FEDERAL COURT OF AUSTRALIA

Stack v Brisbane City Council

[2004] FCA 354

PATENTS - entitlement to grant

ESTOPPEL - issue estoppel - judgment on preliminary issue - further proceedings

COSTS - usual rule that costs follow event - whether special circumstances justifying an order contrary to usual rule

Stack v Brisbane City Council [1999] FCA 1279

Blair and Perpetual Trustee Co Ltd v Curran (1939) 62 CLR 464

Administration of the Territory of Papua New Guinea v Guba (1973) 130 CLR 353

Ramsay v Pigram (1968) 118 CLR 271

Taylor v Ansett Transport Industries Ltd (1987) 18 FCR 342

Murphy v Abi-Saab (1995) 37 NSWLR 280

Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630

Stack v State of Queensland (1996) 68 FCR 247

Hughes v Western Australian Cricket Association [1986] ATPR 40-748

Cummings v Lewis (1993) 41 FCR 559 (FC)

Patents Act 1990 (Cth)

Patents Regulations 1991 (Cth)

GEORGE STACK v BRISBANE CITY COUNCIL

QG 28 OF 1994

COOPER J

BRISBANE

30 MARCH 2004

THE COURT ORDERS THAT:

1.         Proceedings QG28 of 1994 be dismissed against, and judgment be entered for, the Brisbane City Council, Davies Shephard Pty Ltd (now Elster Metering Pty Ltd) and Davies Shephard (Queensland) Pty Ltd (now Woodpickers Australia Pty Ltd) on the claim and cross-claim save for those issues pleaded against the Brisbane City Council in paras 14 - 22 inclusive, 23 - 27 inclusive of the Further Amended and Consolidated Statement of Claim filed on 6 October 1997.

2.         Proceedings QG29 of 1996 be dismissed against, and judgment be entered for, Davies Shephard Pty Ltd (now Elster Metering Pty Ltd) and GSA Industries (Aust) Pty Ltd. 

3.         Proceedings QG11 of 1996, QG29 of 1996, VG39 of 1996 and VG40 of 1996 be dismissed with no order as to costs.

4.         Proceedings QG21 of 1996 be dismissed against, and judgment be entered for, the State of Queensland in respect of the claims relating to petty patents 645740 and 662284.

5.         George Stack and G S Technology Pty Ltd pay one half of the costs of Davies Shephard Pty Ltd (now Elster Metering Pty Ltd), Davies Shephard (Queensland) Pty Ltd (now Woodpickers Australia Pty Ltd)  and GSA Industries (Aust) Pty Ltd of and incidental to the claim and cross-claim in the proceedings QG28 of 1994 and of QG29 of 1996, to be taxed if not agreed. 

6.         George Stack and G S Technology Pty Ltd pay the costs of the Brisbane City Council of and incidental to QG28 of 1994, other than in respect of the outstanding issues pleaded in paras 14 - 27 inclusive of the Further Amended and Consolidated Statement of Claim filed on 6 October 1997, to be taxed if not agreed. 

7.         George Stack and G S Technology Pty Ltd pay the costs of the State of Queensland of and incidental to QG21 of 1996, other than the costs of those issues determined by Kiefel J with respect to the registration of petty patent 662284 on the Register of Patents in the name of G S Technology Pty Ltd, to be taxed if not agreed.

8.         George Stack and G S Technology Pty Ltd pay the costs of the Brisbane City Council, the State of Queensland, Davies Shephard Pty Ltd (now Elster Metering Pty Ltd), Davies Shephard (Queensland) Pty Ltd (now Woodpickers Australia Pty Ltd), and GSA Industries (Aust) Pty Ltd of and incidental to these motions for final orders to be taxed if not agreed. 

9.         George Stack, G S Technology Pty Ltd and the Brisbane City Council file within 14 days consent directions for the further conduct of the remaining issues in Q28 of 1994 in default of which the matter be listed for further directions at 9.30am 16 April 2004. 

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

REASONS FOR JUDGMENT

BACKGROUND

1                     This litigation concerns claims and cross-claims in respect of petty patents for water meter assemblies.  The history of the litigation is set out in my Reasons for Judgment in Stack v Brisbane City Council [1999] FCA 1279 at pars 1 - 12 inclusive;  see also on appeal (2001) 108 FCR 422 at 423 - 424.  Appeals by George Stack (“Stack”) and GS Technology Pty Ltd (“GST”) from declarations and orders which I made upon the trial of two preliminary issues were dismissed by a Full Court of this Court on 4 May 2001.  An application for special leave to appeal to the High Court of Australia was dismissed with costs on 26 June 2002.  In refusing special leave to appeal from the decision of the Full Court, the presiding judge (Gaudron J) said that dismissal of the application should be “ ... without foreclosing the making of a further application in respect of a decision of the Full Federal Court, should it appear that an appeal would be of utility and should the applicants be so advised.” 

MOTIONS FOR FINAL RELIEF

2                     The matters have been re-listed for the purpose of determining what orders ought to be made to dispose of the proceedings, including the costs of the proceedings before me on the separate questions, and otherwise to advance the litigation in respect of any remaining issues to be determined as between the parties.

