FEDERAL COURT OF AUSTRALIA

Embertec Pty Limited v Energy Efficient Technologies Pty Limited (No. 3) [2013] FCA 1010

THE COURT DIRECTS THAT:

1.    The parties forward to my associate short minutes to give effect to these reasons for judgment within 13 days.

2.    The proceedings be listed for directions at 9.00 am on 23 October 2013.

THE COURT ORDERS THAT:

3.    The respondents pay 60% of the applicant’s costs of the respondents’ interlocutory applications filed on 10 September 2013 and 9 August 2013.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    Before the Court are two interlocutory applications brought by the respondents. They concern a proposed amendment to the defence and discovery by the applicant. In respect of one proposed category of discovery the amendment and discovery are linked.

2    There are two patents in issue, generically known as the applicant’s 624 and 197 patents. They both relate to power saving devices. As outlined by Foster J in an earlier interlocutory judgment in these proceedings, Embertec Pty Limited v Energy Efficient Technologies Pty Limited [2013] FCA 2:

3.    Embertec and EETECH [Energy Efficient Technologies Pty Limited], are competitors in the market for the sale and supply of standby power controllers (SPCs). Their businesses are concentrated in the State of Victoria.

4.    SPCs are devices which are connected to household electrical appliances and which, by the deployment of an appropriate timing device, automatically switch off those appliances and any other appliances connected to them even when they are in standby mode.

3    In general terms, Embertec, the applicant, has a priority date for the patents of 3 June 2009. It asserts in the proceedings that the respondents infringe the patents by the sale of various devices, particularly in the Victorian market. Embertec markets its own device, which it says is within the scope of the two patents.

4     Because the two interlocutory applications are brought by the respondents I shall set out in a little detail the respondents’ summary of their position.

5    The respondents’ cross-claim challenges the validity of the two patents on the grounds that the claims do not claim a patentable invention; the claims do not define the invention and are insufficient; none of the claims is fairly based on the matter described in the specification; none of the claims is novel when compared with the prior art base as it existed before the priority date of the claims; and none of the claims is useful.

6     Additional challenges to the validity of the 197 patent are that claims 2 and 3 are not fairly based on the matter described in the specification; claims 2 and 3 are not novel when compared with the prior art base as it existed before the priority date of those claims; claim 1 and claims 4 and 5 (insofar as dependent on claim 1) are not novel when compared with the prior art base as it existed before the priority date of those claims; and claims 2 and 3 and claims 4 and 5 (insofar as dependent on claims 2 and 3) do not involve an innovative step when compared with the prior art base as it existed before the priority date of those claims.

7    The validity of the 624 patent is challenged on the additional grounds that the claims lack clarity; claims 1 and 4 are not fairly based on the matter described in the specification; none of the claims 1 to 4 is novel in that each does not advance the common general knowledge as it existed in the patent area prior to the priority date; claim 4 is not fairly based on the matter described in the patent specification; claim 4 is not novel when compared with the prior art base as it existed before the priority date of the claims; claims 1, 2 and 3 are not novel when compared with the prior art base as it existed before the priority date of those claims; and claim 4 does not involve an innovative step when compared with the prior art base as it existed before the priority date of the claim. The respondents also assert a defence based upon the principle of Crown use.

Amendment

8    By an interlocutory application filed on 10 September 2013 the respondents seek leave to amend their defence in the manner recorded in the proposed Amended Defence being RKS-3 to the affidavit of Ranjani Kalyani Sundar sworn 10 September 2013.

9    Paragraph 58 of the Amended Statement of Claim filed on 30 April 2013 is in the following terms:

58.    The Applicant is the registered owner of Australian Innovation Patent Numbers:

(a)    2012100197 (the 197 Patent) entitled ‘Power Sensor’, which was certified on 22 August 2012; and

(b)    2012100624 (the 624 Patent) entitled “Power Monitoring System”, which was certified on 28 August 2012

(the Embertec Patents).

10    The present pleading to this paragraph, in the Defence filed on 16 October 2012, is as follows:

55.    The respondents admit paragraph 58 of the Claim.

11    The proposed pleading, for which the respondents seek leave, is in the following terms:

55.    The respondents do not know and cannot admit paragraph 58 of the Claim.

Particulars

55.1.    The inventor is named as Giuseppe Antonio Gelonese.

55.2.    It appears from the terms of a document entitled Deed of Confirmation of Assignment and dated 30 May 2013 that Giuseppe Antonio Gelonese may not have been the inventor.

55.3.     By reason of the Deed of Confirmation of Assignment and the apparent existence of a further agreement described as an Intellectual Property Transfer Agreement of unknown date, the Respondents are now unable to admit the content of paragraph 58 of the Claim.

