FEDERAL COURT OF AUSTRALIA

Nutrasweet Australia Pty Ltd v Ajinomoto Co. Inc (No 3) [2007] FCA 966

PATENTS – patent invalid by reason of obviousness – application to amend claims – refused to exercise discretion to amend

PRACTICE AND PROCEDURE – orders not entered – power to vacate

Ancare New Zealand Ltd’s Patent [2001] 20 RPC 335

Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300

De L v Director-General, N S W Department of Community Services (No 2) (1997) 190 CLR 207

Hallen Co v Brabantia (UK) Ltd [1990] FSR 134

International Inc. v Tabur Marine (GB) Ltd. [1985] RPC 59

Lubrizol Corp and Another v Esso Petroleum Co. Limited and Others [1998] RPC 727

Minister of Agriculture’s Patent [1990] RPC 61

Neurizon Pty Ltd v Jupiters Limited (2005) 67 IPR 33

Nikken Kosakusho Works v Pioneer Trading Co. [2006] FSR 4

Novartis AG v Bausch & Lomb (Australia) Pty Ltd (2004) 62 IPR 71

Nutrasweet Australia Pty Ltd v Ajinomoto Co. Inc (2005) 67 IPR 381

Raleigh Cycle Co. Ltd v Miller H. & Co. Ltd (1950) 67 RPC 226

Richardson-Vicks Inc Patent [1995] RPC 568

Sara Lee Household & Body Care U.K. Ltd v Johnson Wax Limited (2001) 17 FSR 261

Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256

Windsurfing International Inc. v Tabur Marine (Great Britain) Ltd [1985] RPC 59

Woolworths Limited v BP plc (No 3) [2006] FCAFC 160

NUTRASWEET AUSTRALIA PTY LTD v AJINOMOTO CO. INC

VID 174 of 2002

FINKELSTEIN J

28 JUNE 2007

MELBOURNE

THE COURT ORDERS THAT:

1.                  The motion filed on 22 October 2004 be dismissed.

2.                  Costs reserved.

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

REASONS FOR JUDGMENT

1                     Ajinomoto Co. Inc’s patent is for a sweetener composition containing the compound commonly referred to as DMB-APM combined with one or both of the compounds Aspartame (APM) or Ascesulfame K (AceK).  Each compound is a high intensity sweetener.  The composition is for an improved high intensity sweetener.  The patent has several claims.  Claim 1 is for a sweetener composition comprising DMB-APM and APM and/or AceK in a ratio which gives a sweetness quality thereto closer to that of sucrose than any one of the compounds.  Claims 2, 3 and 4 are claims for compositions of the compounds in particular ratios.  Claim 5 is for a beverage comprising the sweetener composition ratio of any one of claims 1 to 4.  Claim 6 is for a beverage, the subject of claim 5, in carbonated form.  Finally, claim 7 is for a composition according to claim 1, claim 2 or claim 3 “as described with reference to examples”.  Ajinomoto wishes to amend the claims. 

2                     The circumstances in which this application is made are unusual.  On 28 October 2005, in an action brought by Nutrasweet Australia Pty Ltd, I found Ajinomoto’s patent to be invalid on the ground of obviousness.  See Nutrasweet Australia Pty Ltd v Ajinomoto Co. Inc (2005) 67 IPR 381.  No revocation order was made because on 22 October 2004 Ajinomoto had filed a motion to amend the patent and that motion was still outstanding.  The motion had been filed just three days before the trial of the action.  Ajinomoto did not ask for the application to be dealt with at the trial, nor did it seek to defer the trial.  At its request the motion was stood over, with Nutrasweet reserving its position.

3                     The motion to amend the claims is not the only matter that must be dealt with.  On 16 March 2007 Ajinomoto filed a notice of motion seeking to reopen the proceeding in which the patent was found to be invalid.  It could make that application because, as yet, there are no final orders in the action.

4                     Following a hearing on the motions over three days, I dismissed the application to reopen the case and reserved my decision on the motion to amend.  I propose to dismiss that motion as well.  What follows are my reasons for both orders.