3                     Stack and GST oppose the orders sought by the other parties to the litigation and principally seek that the matters be adjourned or dismissed until such time as Stack and GST bring a further application seeking special leave to appeal from the judgment of the Full Court.  In order to render utility to the grant of special leave, they seek that appeals by the Brisbane City Council (“BCC”), Davies Shephard Pty Ltd (“DS”), Davies Shephard (Queensland) Pty Ltd (“DSQ”) and GSA Industries (Aust) Pty Ltd (“GSA”) to the Full Court of this Court in respect of issues on which they failed before me at first instance, which appeals remain unheard by the Full Court, be dismissed for want of prosecution. 

4                     Further, Stack and GST wish proceedings in QG46 of 2000, an appeal under s 69 of the Patents Act 1990 (Cth) (“Patents Act”) from the refusal of the Commissioner’s Delegate to extend the term of petty patent 662284 to be heard and determined.  They contend that those proceedings raise for determination a question of the entitlement of Stack and/or GST to the grant of petty patent 662284.  A determination of the entitlement issue in that proceeding will, it is contended, enable the High Court to determine both appeals having regard to the proper construction of s 15 of the Patents Act.

5                     The BCC seeks, by notice of motion, judgment in its favour against Stack and GST dismissing the proceedings against the BCC in so far as those proceedings are for, or arise out of, alleged infringements of petty patents numbered 645740 and 662284, or for relief under Chapter 17 of the Patents Act 1990 in connection with the alleged exploitation of the inventions claimed in petty patents numbered 645740 and 662284, or as otherwise claimed in par 5(c) of the Further Amended and Consolidated Statement of Claim of Stack and GST filed on 4 February 1998.  Alternatively, the BCC claims, pursuant to O 20 r 2 of the Federal Court Rules, to have the proceedings dismissed against it in respect of such relief, or alternatively that pursuant to O 11 r 16 that the Further Amended and Consolidated Statement of Claim be struck out so far as it concerns claims by Stack and GST of such a nature.

6                     DS and DSQ, who are the second and third respondents in QG28 of 1994, seek final judgment by way of declaratory relief denying an entitlement in Stack or GST to a grant of petty patent number 662284, an order for revocation of that petty patent, and for final judgment of the claims against them by Stack and GST.  Alternatively, they seek under O 20 r 2 or O 11 r 16 of the Federal Court Rules similar relief to that sought by the BCC. 

7                     The State of Queensland, which is a respondent in the proceedings QG21 of 1996, seeks final judgment, including declarations that Stack and GST were not entitled to a grant of Australian petty patent number 662284, that the said petty patent is invalid and for an order for its revocation.  Alternatively, the State of Queensland seeks directions identifying separate questions to be determined in proceedings Q21 of 1996.

8                     GSA and DS seek the dismissal of QG29 of 1996, QG11 of 1996, VG39 of 1996 and VG40 of 1996, all such matters arising out of the refusal by the Delegate of the Commissioner for Patents to extend the term of petty patent 645740.

9                     In my view, the effect of the High Court refusing to grant special leave on the application of Stack and GST from the decision of the Full Court dismissing their appeal means that the orders and declarations which I made in consequence of the trial of separate issues remain of full force and effect.  It follows that any cause of action based on an infringement of petty patent 645740 must fail.

10                  The claim of Stack and GST against DS and DSQ is contained in the proceedings QG28 of 1994.  As appears from the Amended Statement of Claim filed 31 July 1996, the claim against DS and DSQ is for infringement of petty patent number 645740:  see pars 1 and 12 of the Amended Statement of Claim.  The relief claimed by Stack and GST is injunctive relief restraining DS and DSQ from infringing petty patent 645740 and for an inquiry as to damages, or alternatively an account of profits consequent upon the infringement of the said petty patent.

11                  On 6 December 1996, Kiefel J ordered that proceedings QG28 of 1994, QG11 of 1996, QG21 of 1996, QG2907 of 1996, VG39 of 1996 and VG40 of 1996 be heard concurrently.  Her Honour also ordered that the “validity” issues be tried and determined before the issue of infringement.  The “validity” issues included the issue of whether or not Stack and GST were entitled to the grant of a patent in respect of the claimed invention (see also s 28(1)(a) of the Patents Act).  Her Honour further ordered that the State of Queensland, the BCC and the Commissioner of Patents be excused from participation in the hearing of the “validity” issues. 

12                  On 6 October 1997, Stack and GST filed a Further Amended and Consolidated Statement of Claim against BCC and the State of Queensland.  Leave to rely upon this pleading was subsequently granted by me on 31 October 1997.  The amended pleading does not purport to broaden the issues against DS and DSQ.  Paragraph 12 of the document filed on 6 October 1997 again alleges infringement of petty patent 645740 and the relief claimed remains injunctive relief in respect of infringement of petty patent 645740 and an inquiry as to damages or an account of profits for such infringement.  However, the amended pleading did raise against the State of Queensland an allegation of exploitation of petty patent 645740, as well as petty patent 662284, and claimed a statutory right to payment in respect of both petty patents. 

13                  DS and DSQ are entitled to judgment in proceedings QG28 of 1994 as the declarations made and the revocation of petty patent 645740 means that the proceedings brought by Stack and GST against them must fail.  Further, it means that the appeal from the decision of the Deputy Commissioner of Patents to refuse to extend the term of petty patent 645740 must also fail.  Therefore, DS, GSA and the Deputy Commissioner of Patents are entitled to orders dismissing proceedings QG29 of 1996, QG11 of 1996, VG39 of 1996 and VG40 of 1996.