12    Ms Sundar’s affidavit, to which I have referred, states that the respondents seek to withdraw the earlier admission of paragraph 58 in the following circumstances.

13    On 11 June 2013 the respondents became aware of an “Intellectual Property Transfer Agreement” which purportedly assigned the inventor’s right, title and interest in and to the Embertec Patents to the applicant. By reason of that Agreement, Ms Sundar deposed, it was unclear to the respondents whether the applicant is, and is entitled to be, the registered owner of the Embertec Patents and also whether the applicant was, at the relevant time, the appropriate party to issue the present proceedings.

14    By letter dated 26 August 2013, from Fox Tucker Lawyers for the respondents to DibbsBarker solicitors for the applicant, the respondents sought the applicant’s consent to amend the defence. By letter dated 3 September 2013 from DibbsBarker, the applicant said it would not consent on the basis that the applicant saw no utility in the proposed withdrawal of an admission of a matter that was indisputably correct.

15    There was further correspondence between the lawyers for the parties in September 2013.

16    Ms Sundar in her affidavit also deposes to requesting on 9 July 2013 by way of discovery a copy of the Intellectual Property Transfer Agreement (item 18). A letter to the same effect was sent on 15 July 2013. By letter dated 26 July 2013 from DibbsBarker to Fox Tucker Lawyers the applicant objected to the discovery of item 18 on the basis that the relevance of the document was not apparent. By letter dated 7 August 2013 from Fox Tucker Lawyers to DibbsBarker the respondents requested the Intellectual Property Transfer Agreement as it was relevant to the patent infringement proceedings brought by the applicant in its name.

17    The respondents also requested (item 12) “any other document or agreement which records any transfer between any person of any intellectual property rights related to the parent patent or any innovation patent related to these proceedings.” By letter dated 28 August 2013 from DibbsBarker to Fox Tucker Lawyers the applicant objected to item 12 on the basis that it was not relevant to any pleaded issue. By letter dated 4 September 2013, Fox Tucker Lawyers wrote to DibbsBarker stating that item 12 was relevant to paragraph 58 of the applicant’s amended statement of claim and paragraph 55 of the respondents’ proposed amended defence.

18    As may be seen there is some circularity in the assertions of relevance or lack of relevance of the category of discovery and the proposed amendment.

19    In submissions, counsel for the respondents said that it appeared to the respondents that it was likely that Embertec, up until 30 May 2013, was not the owner of the 624 patent and that raised questions as to whether it was entitled to maintain the present proceedings at all and whether it was entitled to seek the grant of the 624 patent when it did.

20    One of the paragraphs of the discovery application which was in dispute sought discovery of the Intellectual Property Transfer Agreement, which was referred to in the 30 May 2013 Deed or Deeds of Confirmation of Assignment. The respondents did not know whether that was a written document or an oral agreement. The recital referred to execution of an Intellectual Property Transfer Agreement, so one might infer it was written. If it was written, the respondents wanted it and submitted they were entitled to it. If it was not written, the respondents submitted, they were entitled to know that because it would be the subject of evidence. What the respondents sought to do in the amendment application, and to this extent it was tied to the discovery application, was simply to withdraw their previous admission to the effect that there was no issue in relation to the ownership of the 624 patent.

21    The amendment by way of withdrawal of the earlier admission was opposed by the applicant. The first ground of opposition was utility. It was beyond doubt, the applicant submitted, that the applicant was the registered owner of the patents: that was a matter of public record. What the respondents wanted to do was put in issue, for the purpose of obtaining a discovery category, whether the applicant was entitled to be the registered owner of the patents. That was an entirely different character of allegation that would normally be found in a cross-claim in which the respondents sought a declaration of invalidity. If the respondents had proof or even an allegation that the applicant was not entitled to be the registered owner on the basis that, for example, there never was a valid transfer of intellectual property between the inventor and the applicant, then that would be a different story, but proposed paragraph 55 alone could not achieve that. The subject matter of paragraph 58 of the amended statement of claim could not be doubted. It was a correct statement.

22    The second ground of opposition was that the particulars in support of the amendment were not justified by the document to which they referred. The difficulty arose in 55.2: “It appears from the terms of the document….” The applicant was unable to find any part of that document that might justify an allegation that Mr Gelonese may not have been the inventor.

23     It followed that the amendment had no utility and there was no proper basis or reason for the withdrawal of the admission to what was a very straightforward allegation. In truth, what was sought to be achieved was to use the amendment as a means to initiate a train of forensic inquiry to potentially raise, for the respondents, additional grounds on which they may be able to proceed with their claims. But what was not permitted in a discovery application was a fishing expedition and that was what this was.