5                     Ajinomoto seeks to reopen the case to demonstrate that I fell into error and to have me reverse my decision so that “all claims are held valid on that issue and that all other challenges due validity are dismissed.”  Mr Hess SC for Ajinomoto makes five broad complaints about my judgment, which he describes as “significant errors of fact and law”.  When I explain the particular errors about which complaint is made, it will become apparent that, in substance, Mr Hess put submissions at this hearing (which are summarised in several lengthy written outlines) that amount to a substantial repetition of the submissions made at the trial.

6                     The alleged errors are as follows.  First, it is said that there was “impermissible resort to hindsight analysis … when assessing the issue of inventive step”.  That invites going over the evidence of all of the experts.

7                     The second alleged error concerns the prior art that can be taken into account when assessing obviousness.  Section 7(3) of the Patents Act 1990 (Cth) provides that in determining inventiveness regard may be had not only to the common general knowledge but also to any publicly available information which a relevantly skilled addressee could “be reasonably expected to have ascertained, understood, regarded as relevant” to work in the relevant art.  On the question of obviousness I relied on the patent by the inventors of DMB-APM that has been referred to as the Nofri Tinti patent.  I relied on that patent after having reached the conclusion that the statutory conditions for its use had been satisfied.

8                     Ajinomoto seeks to argue, as it did at trial, that, when properly construed, s 7(3) does not pick up the Nofri Tinti patent.  In part the argument depends upon an analysis of what is the proper construction of s 7(3).  Mr Hess insists that I did not adopt the correct construction.  His submission also involves a review of the facts, because it is put that several of the conditions in s 7(3) had not been satisfied.  Part of the criticism (and I emphasise that it is only a part of the criticism) is that I overlooked certain important evidence in arriving at the conclusion that the Nofri Tinti patent would be “regarded as relevant” by a skilled addressee.

9                     The third alleged error concerns a statement in my reasons (para 55) that at the priority date of the patent, the taste profile of DMB-APM formed part of the common general knowledge.  This raises the question whether I had treated the taste profile of DMB-APM as part of the common general knowledge for the purpose of assessing the obviousness of the patent.  It is evident that the statement at para 55 is wrong.  That statement is to be contrasted with several earlier statements (for example in paras 27 and 44) that the Nofri Tinti patent did not form part of the common general knowledge at the priority date.  The inquiry as to whether s 7(3) permitted use to be made of the Nofri Tinti patent is also relevant when considering whether I in fact treated the patent as part of the common ground knowledge.

10                  The next alleged error relates to the evidence of the overseas experts called by Nutrasweet.  It was common ground at trial that there was no art in Australia of developing new high intensity sweeteners.  Ajinomoto used this to argue, among other things, that the overseas experts could not give relevant evidence.  I was not persuaded by the argument.  In my reasons I said that where, as here, there was information widely circulating in Australia that could likely easily be referred to by a person interested in the art, that information could not be ignored when deciding whether an invention was obvious.  Ajinomoto argued at trial, and now wishes to repeat its argument, that there can be no hypothetical skilled addressee who can address obviousness when there is no relevant art in Australia.

11                  The final error relied on is that I failed to give reasons for finding lack of inventive step in relation to the ratio claims 2 to 4 and the composition claim 7.  Here the question is whether it was necessary to deal specifically with each of the dependant claims when the principal claim was found to be invalid.

12                  The power to reopen a case is not in doubt.  It is, however, a power that must be exercised sparingly, having regard to the public interest in maintaining the finality of litigation.  Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256, 265.  Still, there are occasions in which it is both appropriate and fair to allow further argument and even further evidence in a case before it is finally disposed of.  For example, if it turns out that a court finds that the unsuccessful party has not had the clear and adequate opportunity to argue its case, there might be a denial of procedural fairness if the case were not reopened: Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300, 309.  It would also be appropriate to reopen if it were clear that the court had proceeded “on a misapprehension as to the facts or the law”, especially where the misapprehension was the result of accident or oversight and not the fault of the party seeking to reopen the case: De L v Director-General, NSW Department of Community Services (No 2) (1997) 190 CLR 207.