14                  In the proceedings to which DS, DSQ and GSA are parties, which were subject to the order of Kiefel J made on 6 December 1996, there is no claim made against them that they, or any of them, have infringed petty patent 662284, nor is any relief claimed against them for alleged infringement of that petty patent.  Nor did DS, DSQ or GSA by cross-claim seek revocation of petty patent 662284.  In those circumstances I am not satisfied that DS, DSQ or GSA is entitled to any declaratory relief in respect of petty patent 662284 or is entitled to an order for its revocation.

15                  The BCC and the State of Queensland are entitled to judgment in respect of those causes of action pleaded against them in QG28 of 1994 and QG21 of 1996 respectively which rely upon infringement of petty patent 645740, or which rely upon Stack or GST being a person entitled pursuant to s 15 of the Patents Act to a grant of petty patent 645740.  That leaves for consideration the remaining claims against the BCC and the State of Queensland in respect petty patent 662284.

PETTY PATENT 662284

16                  The BCC and the State of Queensland claim to be entitled to final relief in respect of petty patent 662284 in consequence of the filing of the Further Amended and Consolidated Statement of Claim.  The argument is that the determination of the preliminary questions covered all questions of entitlement arising on the pleadings and was not limited to an entitlement to petty patent 645740.

17                  Prior to the delivery of the Further Amended and Consolidated Statement of Claim against the BCC and the State of Queensland, there was no question that the entitlement issue, to be determined as part of the validity issues the subject of the orders of Kiefel J, was entitlement to the grant of petty patent number 645740.  As appears from a perusal of the reasons of the Deputy Commissioner refusing the extension of petty patent 645740 which gave rise to the appeal in proceedings QG29 of 1996, and the Statement of Grounds of Opposition of DS and GSA as filed and particularised in those proceedings, the entitlement issue related solely to petty patent 645740.  The grounds relied upon in opposition to that appeal replicated Particular 1 of the Grounds of Invalidity relied upon by DS, DSQ and the BCC in the proceedings QG28 of 1994.  The Grounds of Opposition and Particular 1 of the Grounds of Invalidity challenged the entitlement of Stack to the grant of the petty patent on three bases.  They were that Stack was not the inventor, that Stack and Grieves were joint inventors acting in their capacity as employees of GST or another company, Russell Plastics, or alternatively, that employees of Reliance Manufacturing Company, a trading division of GSA, were the inventors or joint inventors of the inventions claimed in the petty patent.  So much was clear to the legal representative for Stack and GST as appears from the transcript of a directions hearing held before me on 25 July 1997 (see pp 9 and 10).

18                  I do not accept that the Further Amended and Consolidated Statement of Claim against the BCC and the State of Queensland (in respect of which leave to file and serve was granted to Stack and GST on 31 October 1997), had the effect of widening the preliminary issues to be determined pursuant to the order of Kiefel J made on 6 December 1996 to include a question of entitlement of Stack and GST to petty patent 662284.  The following extracts from the transcript of proceedings on 31 October 1997 make that clear:

“MR ABAZA:   Yes.  We seek leave - that is my clients seek leave to file and serve a consolidated statement of claim for both QG 28 and QG 21.  The object of such consolidation is to bring both patents - that is 645740 and 662284 - into the one action.  It will not affect the trial for 645740.  It is reflective of the amended reply and answer in QG 28.  It does not alter, the paragraph numbers are the same, relative to the claims existing against Davies Shephard for QG 28, but it does add against Brisbane City Council three significant causes of action:  (1) for plan to plan copying of drawings;  (2) for breach of contract; and (3) for breach of confidence.

HIS HONOUR:   Why does that have to be done before the trial?

MR ABAZA:   There are limitation period problems perceived as accruing, relative to the first of those matters.  The limitation period relative to copyright is six year and we are very close to that, relative to two assertions made in the consolidated statement of claim.

....

MR McMURDO:   Well, in a sense it does not - your Honour, we do oppose leave being given to amend.  It does not concern us in the sense that it does not claim any further relief against us that is not already claimed, but it is likely to put in jeopardy the hearing of this case in December by the introduction of another patent.   There seems to be no need for the issues sought to be raised by the amendments to be raised by amendments in these proceedings, especially having regard to the advanced state of these proceedings, and for those reasons we do object to leave being given.

HIS HONOUR:   Ms Pollard, what is the State of Queensland's position?

MS POLLARD:  The State of Queensland does not object to a consolidation of the proceedings.  However, the pleading as has been filed and served we object to certain paragraphs of that.   And the way it affects us is it brings in State of Queensland with the original patent.  We were only ever named for the second patent which is now new to all the other parties, and they are bringing State of Queensland in on that first patent.

HIS HONOUR:   I see.  Well, if I grant the leave subject to - sorry, without prejudice to the entitlement of all parties to plead such defences including the statute of limitations as they may be advised, the discreet issues that are set down principally for argument, only validity and entitlement can still proceed in December, cannot they, because they will not be touched upon by this.

MR MARTIN:   Yes.  If your Honour grants the leave and then directs that no action be taken upon it until the conclusion of that trial, or that part of the hearing, yes, that would meet the problem.

HIS HONOUR:   That would leave you isolated, Mr McMurdo.