24    In reply, the respondents submitted the proposed amendment was in the nature of protection. They had become aware of this issue. They wished to withdraw the admission previously made until they understood what was meant by the documents. If what they suspected was true, there would undoubtedly be a formal application for further amendment to enliven the issue in a more formal sense.

25     In my opinion, the challenge the respondents wish to make should be done correctly and formally now. The respondents should not be permitted to deny in the manner proposed the fact of the applicant being the registered owner of the patents. As a matter of substance it may be that, once framed, an amendment along the lines of that sought by the respondents should be permitted, This is in light of the respondents’ recent awareness of the existence of the Intellectual Property Transfer Agreement and its potential terms and of the two deeds of confirmation of assignment dated 30 May 2013 and the terms of those deeds.

26    If the respondents should be permitted by way of pleading to put in issue the status of the applicant, in my opinion it should be done by way of further answer to paragraph 58 of the claim, rather than the non-admission of it, and by cross-claim.

27    Given the existence and terms of the two deeds of confirmation of assignment, contrary to the submissions on behalf of the applicant, it is not apposite to refer to the proposed amendment as giving rise to a fishing expedition.

28    To the extent that the point made by the applicant was that the deeds or the relevant deed did not expressly say that Mr Gelonese may not have been the inventor, again in my view that is a technical or formal point. It goes only to the particulars provided in the circumstances deposed to by Ms Sundar. The two deeds are, or one of them is, capable of bearing the inference that, before 30 May 2013, there was or may have been an issue as to the effectiveness of the earlier assignment. In my opinion that is sufficient for present purposes.

29    I therefore direct that the respondents bring in, as part of the short minutes I shall direct, proposed amendments to their pleadings, both the defence and the cross-claim, and I indicate that if those proposed amendments are satisfactory I would then propose to grant them leave to amend to give effect to the substance of the point in the manner recorded in the proposed amended defence contained in annexure RKS-3.

Discovery

30    By interlocutory application filed on 9 August 2013 the respondents sought an order that the applicant give discovery of the categories of documents described in paragraphs 1 to 4, and 6 to 15 of the respondents’ revised categories of discovery exhibited to the affidavit of Ms Adamopoulos sworn 9 August 2013 as DHA4. At the interlocutory hearing the disputed categories were 2, 3, 4, 6, 10, 11, 12, 14, 15, 16 and 17 as annexed to the written outline of submissions on behalf of the applicant dated 12 September 2013. In the course of the interlocutory hearing, category 16 was stated to be no longer pressed. The remaining categories were as follows:

2.     Working Notes, Trial and Assessment Criteria, Trial and Assessment Results, and all correspondence referring to Embertec’s participation in various trials and assessments in order to demonstrate and verify the energy saving benefits of SPCs.

4.    All documents created during the period 1 January 2009 to 31 December 2011 that evidence, record, refer to or relate to the development of the technology, features and/or design of the Embertec products including, but not limited to:

3.1.    any presentations, reports, emails, memoranda or file notes created by Embertec referring to any existing energy savings product on the market (excluding EETECH’s products), including any products with separate alarms and any documents containing any comparisons of any such products.

5.    Any document dated in the period 1 January 2009 to 31 December 2011 which discusses or makes any reference to any product that includes energy saving features, alarms, warning devices, or infra red or radiofrequency reception.

6.     All documents that evidence the relationship or collaboration between Embertec and Kambrook and the development, manufacture, distribution, supply or sale of the SmartSwitch during the period 1 December 2009 to 30 June 2012.

10.    All documents since June 2009 relating to the re-examination, revocation or opposition of the parent patent and/or of any of the innovation patents held by Embertec in relation to energy saving devices.

11.    Files of Davies Collison Cave regarding the patent applications for

–    Australian Innovation Patent number 2012100197

–    Australian Innovation Patent number 2012100624

–    Parent Patent number 2010256278

(excluding any privileged information)

12.    Any document created during the period 1 July 2005 to date which is, or which refers to in any way any “Intellectual Property Transfer Agreement” between Giuseppe Gelonese and Embertec or any other document or agreement which records any transfer between any person of any intellectual property rights related to the parent patent or any innovation patent related to these proceedings.

14.    All documents created by Embertec or the inventor since June 2009 which were used, or created for use in, the applications for:

14.1.     the grant of Australian Innovation Patent number 2012100624;

14.2.    the grant of Australian Innovation Patent number 2012100197.

15.    Any correspondence during the period 1 December 2009 and 31 December 2011 between Embertec and the Essential Services Commission regarding the inclusion of standby power controllers into the VEET Scheme.

17.    All documents provided to the ESC or any government or regulatory authority during the period December 2009 and December 2011 in connection with Embertec’s application for approval of its product.

