or fresh inventive steps. I conclude that documents within these categories should be discovered by the respondent.

33                  I am not satisfied that any significant assistance will be provided to the Court by a consideration of documents relating to the prosecution in other jurisdictions of patent applications in the same or similar form to the patent applications in suit. The law of those jurisdictions may be different to our law as may the surrounding circumstances touching on, for example, the state of common general knowledge (see Temmler v Knoll Laboratories (Australia) Pty Ltd (1969) 43 ALJR 363 (note)). Although such documents may be discoverable (see Terrell at para 12.143), in balancing the desirability of discovery being given of all documents that may be useful against the undesirability of compelling parties to incur unnecessary expense, the scale here tips, in my view, in favour of there being no order for discovery of the documents within category (iv).

34                  The proceedings will stand over to a date to be fixed to allow the applicants to bring in short minutes of order to reflect these reasons for decision. It is to be hoped that the parties will agree the terms of those short minutes.

Associate:

Dated: 16 October 2000