MR McMURDO:   Yes, that would accommodate us.

HIS HONOUR:   And I cannot - as I think it through aloud - I cannot see that anything is going to arise in that area, that will prejudice those two issues.  It may cause problems in relation to finalising litigation against the Brisbane City Council, and that may have to stand over.  Is the document in?

MR McMURDO:   Yes.

HIS HONOUR:   I will have a look.  Mr Abaza, are you happy enough for me to initial this and just place it with the papers?

MR ABAZA:   Thank you, your Honour.

HIS HONOUR:   All right.   Without prejudice to the rights of the first and fourth respondents to seek to strike out or stay any parts of the consolidated pleading against them, and to raise by way of defence any matter arising under any relevant limitations statute, I grant leave to amend in accordance with the draft initialled by me, dated and placed with the papers.

MR ABAZA:   The next matter, your Honour, is an issue which has arisen on some orders which were made in 1996.

HIS HONOUR:   Yes.

MR ABAZA:   They concern proceedings VG40 of 1996 which came here from Victoria.  Spender J ordered on 4 June 1996 that that matter, VG40, be heard concurrently with matters QG29 of 1996, and QG11 of 1996.  And his Honour made a similar order in the matter of VG39.  In the matter of QG11 of 1996, on 24 April 1996 her Honour Kiefel J ordered that that matter QG11 be heard together with QG29 of 1996.  It is the applicant's position that by virtue of those orders that what we were litigating on commencing the 1st of December is that which is set out in this draft paragraph 6, that is, the matters pleaded in each of VG39, 40, 29, 11, and validity issues as pleaded in the old 28 of '94.

HIS HONOUR:   As I understood the position, what was being litigated was the validity and entitlement issue as a separate issue in the consolidated proceedings, and that everything else was to stand over until the question of validity and entitlement was decided upon on the basis that depending upon whether you won or lost in that that may resolve the matter.  Unless somebody wishes to - that is the way I read her Honour's order of December. That what happened is that it all came to a head and that her Honour decided that to consolidate them and choose two issues out of it, namely, entitlement and validity, and progress the matter, and that all of her directions, and certainly to the extent that I have been amending the directions extending the periods, it has been on that basis that they are the two issues that will be decided as discreet issues.

MR ABAZA:   Thank you.” 

19                  In par 16 of my reasons for judgment given on 15 September 1999, I identified six issues for determination on the trial of the preliminary issues.  The first of these issues was whether Stack or GST was entitled to the grant of the petty patent.  That petty patent was petty patent 645740.  As the Full Court recorded in its reasons for judgment in par 9, the proceedings before me were conducted pursuant to the grounds of opposition, particulars thereof which were supplied by the cross-respondents.  The cross-respondents were DS, DSQ and GSA.  The proceedings on appeal, as were the proceedings at first instance, were limited to the entitlement of Stack or GST to the grant of petty patent 645740.

ISSUE ESTOPPEL

20                  As an alternative argument, the BCC and State of Queensland submit that declarations numbered 1, 2, 3 and 4 made on 15 September 1990 together with certain findings made by me in my reasons for judgment give rise to an issue or issues estoppel in their favour.  They submit that the issues estoppel preclude Stack and GST from obtaining the relief claimed against them in respect of petty patent 662284.

21                  For there to arise an issue estoppel binding against Stack and GST it must be shown that:

(a)        the issue ruled upon was indispensable or fundamental to the ultimate decision:  Blair and Perpetual Trustee Co Ltd v Curran (1939) 62 CLR 464 at 531;

(b)        the judgment is capable of giving rise to an issue estoppel:  Administration of the Territory of Papua New Guinea v Guba (1973) 130 CLR 353 at 451;

(c)        the issues must be the same in each proceeding:  Blair v Curran at 510, 532, 541;  and

(d)        the parties to be bound by an issue estoppel were in controversy on the issue in question:  Ramsay v Pigram (1968) 118 CLR 271 at 276;  279;  Taylor v Ansett Transport Industries Ltd (1987) 18 FCR 342 at 356-358;  365.

22                  A practical test as to whether an issue was indispensable or fundamental to the ultimate decision is whether an appeal lies from a finding in respect of the issue:  Murphy v Abi-Saab (1995) 37 NSWLR 280 at 288.  In the instant case, each of the declarations was appealed to the Full Court of this Court and special leave to appeal in respect of them was refused by the High Court of Australia.  Further, the fact that the proceedings were in respect of preliminary issues does not deny that they were capable of creating issues estoppel binding the parties to the proceedings:  Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 at 642.

23                  Stack and GST submit that the declarations only went to the ultimate issue of whether  Stack or GST was entitled to the grant of petty patent 645740.  Thus, they submit, the entitlement of Stack or GST to the grant of petty patent 662284 was a different issue and not one touched upon by any of the issues determined by me in the preliminary determinations.

24                  The declarations which I made on 15 September 1990 were:

“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.”