31    The additional evidence read for the respondents on this interlocutory application was the affidavit of Despina Hara Adamopoulos sworn 9 August 2013, to which I have referred, and a further affidavit of Ranjani Kalyani Sundar sworn 10 September 2013. For the applicant, the affidavit of Scott Robert James Sloan sworn 28 August 2013 was read.

32    Before turning to consider the categories, I note that the Federal Court Rules 2011 (Cth) and what is now Practice Note CM5 guide the resolution of the application. I apply as criteria to guide the exercise of my discretion whether the making of the orders sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. I refer to paragraphs 2, 3 and 4 of the Practice Note, especially to paragraph 3, which states:

3. In determining whether to make any order for discovery, the Court will have regard to the issues in the case and the order in which they are likely to be resolved, the resources and circumstances of the parties, the likely benefit of discovery and the likely cost of discovery and whether that cost is proportionate to the nature and complexity of the proceeding.

33    It is against this, more recent, background that the authorities on which the parties relied need now to be considered.

Category 2

34    In relation to category 2 the respondents submitted that the documents supporting the applicant’s participation in various trials and assessments to demonstrate and verify the energy saving benefits of standby power controllers were relevant to the respondents’ claim that the claims merely defined features which were known to those skilled in the art before the priority date; that the claims did not secure the promised advantage of the specification which was an enhancement of energy saving by networking of a plurality of energy saving devices; that claims 2 and 3 of the 197 patent were not novel when compared with the prior art base by reason of the installation in Victoria since at least as early as August 2011 of the Embertec EmberPlug; that claim 4 of the 624 patent was not novel by reason of the installation in Victoria since at least as early as August 2011 of the Embertec EmberPlug; that none of the claims was novel when compared with the prior art base; and that claims 1, 2 and 3 of the 624 patent were not novel when compared with the prior art base. The respondents submitted that the documents would provide evidence of the operation of the energy saving features of the applicant’s SPC devices and went to the question of whether the products sold by the applicant were capable of being within the scope of the claims of the patents. In any event, the respondents submitted, documents concerning any test to evaluate or determine the validity of the patent in any respect falling within any of the grounds in issue on the pleadings should be discovered: F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at [16].

35    In oral submissions the respondents contended the category sought working notes, trial and assessment criteria, trial and assessment results, correspondence referring to Embertec’s participation in trials and assessments, but only insofar as that correspondence demonstrated or verified the energy saving benefits of SPCs. Ordinarily, they submitted, one might think that in a case where, first, novelty and, second, sufficiency were in issue, the experimental work of the applicant who was the holder of the patent would be directly relevant. The respondents referred to F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295 and to Lubrizol Corporation Inc v Imperial Chemical Industries Plc (2000) 50 IPR 526 at [27]. The respondents raised novelty issues, questions of fair basing and questions of sufficiency. All three, it was submitted, would give rise to an obligation to discover the experimental work that led to the alleged development of both the patents and of the Emberplug product which was said to be the cause of the damage incurred.

36    The respondents submitted it would be expected, objectively, that in the working notes, trial and assessment criteria it was highly likely documents would be uncovered which went to the applicant’s state of knowledge of the prior art in the period up to the priority date at the time it was developing both its product and the patents. So, on relevance, the respondents submitted that there was clearly relevance in relation to the novelty claims, which they pressed. This category was also likely to go to the question of why the Emberplug did not achieve that which the patents claim in the body of the specification, being the ability to network a plurality of devices. Documents created post the priority date may well shed light on the state of knowledge of Embertec prior to 3 June 2009. There was nothing to say that a field trial working note from some time shortly after or after the priority date may not make complete reference to Embertec’s knowledge of the prior art in the period prior to 3 June 2009 and could operate, therefore, as an admission.

37    The fair basing issue arose because the respondents’ case, in part, was that the claims were not fairly based on the matter described in the specifications. In particular, the body of the patent seemed to be directed almost entirely towards networking multiple energy saving devices and thereby achieving an energy saving benefit, but the claims of the patent were totally unrelated to the networking function claims of each patent, 624 and 197. Further, the Emberplug, which was the product sold by the applicant in the market, was a standalone device which was not networked in any way and could not connect to devices without the connection of a further power board of an ordinary type. So the Emberplug had no networking yet that was the very essence of the body of the specification of the patents.

38    The applicant submitted that category 2 was unconstrained as to time. As sworn by Mr Sloan, Embertec had been involved in trials and assessments to verify the energy saving benefits of its SPC products over a number of years. Those trials and assessments were ongoing. This category would capture every document created by the applicant relating to every test conducted, in the development of every version of the SPCs, to demonstrate the energy saving benefits of them. The category was opposed on the grounds that it was neither relevant nor necessary to the disposition of the proceedings and that it was unduly broad and oppressive. Documents recording trials and assessments carried on prior to the priority date could have no relevance to the allegations of lack of fair basis, novelty and innovative step, as pleaded. A fortiori documents recording trials and assessments carried on after the priority date could have no relevance to those issues.