13                  This is not one of those cases.  At the risk of being too blunt, all Ajinomoto wishes to do is have the opportunity to repeat the arguments which I did not accept with regard to obviousness.  There is no suggestion that Ajinomto was denied the opportunity of putting forward any argument at trial.  To the contrary, Ajinomoto wishes to repeat most of those arguments.  It is not suggested that, for some inexplicable reason, I proceeded on a mistaken view of the facts, or that for some unknown reason I had erred in law.  The real contention is that I fell into error and that upon further reflection, the error will become apparent so that I can then put things right.

14                  If that were all there was to Ajinomoto’s application, it would be dismissed out of hand.  It turned out, however, that the matter was a little more complicated.  The complication arose by reason of the motion to amend the patent, to which I will now return.

15                  The proposed amendments were of two kinds.  Some were to amend clerical errors and obvious mistakes in the specification.  They can be put to one side.  The remaining amendments were, according to Mr Hess, to bring into the specification “new and narrower claims to meet the Nutrasweet objections to those claims [that were at trial attested] on the ground of lack of fair basis [and] lack of utility.”

16                  Nutrasweet objected to the amendments on several grounds.  First it was said that the amendments were not allowable under s 102 of the Patents Actin that if the amendments were made the specification would not comply with s 40 of the Patents Act.  There was also an objection based on discretionary grounds.  It is worthwhile noting that in its particulars, Nutrasweet identified one discretionary ground as follows: “It is an inappropriate exercise of the Court’s discretion and a waste of Court time and resources for the Court to now consider the validity of the proposed fall back claims”.  Other objections were that Ajinomoto was precluded from asserting that its proposed claims (as amended) were valid by reason of the principle of res judicata and that even if the amendments were allowed the patent would be invalid for the reasons set out by me in my judgment.

17                  In accordance with directions given after the trial, the parties filed affidavits in support of their respective contentions.  So far as Nutrasweet was concerned, the affidavit material filed by it dealt with both the s 40 issues and obviousness.  Material filed by Ajinomoto on the amendment motion included not only evidence that had been tendered at the trial but also additional evidence on obviousness, including a document whose tender had been rejected at trial.  It appeared that the parties were getting ready for a retrial of the main dispute, although necessarily limited to the new claims Ajinomoto sought to add to its patent.

18                  On a point of detail, Ajinomoto did suggest that the appropriate forum for testing inventiveness was not through the amendment application but in a separate revocation action.  Mr Hess said that the only matters that should be considered on the amended motion were the s 40 issues and discretionary factors.  The cases in this area do not present a united front: see eg. Richardson-Vicks Inc Patent [1995] RPC 568; Minister of Agriculture’s Patent [1990] RPC 61; Neurizon Pty Ltd v Jupiters Limited (2005) 67 IPR 33; Novartis AG v Bausch & Lomb (Australia) Pty Ltd (2004) 62 IPR 71.  In view of the order I intend to make it is not necessary to consider this issue.

19                  On the assumption that I would deal with obviousness during the amendment application, Ajinomoto argued that this would be a good reason to reopen the case.  Mr Hess made the (not unreasonable) point that the case should be reopened if for no other reason than to avoid the possibility (and the obvious embarrassment) of inconsistent findings.  He pointed out that if on the amendment application he could persuade me to disregard the Nofri Tinti patent, the inventive step challenge to the new claims would fail.  In that circumstance, he said, the old claims should also be restored.

20                  While this argument was superficially attractive, upon closer analysis it must be rejected.  There is no realistic possibility of there being inconsistent findings.  According to the cases, a patentee is not entitled, following a trial on validity, to bring an application to amend the invalid claims, except in very limited circumstances and this is not one of them.

21                  Windsurfing International Inc. v Tabur Marine (Great Britain) Ltd [1985] RPC 59 was an infringed action.  The defendant successfully contested the validity of the patent in suit on several grounds, including obviousness.  After judgment against the plaintiff was given, counsel asked for the order revoking the patent to be suspended pending consideration of an amendment to the specification.  The application was refused.  Oliver J said (at 81):

“[I]t was for the plaintiffs, if they wished to support their claim to monopoly on some alternative basis, to raise the point and adduce the appropriate evidence for that purpose at the trial.  In fact, however, no-one, from first to last, advanced or considered the specialised qualities of a surfboard as an inventive concept and the suggestion that there should be an adjournment for this now to be raised and investigated as a basis for the claim to monopoly involves, in effect, a fresh trial, the recalling of most, if not all, of the most important witnesses, and a considerable degree of recapitulation of the evidence as well as the calling of fresh evidence on an issue never previously suggested either in the specification or in the pleadings.  We would require considerable persuasion that the imposition upon a successful defendant of such a manifestly inconvenient and oppressive course would be a proper exercise of discretion even in an otherwise strong case.” 