25                  In my reasons I made the following findings:

“So far as the evidence goes, Stack and Grieves were employed by Russell Plastics to develop the invention claimed in PK2036, which they did.  The evidence of Grieves is that the prototype water meter assembly delivered to the BCC in July 1990 was the embodiment of Figure 1 to PK2036.  The invention claimed in PK2036 was, I find, made by Stack and Grieves in the ordinary course of their duties as employees of Russell Plastics.  Both were required to act in the interest of Russell Plastics while so employed and were not to do anything inconsistent with the duty of good faith which they owed as employees of Russell Plastics.  The circumstances of their employment with Russell Plastics, and in the case of Stack, his position as a director of that company, were inconsistent with their retaining for their personal benefit the invention claimed in PK2036:  Worthington Pumping Engine Company v Moore (1902) 20 RPC 41 at 46;  Fine Industrial Commodities Limited v Powling (1954) 71 RPC 253 at 257.  Further, the right of Russell Plastics to the invention, in the circumstances of the employment and the making of the invention for the purposes of the employer’s business, was an incident of the employment of Stack and Grieves by the company:  Sterling Engineering Co Ld v Patchet [1955] AC 534 at 543-4;  547, 548, 549.  There is no evidence of any special contract or term of the employment which would have entitled Stack and Grieves to retain the invention to the exclusion of their employer. 

It follows, in my view, that Stack was not entitled under s 15(1) of the Act to the grant of a patent for the invention claimed in PK2036.  The consequence is that he was not entitled, nor were he and Grieves jointly entitled, to make any divisional application and to have granted a patent, including the petty patent, on the basis of an entitlement to Stack or Stack and Grieves under s 15(1) of the Act.

As the entitlement of GST to the petty patent is sourced solely in the assignment from Stack which entitled it to registration in the Register of patents, it follows that GST as the patentee is not entitled to the patent within the meaning of s 138(3)(a) of the Act.  Nor was Stack, as patentee, entitled to be granted the petty patent within the meaning of s 28(1) of the Act.”

26                  Within the proceeding QG21 of 1996, Stack and GST sought orders requiring the Commissioner of Patents to register the transfer of Petty Patent 662284 from Stack to GST.  That issue was heard and determined by Kiefel J.  Her Honour concluded that GST was entitled under s 187 of the Patents Act and Regulation 19 of the Patents Regulations 1991 (Cth) to be registered as owner of the petty patent.  However, that entitlement was as to ownership and not an entitlement to a grant of a patent as dealt with in s 15:  Stack v State of Queensland (1996) 68 FCR 247 at 251-252;  see also my reasons at [1999] FCA 1279 at [34] to [40] inclusive.  For the purpose of the determination of this issue of registration, Stack and GST and the State of Queensland filed an agreed statement of facts in QG21 of 1996.  That document conveniently sets out the history of petty patent 662284. 

27                  The agreed statement of facts so far as presently relevant stated:

“[3]    Petty Patent No. 645740 was filed on 25 August 1993 at Application 44897/93.  That Application was filed as a Divisional Application derived from Patent Application 85236/91 filed on 30 August 1991 for an invention entitled ‘Water Meter Assemblies’, that Application taking priority from two Provisional Applications, PK2036 filed on 30 August 1990 and PK5286 filed on 26 March 1991.”

. . .

[14]    Petty Patent No. 662284 was filed on 17 February 1994 as Application 55215/94.  That Application also was filed as a Divisional Application derived from Patent Application 85236/91 for an invention entitled ‘Water Meter Assemblies’, that Application taking priority from the two Provisional Applications referred to at paragraph 3 above.

. . .

[20]    The facts regarding entitlement for the grant of Petty Patent No. 662284 are the same a the facts regarding entitlement for the grant of Petty Patent No 64570.  Petty Patent Nos. 662284 and 645740 were both filed as Divisional Applications derived from Patent Application 85236/91.  The facts and evidence relied on in each case on the question of the entitlement to each patent are precisely the same facts an evidence, comprising, in each case:-

            (i)         the Minute of GST of 7 September 1990;  and

            (ii)        the four declarations

            :  see also the Particulars of the Statement of Claim, paragraph 2.”

28                  The entitlement to apply for the grant of a petty patent was at the relevant time controlled by sections 15 and 39 of the Patents Act.  Section 15 provided:

“15.     Who may be granted a patent?

(1)       Subject to this Act, a patent for an invention may only be granted to a person who:

            (a)        is the inventor; or

(b)       would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or

(c)        derives title to the invention from the inventor or a person mentioned in paragraph (b); or

(d)        is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).

(2)       A patent may be granted to a person whether or not he or she is an Australian citizen.” 

            (original emphasis)

Section 39 provided:

“39.     Divisional applications

(1)       Where a complete patent application is made (but has not lapsed or been refused or withdrawn), the applicant may, in accordance with the regulations, make a further complete application for a standard patent or a petty patent for an invention:

(a)        disclosed in the specification filed in respect of the first-mentioned application; and

(b)        where the first-mentioned application is for a standard patent and at least 3 months have elapsed since the publication of a notice of acceptance of the relevant patent request and specification in the Official Journal - falling within the scope of the claims of the accepted specification.

(2)       A patentee of a petty patent may, in accordance with the regulations, make a further complete application for a petty patent or a standard patent in respect of an invention disclosed in the complete specification filed in respect of the application on which the first-mentioned petty patent was sealed.”

(original emphasis)

29                  An application for a patent is made by filing a patent request in accordance with the regulations:  s 29(1).  Regulation 3.1 of the Patents Regulationsrequired a notice by the applicant stating “the entitlement of the nominated person to the grant of the patent” and “if the applicant claims priority from another application - a notice by the applicant stating the entitlement of the nominated person to claim that priority ...”.  The term “nominated person” is defined in Schedule 1 to the Patents Act as “the person identified in a patent request as the person to whom the patent is to be granted”. 