39    In contrast to the position in F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295, the discovery sought in the present case did not relate to tests conducted by the party alleging invalidity but instead to tests conducted by the patent holder, and questions of misrepresentation and state of knowledge were not pleaded and did not arise. As to breadth and oppressiveness, on the evidence discovery would take one person approximately six weeks to complete. Such an exercise was unwarranted, unnecessary and disproportionate to any discernible benefit from the giving of discovery within this category.

40    In oral submissions in relation to category 2, the applicant submitted that there was currently no pleaded issue that Embertec was engaged in the conduct of tests or other work prior to the priority date 3 June 2009, which might impugn novelty or innovative step. Instead the allegation in the cross-claim was that the relevant patents lack novelty and innovative step, obviousness not being a matter that arose because these were innovation patents, s 7 of the Patents Act 1990 (Cth). The respondents’ case was that there were numerous items of prior art which were in the public domain prior to the priority date and that those items, when analysed, demonstrated that the patents were not novel. For example, a listing of the relevant prior art was set out in paragraphs 18.3B, 18.4, 18.5, 19.5 and 19.6 of the statement of cross-claim. Each of those paragraphs collected and identified with great precision a number of items of prior art which were identified. That was where the battle lines were drawn and on that basis it was difficult to see that the trials and tests and the like carried out or possibly carried out by the applicant prior to the priority date would have any relevance.

41    For example, Burchett J in F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at [4] referred to what was described by Hoffman LJ in Unilever Plc v Chefaro Proprietaries Ltd [1994] FSR 135 at 142 as being 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.

In other words, the applicant submitted, if the first respondent was engaging in research and development, that tended to suggest against a finding of obviousness. But obviousness did not arise in the present case.

42    In F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at [4] Burchett J also referred to Aickin J’s comment in Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 283 that the issue of obviousness “must be judged at the priority date”, so that the discovery of documents by a patentee on this ground should be limited to a period ending then.

43    As to novelty, in F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at [5] Burchett J referred to Aickin J’s comment in Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 275 that:

It is indeed difficult to imagine a situation in which prior experiments as such could throw any light on novelty.

44    Turning to the question of fair basis, at [5] Burchett J said:

Similarly, with respect to fair basis, it is stated in Terrell on the Law of Patents (14th ed, 1994) at para 12.148:

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.

For this proposition, the authority cited is Schering Agrochemicals Ltd v ABM Chemicals Ltd [1987] RPC 185, where Falconer J said (at 187):

[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. It is a matter for the court to decide what is the construction of the claim and its ambit. It is a matter for the court to decide, as a matter of construction, what is the disclosure and its extent and thereafter to decide whether there is fair basis or not and what some person may or may not have thought, either in the plaintiffs’ employ or engaged on behalf of the plaintiffs or indeed, if I may say so, some foreign patent office, has got nothing to do with that and cannot be of any assistance to the court.

The applicant submitted that this was exactly what the case was here. There were allegations of lack of fair basis and the Court would have to construe the patent and decide as a matter of construction whether the claims made in the patent were referrable to and squarely based upon the text of the specification. That exercise would not be assisted at all by discovery.

45    As to sufficiency as a justification for category 2, the applicant submitted, the actual paragraphs of the cross-claim in which sufficiency was raised were paragraphs 18.2 and 19.2 and it was difficult to see how discovery in the terms sought in category 2 could throw any light on the resolution of those paragraphs. For example, 19.2 merely recited matters in the claims for the 624 patent that were said to be not clear.

46    As to oppression, the applicant again referred to Mr Sloan’s evidence.

47     The applicant submitted, the combination of the lack of relevance of the category with the burden imposed meant that the discovery was disproportionate to any forensic value that the documents might have and should be rejected.

48    In my opinion, as framed this category is insufficiently relevant to warrant an order for discovery. This category should be limited as follows

2.    Working Notes, Trial and Assessment Criteria, Trial and Aassessment Rresults as at the priority date showing , and all correspondence referring to Embertec’s participation in various trials and assessments in order to demonstrate and verify the energy saving benefits of the applicant’s SPCs the subject of the patents in issue.

It is a matter of speculation whether there are any results after the priority date in the possession of the applicant which refer back to other pre-priority date results which in turn may assist the respondents: see Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd [2001] FCA 235 at [11] per Tamberlin J.