22                  A similar situation arose in Lubrizol Corp. and Another v Esso Petroleum Co. Limited and Others [1998] RPC 727.  In that case Aldous LJ (with whom Brooke and Roch LJJ agreed) refused an application for leave to amend a patent after trial.  He said “(at 790) “[I]t is a fundamental principle of patent litigation that a party must bring before the court the issues that he seeks to have resolved, so as to enable the court to conclude the litigation between the parties.”

23                  So also in Sara Lee Household & Body Care U.K. Ltd v Johnson Wax Ltd (2001) 17 FSR 261.  There David Young QC, sitting as a Deputy Judge of the High Court, refused an application to add new claims to a patent found to be invalid.  He said that what the patentees wanted was “to have their cake and eat it”.  He referred to Raleigh Cycle Co. Ltd v Miller H. & Co. Ltd (1950) 67 RPC 226, 230 where Lord Normand said that having been put on notice that there was an attack on the validity of their patent, the patentees were “put to an election between amending these claims and continuing their action without amending while maintaining that the claims were valid” and having chosen the second alternative, they were disentitled from pursuing the first except in “very special circumstances”.  Mr Young QC also referred to Lubrizol Corp. v Esso Petroleum Co. Ltd. 

24                  In Ancare New Zealand Ltd’s Patent  [2001] 20 RPC 335, Gault J (with whom Henry and Thomas JJ agreed) suggested there may be “special circumstances” in which an amendment could be entertained after judgment.  He instanced by way of example a patent held to be invalid in part where the amendment is required to excise the invalid part.  For example in Nikken Kosakusho Works v Pioneer Trading Co. [2006] FSR 4 the English Court of Appeal (per Jacob LJ) said that it might also be possible to permit an amendment the effect of which would be to rewrite claims so as to exclude invalid claims (or dependencies).  Reference was made to Hallen Co v Brabantia (UK) Ltd [1990] FSR 134 where it was said that “a proposed claim which was not under attack and could not have been under attack prior to trial” would not be allowed after trial.

25                  These cases (most of which were followed by the Full Court in Woolworths Limited v BP plc (No 3) [2006] FCAFC 160) show that the course Ajinomoto was attempting to take was simply not available to it.

26                  On the last day (day three) of the hearing, and probably to avoid the impending shipwreck, Mr Hess changed tack.  Contrary to the position he had taken over the previous two days, Mr Hess said the proposed amendments were not intended to overcome the invalidity finding and that: “It is not intended that the proposed amended claims have that effect.”  He went so far as to say that issue estoppel “may comprehend the new claims [and] that now Ajinomoto would not contest that point.”  Mr Hess tactic may in part have been in response to a move by Mr Cain SC, who was also shifting ground to improve his position.  On the previous day Nutrasweet had withdrawn its objection to the amendments on the grounds of lack of fair basis and inutility.  With lack of inventiveness as the only basis for opposing the amendments Mr Cain found a good way of highlighting the problem.

27                  It was far too late in the day for any tactical move to save the application.  The position in law is quite clear.  Ajinomoto should have brought on its application to amend so that it could be dealt with at or before the trial.  Thereafter it was too late.

28                  There are, in any event, two further difficulties standing in the way of the amendments.  First, Mr Hess’ concession that Ajinomoto would not contest obviousness meant he was seeking to add invalid claims to the patent. I know of no precedent for such a course.  Secondly, it is inappropriate to allow an amendment to a patent that has been found to be invalid and will in due course be revoked.

29                  I accept that if the Full Court overturns my decision, Ajinomoto may still press for the amendments.  Were the patent valid, there being no objection to the form of the amendments, I would have been disposed to allow them.  But that is of no present relevance.

30                  The motion to amend will be dismissed.  I will hear the parties on the costs of both motions.

Associate:

Dated:         28 June 2007