30                  Sections 38 and 39 of the Patents Act contemplate that the entitlementto the petty patent will be the same entitlement claimed in respect of the provisional application.  So too when priority is claimed from an earlier application:  reg 3.1.

31                  In paragraph 1 of the Further Amended and Consolidated Statement of Claim, Stack and GST alleged that Stack was the “nominated person” in respect of both petty patents.  That is, that Stack was the person to whom the patent was to be granted, he being the person entitled under s 15 of the Patents Act to the grant.  The effect of the pleading is that it is an entitlement to the grant of a patent for the invention claimed in the petty patents.  This is the same invention as that claimed in the applications entitled “Water Meter Assemblies” made on 30 August 1990 (Application PK2036) and 26 March 1991 (Application PK5286 which became Australian Patent Application 85236/91) which are also the earlier applications from which priority is claimed. 

32                  The rights as patentee of the two petty patents claimed by GST were derivative from Stack and were as good as the rights transferred to it by Stack.  It has never been the case of Stack or GST that GST was entitled under s 15 of the Patents Act to a grant of a patent to it in respect of the invention claimed in the various applications entitled “Water Meter Assemblies”.  Declaration 4 of the declarations made on 15 September 1990 made the situation explicit. 

33                  There is an identical issue in the claims brought by Stack and GST in respect of both petty patents.  It is the issue of whether Stack was or was not at any material time entitled under s 15 of the Patents Act to the grant to him of a patent in consequence of the filing of the provisional specification PK2036 or to a grant to him of a standard patent in consequence of the filing of Application 85236/91.  Those issues were determined against Stack and GST by declarations 1 and 2 and were fundamental to declaration 3. 

34                  In each of the proceedings ordered by Kiefel J to be heard concurrently, there has been an issue in controversy between the parties on both sides of the record as to whether or not Stack or GST was entitled to the grant of a patent in respect of the invention claimed in PK2036, PK5286, Application 85236/91 and Application 44897/93 which gave rise to divisional patents, petty patent 645740 and petty patent 662284:  see for example paras 5 and 28 of the Further Amended and Consolidated Statement of Claim;  par 1 of the Applicants Particulars of Exploitation filed in QG21 of 1996.  It was always the intention that the State of Queensland, the BCC and the Commissioner of Patents would be bound by the findings on these issues as determined as preliminary questions; the conduct of the preliminary determination simply was left to the other respondents.

35                  I am satisfied that each of the necessary elements to establish an issue estoppel binding against Stack and GST with respect to the entitlement of Stack or GST under s 15 of the Patents Act to obtain the grant of a patent in respect of the “water meter assemblies” invention has been made out.  This means that Stack and GST cannot make out the necessary entitlement to the grant of petty patent 662284.  To allow the proceedings to proceed in respect of the issues relating to petty patent 662284 in the face of ultimate failure would amount to an abuse of process.  The proceedings against the BCC for infringement and against the BCC and the State of Queensland for relief under s 165 of the Patents Act will be dismissed pursuant to O 20 r 2 of the Federal Court Rules.  However, neither the BCC nor the State of Queensland sought a revocation of petty patent 662284 in the substantive proceedings by cross-claim.  Accordingly they are not entitled to such relief in a summary manner on these notices of motion.

36                  The proceedings against the BCC for breach of copyright, breach of contract and breach of confidence remain for determination in QG28 of 1994.  If they are to be pursued, directions will be required. 

COSTS

37                  There remains the question of costs.  Stack and GST submit that, as with the other orders, nothing final ought be decided in relation to costs pending determination of the proceedings in QG46 of 2000.  In these proceedings, which are against DS and the Commissioner of Patents, Stack and GST seek orders for the extension of petty patent 662284.  The issue of the entitlement of Stack to obtain the grant of the petty patent is a live issue.  It involves the issue which was determined adversely to them by me in the present proceedings.  Proceedings QG46 of 2000, Stack and GST submit, is the vehicle by which they will be able to bring the issue before the High Court of Australia again and thereby enliven the latent right to bring a fresh application for special leave to appeal in respect of these proceedings.  The difficulty with this submission is that DS and the Commissioner for Patents are parties to these proceedings and have the benefit of such issues estoppel as arise in it.  Because the issue in QG46 of 2000 involves the same issue as determined in these proceedings, it is not open to relitigate the issue between the same parties in QG46 of 2000.  Accordingly, no useful purpose is now served in not proceeding to deal with the question of costs. 

38                  The main contest on the question of costs is between Stack and GST on one side and DS, DSQ and GSA on the other.  DS, DSQ and GSA submit that they obtained judgment in the action and that the claims against them failed.  Further, DS and DSQ claim that they succeeded on their cross claim and obtained revocation of petty patent 645740.  It is submitted that this success entitles them to an order for costs of the proceedings on the basis that costs ordinarily follow the event.  On the other hand, Stack and GST submit that on all issues other than the issue of entitlement, DS, DSQ and GSA failed and by their conduct substantially prolonged the trial on those issues.  They submit that these circumstances warrant an order in their favour, at least in respect of the issues upon which DS, DSQ and GSA failed. 