Categories 3, 6 and 10

49    The respondents submitted that these categories were relevant to the issues in dispute regarding the development of the 197 patent and the 624 patent underpinning the applicant’s product. By reference to Lubrizol Corporation Inc v Imperial Chemical Industries Plc (2000) 50 IPR 526 and F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295, the respondents submitted it was appropriate for the patentee to give discovery of its research, development and experimental work in connection with the alleged inventions. The appropriate formulation in relation to discovery of research material was to extend it to research all studies “in the course of which the invention was made”: Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd [2001] FCA 235 at [7].

50    In oral submissions, category 3 was said to be directly related to the question of what was Embertec’s knowledge of the prior art, being products actually sold in the marketplace prior to the priority date. The respondents had extended the period through to 31 December 2011 to catch the category of documents which may have come into existence after the priority date, but which referred to or disclosed Embertec’s state of knowledge prior to the priority date. The prior art was not simply the pre-existing patents which the respondents had alleged, but also the existence of products in the marketplace worldwide which achieved precisely the same result as the Emberplug and which were on the market prior to 3 June 2009.

51    Category 6, the respondents submitted, was founded on a strong suspicion that Kambrook had already developed its product before entering into a relationship with Embertec and that the Embertec patents may be drawn from a reverse engineering exercise from the Kambrook product and also that the Emberplug product may be a development of the Kambrook product. That was the issue to which category 6 went.

52    The respondents submitted that category 10 was intended to catch documents which were likely to contain admissions in relation to Embertec’s dealings with the Patent Office which resulted in amendments to either the parent patent or the innovation patents as a result of concerns held by the Patent Office. The respondents sought documents, which may be internal documents as well, which responded to concerns that may have been raised by the Patent Office. The respondents suspected that there would be internal working documents in Embertec which may reveal Embertec’s thinking, to the point of being admissions against interest, in relation to the prior art in particular that was related to the two patents.

53    The applicant submitted that category 3 sought discovery of all documents over a three year period. The applicant’s objection was on grounds of relevance and that the category was oppressively broad. The documents sought were not referable to any pleaded ground of invalidity. Documents created after the priority date of 3 June 2009 could have no relevance: F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at [4]. The authorities relied on by the respondents took the matter no further but were limited to their facts and did not support any general proposition favouring discovery of the kind sought by the respondents. Lubrizol Corporation Inc v Imperial Chemical Industries Plc (2000) 50 IPR 526 concerned obviousness but the validity of the applicant’s patents in the present case was not challenged on grounds of obviousness. As to oppression, the category was breathtakingly wide. It would require the applicant to discover nearly every piece of paper and electronic file that it created over the relevant three-year period.

54    As to category 6, the applicant submitted it did not have any discernible relevance to any pleaded issue. The respondents’ submissions did not shed any light on the matter. The category was directed to events after the priority date, and the respondents’ suspicion that Kambrook had already developed its product and that Embertec patents may have been drawn from reverse engineering was nowhere anchored in the pleadings and was just not relevant on the pleaded issues. It was mere conjecture of a kind rejected by Burchett J in F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295.

55     As to category 10, documents created after the priority date relating to revocation/opposition proceedings, the applicant submitted that category lacked any discernible relevance. Again, the first problem with the category was that it related to events after the priority date and it lacked any discernible relevance by reference to the pleadings. There was no discussion or allegation at all in the pleadings concerning re-examination, revocation or opposition proceedings after the priority date, much less had it been elucidated or disclosed how those proceedings, which had nothing to do with this case, might throw light on the issues in this case.

56    In my opinion, as to category 3, it is far too broadly expressed. I would not exercise my discretion to make an order for discovery in those terms, particularly given the oppression to which the applicant refers in its affidavit evidence sworn by Mr Sloan. As limited by me it reads:

3.    All documents as at the priority date showing the created during the period 1 January 2009 to 31 December 2011 that evidence, record, applicant’s knowledge of (i) the pre-existing patents which the respondents allege and (ii) the existence of products in the marketplace which achieved the same result as the Emberplug and which were on the market prior to 3 June 2009. refer to or relate to the development of the technology, features and/or design of the Embertec products including, but not limited to:

3.1.    any presentations, reports, emails, memoranda or file notes created by Embertec referring to any existing energy savings product on the market (excluding EETECH’s products), including any products with separate alarms and any documents containing any comparisons of any such products.

Again, it is a matter of speculation whether there are any documents after the priority date in the possession of the applicant which refer back to other pre-priority dates which may assist the respondents: see Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd [2001] FCA 235 at [11] per Tamberlin J.

57    As to category 6, I am not persuaded that this category is sufficiently relevant to the issues arising from the pleadings to warrant an order for discovery. On the material before me, the submission put on behalf of the respondents did not rise higher than conjecture. In any event, in my opinion the category is too broad. No narrower version of it was suggested on behalf of the respondents. There is no obvious means of limiting the category to what may be sufficiently relevant. I deny the respondents’ application in respect of this category.