39                  Ordinarily costs follow the event and a successful litigant receives its costs in the absence of special circumstances justifying some other order:  Hughes v Western Australian Cricket Association [1986] ATPR 40-748 at 48,136;  Cummings v Lewis (1993) 41 FCR 559 (FC) at 599-604.  A successful party who has failed on certain issues may not only be deprived of its costs on those issues but may be ordered to pay the other party’s costs:  ibid.  The manner in which a party conducts the litigation may require that some order other than the ordinary order be made on the question of costs:  Cummings v Lewis at 599-604. 

40                  The issue of entitlement, other than the claim to inventorship of the invention claimed in petty patent 645740 being in employees of GSA, was of small compass at the hearing.  It did not contribute in any substantial way to the length of the hearing.  The bulk of the hearing was devoted to issues upon which DS, DSQ and GSA failed.

41                  The attack on the petty patent based on invalidity for non-compliance with the requirement of s 40 of the Patents Act is dealt with in paras [88] - [133] of my reasons [1997] FCA 1279.  In my view, the attack was unreasonable.  In respect of the evidence tendered by DS, DSQ and GSA in support of it, I said in part:

“[113]            In my view the invention claimed in Claim 1 does not travel beyond the invention described in the specification.  It is therefore fairly based on the matter described in the specification as required by s 40(3) of the Act.  Whether or not the claim departs from earlier specifications is irrelevant for the purposes of s 40(3).  Whether that is the case will be considered when the priority date of the claim is to be determined.

[114]  The objections taken by DS, DSQ and GSA to the meaning or lack of meaning of the term “measuring element assembly” do not alter my view as to satisfaction of the requirements of s 40(3).  Stack and GST do not claim any invention or monopoly in a measuring element assembly.  In the context of the specification and the claims, the measuring element assembly was the component which engaged threadedly with the manifold at the threaded access port, which component itself measured, or in which was the measuring element which measured, the flow of water through the component.  How that unit was constructed, and what elements were used to construct it, were not part of the invention described in the specification.  Thus, those matters were not required to be disclosed in, or form part of, the invention claimed in Claim 1.  What is not claimed is disclaimed:  Electric & Musical Industries Ld v Lissen Ld and Boonton Research Corporation Ld (1939) 56 RPC 23 at 39.  The essential features of the measuring element assembly, however constructed, are that it screws into its operative position so that the outlet of the measuring element assembly sealably engages with the upper end of the backflow prevention assembly to require the water to pass through the outlet of the measuring element assembly into and through the backflow prevention assembly, and, by such engagement alone to provide the means of retaining the backflow prevention assembly in its operative position.  Those features were clearly and succinctly disclosed in both the specification and the claim, and all the witnesses who claimed to be skilled addressees understood that from their reading of the complete specification and the claims in the petty patent.  It is irrelevant that some of the witnesses were cross-examined on the basis that the drawings showed an assembly which was calibrated off-site, when calibration off-site was not part of the invention described or claimed.  Likewise, their evidence that there was no definition of what constituted a “measuring element assembly” within the specification or claim and that it was not a term of art in the trade, was also irrelevant when there was no separate claim in the petty patent for a measuring element assembly or for a measuring element assembly having characteristics greater than those claimed as part of the claimed combination.

[115]  I also reject the contention that the claim is ambiguous or fails to disclose how the measuring element assembly and the backflow prevention assembly are removed.

[116]  In my view the claim and complete specification, as a matter of construction, require that the component, being the measuring element assembly, is engaged and disengaged from its operative position by itself being screwed or unscrewed into or from the threaded meter access port, and thereby engaging or disengaging the end of the backflow prevention assembly.  The backflow prevention assembly, once released from its operative position by disengagement of the measuring element assembly, is slid out through the threaded access port when the measuring element assembly is wholly unscrewed and withdrawn from the access port.

[117]  The complaints of some of the witnesses as to alleged deficiencies in the drawings in Figures 1, 2, 4 and 5 to the complete specification are in my view disingenuous.  To the extent that they are complaints as to the contents and operation of the measuring element assembly, they are also irrelevant. 

. . .

[121]  All of the witnesses of DS, DSQ and GSA put forward as skilled addressees under cross-examination expressed an understanding of what was a measuring element assembly as described in the petty patent and how it screwed into the unitary manifold and thereby retained the backflow prevention assembly in place.  None of these witnesses gave evidence that they could not construct a water meter assembly by following the specification, the drawings and the claims.  Such evidence as there was as to whether a water meter assembly could be constructed by reference to the petty patent was all the other way. 

[122]  Similarly, those put forward as skilled addressees express no lack of understanding as to what constituted a backflow prevention assembly or a non-return valve assembly as those terms are used in the complete specification.” 

42                  In relation to the issues of obviousness and novelty, I am satisfied that DS, DSQ and GSA claimed as part of the prior art base any patent disclosure of a water meter assembly that predated the priority date, any disclosure or knowledge of the individual integers of the claim (as opposed to the combination as a whole) and, the entirety of the tenders for BCC tender WS34/90/91) without any careful discrimination as to their relevancy or weight.  The examination and cross-examination demonstrated that the material was either irrelevant or failed to address the statutory test in respect of this combination patent.  For example, the BCC tender did not close until 31 August 1990 and the tender details were kept confidential to the BCC.  The information contained in them was not publicly available on the priority date and could not have been made known to Stack on that date:  see reasons at [154] - [200] as to obviousness and [210] - [229] in respect of novelty. 