58    As to category 10, I am not persuaded that this category is sufficiently relevant to the issues arising from the pleadings to warrant an order for discovery. In my view the possibility that the category of documents may catch admissions against interest is not an adequate basis for a category of this breadth. I deny the respondents’ application in respect of this category.

Category 4

59    In relation to category 4 the respondents submitted that the documents were relevant to the validity of the 197 patent and the 624 patent. The documents were, it was submitted, relevant to the issue of why the applicant chose to include the relevant features in its patent specifications. Also the documents would test the veracity of the 197 patent and the 624 patent insofar as the usefulness, fair basis and novelty claims were concerned.

60    In oral submissions the respondents put that this category related to a slightly different subset of relevance to category 3, in that it related more precisely to the alarms and warning devices as described in the patents. The infrared or radio frequency reception was a reference to the sensor means.

61    The applicant submitted that the category was not relevant and it was oppressively broad. The documents sought by the proposed category were not referable to any pleaded ground of invalidity. The respondents’ submissions failed to identify with any precision the necessary connection between the proposed discovery and the pleaded issues. Documents created after the priority date could have no relevance. Category 4 was also breathtakingly wide. It would require the applicant to discover nearly every piece of paper and electronic file that it created over the relevant three-year period.

62    I am not persuaded that this category is sufficiently relevant to the pleadings to warrant an order for discovery.

63    In any event, in my opinion this category is too broad. No narrower version of it was suggested on behalf of the respondents. There is no obvious means of limiting the categories to what might be relevant. Merely to delete the words “or makes any reference to” would not cure the problem. I deny the respondents’ application in respect of this category.

Category 11

64    This category relates to the files of the patent attorneys. The respondents submitted the documents were relevant to determining the validity of the 197 patent and the 624 patent, particularly in the event that the documents included patent searches and prior art. The respondents submitted that records of the results of patent searches carried out by Davies Collison Cave were discoverable: Trade Practices Commission v International Technology Holdings Pty Ltd (1995) 31 IPR 466 at 470. On the same authority, it was submitted, communications between Davies Collison Cave and other parties such as the Commissioner of Patents were also discoverable. The documents were relevant to all of the grounds of invalidity asserted by the respondents.

65    The respondents submitted that it may well be that Davies Collison Cave had been dealing with other entities as well as Embertec in relation to the Embertec products and patents. It may well be that Davies Collison Cave had conducted prior art searches which revealed the existence of the prior art upon which the respondents relied. It may well be that Davies Collison Cave had provided communications to parties other than the respondents who sold other products in the marketplace, but for some reason the applicant had chosen not to litigate against them.

66    The applicant submitted that it was difficult to see how the entirety of the files of the applicant’s patent attorneys could be relevant or why discovery of the entire files was necessary. Much of the files would contain privileged information, and although privileged documents were excluded from the category, nevertheless they would need to be reviewed. The proposed discovery was far wider than was ordered in Trade Practices Commission v International Technology Holdings Pty Ltd (1995) 31 IPR 466. Moreover, communications between the patent attorneys and the Commissioner of Patents or IP Australia were a matter of public record and discovery of those documents should not be required as they were already available to the respondents.

67    I do not regard the orders made in Trade Practices Commission v International Technology Holdings Pty Ltd (1995) 31 IPR 466 as of assistance in the present case. The decision was primarily concerned with working out claims for privilege. Further, the Federal Court rules and the approach to discovery have changed since the date of that decision. Still further, very much depends on the nature of the case brought and it is not permissible, in my view, to reason directly from the results of one contested application for discovery to another, being the matter presently before the Court: F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at [19].

68    In my opinion this category is too broad. The submissions put on behalf of the respondents were, in my view, somewhat speculative.

69    The appropriate order is to limit the scope of the words “regarding the patent applications for” to patent searches and prior art and to exclude from the category documents which are publicly available. The category would read:

11.    Files of Davies Collison Cave regarding the patent applications for

–    Australian Innovation Patent number 2012100197

–    Australian Innovation Patent number 2012100624

–    Parent Patent number 2010256278

limited to documents evidencing patent searches and prior art and excluding any documents which are publicly available and excluding any privileged information communications)

Category 12

70    At the level of principle this category stands or falls with the amendment to the defence, which I have allowed.

71    At the level of drafting, it seems to me the category is too wide as all the respondents seek in substance is the intellectual property transfer agreement that the two deeds of 30 May 2013 may suggest exists and any other document or agreement which has the same effect of constituting a transfer.

72    As limited in its scope by me, the category would read:

12.    Any document created during the period 1 July 2005 to date which is, or which refers to in any way evidences any “Intellectual Property Transfer Agreement” intellectual property transfer agreement between Giuseppe Gelonese and Embertec or any other document or agreement which records any transfer between any person of any intellectual property rights related to the parent patent or any innovation patent related to at issue in these proceedings.

The making of an order in these terms is conditional on the grant of leave to amend which, in turn, must await the provision by the respondents of a satisfactory form of pleading to raise the substantive issue of the status of the applicant.

Category 14

73    The respondents said in correspondence that documents created by Embertec or the inventor since June 2009 to support the grant of the innovation patents were relevant to the validity of the patents and the applicant’s entitlement to bring infringement proceedings. In oral submissions the respondents accepted that the category could be limited to documents which were used, in the sense of sent to the Patent Office, in the applications for the two patents.

74    The applicant submitted that this category was directed to after the priority date. The issue in these proceedings is whether the applicant’s patents are or are not valid and, if they are valid, whether they were infringed and it was to be doubted that category 14 would assist in that at all.

75    I accept that this category is relevant to the issues. As limited in its scope by me, in light of the respondents’ apparent concession noted above, the category would read:

14.    All documents created by Embertec or the inventor since June 2009 which were used in , or created for use in, the applications for:

14.1.     the grant of Australian Innovation Patent number 2012100624;

14.2.    the grant of Australian Innovation Patent number 2012100197;

and sent to the Patent Office (IP Australia).

Categories 15 and 17

76    The respondents submitted that these documents were relevant to the Crown use defence against the applicant’s claim for patent infringement. The documents went to the question of the extent to which the applicant was involved in assisting the Essential Services Commission or other Victorian authorities develop specifications which later formed the Victorian Energy Efficiency Target Regulations 2008 (Vic) under which the devices were sold. Additionally, the respondents submitted, the documents were directly relevant to their challenge to the validity of the 197 patent and the 624 patent. The documents would provide evidence of the general state of knowledge in the art before the priority date, the extent of information-sharing by industry participants and the foreshadowing of the claims of the 197 patent and the 624 patent by the Victorian Energy Efficiency Target Act 2007 (Vic) and the Victorian Energy Efficiency Target Regulations 2008.

77    The respondents submitted that category 15 sought correspondence in a defined period of three years passing between Embertec and the Essential Services Commission regarding the inclusion of SPCs into the Victorian scheme. Category 17 sought documents that were provided to the Essential Services Commission or any other Government or regulatory authority in the same period in connection with Embertec’s application for approval of its product into the scheme. The respondents anticipated that there would be found some correspondence between the applicant, Embertec, and the Essential Services Commission which demonstrated that Embertec was integrally involved in the drafting of the regulations under which parties such as the respondents were capable of joining the Victorian Renewable Energy Scheme in respect of SPCs.

78    The applicant submitted that the proposed categories sought documents created by Embertec or correspondence between the Essential Services Commission and Embertec. Those documents could have no conceivable relevance to the question whether the first respondent had been authorised by the Crown in the manner alleged in the defence. As to the proposition that the documents were relevant to the respondents’ challenge to the validity of the patents, given that the categories called for documents created from 1 December 2009, being some six months after the priority date of 3 June 2009, this could not be the case.

79    As to relevance I was taken to paragraphs 67 to 72 of the defence. Those paragraphs plead that the effect of approval of the first respondent’s Smart PowerBoard AV was to authorise the first respondent to import it into Australia and to supply it to Victorian consumers of electricity. The importation and supply of the Smart PowerBoard AV products pursuant to the approval was, it was pleaded, for the purpose of achieving the objects of the Victorian Energy Efficiency Target Act 2007 and was for the services of the Essential Services Commission and the State of Victoria. In the premises, it was pleaded, the importation and supply of the first respondent’s Smart PowerBoard AV was not an infringement of either the 197 or the 624 patent.

80    In my opinion, there is a distinct lack of correspondence between the pleadings and the matters put on behalf of the respondents as supporting these categories. I am not persuaded that these categories are sufficiently relevant to the defence of Crown use to warrant an order for discovery.

81    In any event, these two categories are too broad. No narrower version of them was suggested on behalf of the respondents. There is no obvious means of limiting the categories to what might be relevant to the Crown use defence. I deny the respondents’ application in respect of these categories.

Conclusion and orders

82    I direct the parties to forward to my associate short minutes to give effect to these reasons within 13 days. If the parties cannot agree, I will hear them on the final form each category should take.

83    As to costs, the appropriate order is that the respondents pay 60% of the applicant’s costs of the respondents’ interlocutory applications filed on 10 September 2013 and 9 August 2013.

Associate:

Dated:    9 October 2013