43                  I am satisfied that DS, DSQ and GSA failed to make proper or timely discovery.  The issue of discovery existed before the trial commenced and was an ongoing one.  It concerned the existence of files and working drawings in the possession of the respondents including working drawings supplied to DS and to GSA by Stack for the purposes of obtaining prices from them to manufacture and supply water meter assemblies to Russell Plastics for it to supply under its contract with the BCC.  The documents were important in two respects.  First, to demonstrate that the employees of GSA who were put forward as the inventors or co-inventors had done no more than use the working drawings provided by Stack and had replicated those drawings with GSA mastheads as the manufacturing drawings.  Second, to demonstrate that DS copied the drawings when it manufactured and supplied water meter assemblies under the later BCC tender.  The files were ultimately produced during the trial without any satisfactory explanation as to why they had not been produced earlier.  The non-disclosure of the files unnecessarily prolonged the cross examination of witnesses trying to establish the existence of the files, their content and the alleged copying.  At the time, I stated that the late disclosure would reflect in the award of costs ultimately made.

44                  In my view, the above circumstances constitute special circumstances justifying an order other than the ordinary order as to costs between Stack and GST and DS, DSQ and GSA. 

45                  DS, DSQ and GSA successfully defended these proceedings and obtained the revocation of petty patent 645740.  They are entitled to substantial costs.  However, Stack and GST ought not to have to pay for the costs occasioned by unreasonably running issues, being indiscriminate as to the particulars of obviousness and novelty and failing to make proper discovery with the attendant consequence that the trial was unnecessarily prolonged.  In my view, the justice of the situation is best achieved by fixing on a percentage of the costs of DS, DSQ and GSA which they must individually carry rather than ordering that they pay the costs of particular issues to Stack and GST.  This is particularly so where the late discovery issue impacted across the range of issues.  In my view, the conduct of DS, DSQ and GSA, which I find constituted special circumstances, had a substantial effect in the length of the trial and the costs associated with preparing to meet the wide ranging issues upon which they failed.  It requires that they carry a substantial part of their own costs, which I fix at 50 per cent.

46                  As the outcome in each of QG11 of 1996, QG29 of 1996, VG39 of 1996 and VG40 of 1996 flows from the dismissal of the principal claims in QG28 of 1996 and the revocation of petty patent 645740, and, involved no substantial costs, no separate order for costs should be made against Stack or GST in respect of those proceedings and, in fact, none was sought.

47                  The State of Queensland and the BCC are entitled to their costs in respect of QG28 of 1994 and QG21 of 1996 in the ordinary way. 

THE FULL COURT APPEAL

48                  Stack and GST have sought that I dismiss the appeals of DS, DSQ and GSA which remain pending before a Full Court.  The power to dismiss those appeals for want of prosecution rests with the Full Court on the application of Stack or GST:  O 58 r 38 Federal Court Rules.  For whatever reason Stack and GST have refrained from making such an application to a Full Court notwithstanding having ample opportunity to do so.

ORDERS

49                  The Court makes the following orders:

1.         Proceedings QG28 of 1994 be dismissed against, and judgment be entered for, the BCC, DS and DSQ on the claim and cross-claim save for those issues pleaded against the BCC in paras 14 - 22 inclusive, 23 - 27 inclusive of the Further Amended and Consolidated Statement of Claim filed on 6 October 1997.

2.         Proceedings QG29 of 1996 be dismissed against, and judgment be entered for, DS and GSA. 

3.         Proceedings QG11 of 1996, QG29 of 1996, VG39 of 1996 and VG40 of 1996 be dismissed with no order as to costs.

4.         Proceedings QG21 of 1996 be dismissed against, and judgment be entered for, the State of Queensland in respect of the claims relating to petty patents 645740 and 662284.

5.         Stack and GST pay one half of the costs of DS, DSQ and GSA of and incidental to the claim and cross-claim in the proceedings QG28 of 1994 and of QG29 of 1996, to be taxed if not agreed. 

6.         Stack and GST pay the costs of the BCC of and incidental to QG28 of 1994, other than in respect of the outstanding issues pleaded in paras 14 - 27 inclusive of the Further Amended and Consolidated Statement of Claim filed on 6 October 1997, to be taxed if not agreed. 

7.         Stack and GST pay the costs of the State of Queensland of and incidental to QG21 of 1996, other than the costs of those issues determined by Kiefel J with respect to the registration of petty patent 662284 on the Register of Patents in the name of GST, to be taxed if not agreed.

8.         Stack and GST pay the costs of the BCC, the State of Queensland, DS, DSQ and GSA of and incidental to these motions for final orders to be taxed if not agreed. 

9.         Stack, GST and the BCC file within 14 days consent directions for the further conduct of the remaining issues in Q28 of 1994 in default of which the matter be listed for further directions at 9.30am 16 April 2004. 

Associate:

Dated:              30 March 2004

Stack v Brisbane City Council QG28/94

Stack v Davies Shephard Pty Ltd QG11/96

Stack v State of Queensland QG21/96

GS Technology Pty Ltd v Davies Shephard Pty Ltd QG29/96

Davies Shephard Pty Ltd v Stack VG39/96

GSA Industries (Aust) Pty Ltd v Stack VG40/96