FEDERAL COURT OF AUSTRALIA

Repipe Pty Ltd v Commissioner of Patents (No 2) [2019] FCA 2125

ORDERS

THE COURT ORDERS THAT:

1.    By 15 January 2020, the appellant file any application to amend Australian innovation patents numbers 2017100560 and 2017100943.

2.    Unless by 15 January 2020 the appellant makes the application in order 1, the appeal is dismissed.

3.    The appellant pay the respondent’s costs of the appeal, to be assessed if not agreed.

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

REASONS FOR JUDGMENT

MCKERRACHER J:

Introduction

1    On 22 November 2019, I delivered reasons in Repipe Pty Ltd v Commissioner for Patents [2019] FCA 1956, published 22 November 2019 (Reasons), in which I concluded that the two Patents the subject of the appeal were not a manner of manufacture and were not patentable subject matters. At the hearing of the appeal I was asked to refrain from making final orders pending publication to allow the parties an opportunity to consider the Reasons. The parties were unable to agree to final orders and, by consent, I programmed the filing of short written submissions to accompany their respective minutes of proposed final orders.

2    Repipe’s proposed orders are:

(1)    By 15 January 2020, the appellant file any application to amend Australian innovation patents numbers 2017100560 and 2017100943.

(2)    Unless by 15 January 2020 the appellant makes the application in order 1, the appeal is dismissed.

(3)    The appellant pay the respondent’s costs of the appeal to date, other than the costs of and incidental to the evidence of Andrea Jane Shaw, to be taxed if not agreed.

3    The Commissioner’s proposed orders are:

(1)    The appeal be dismissed.

(2)    The appellant pay the respondent’s costs to be taxed if not agreed.

4    Two issues arise between the parties. The first concerns whether Repipe should have the opportunity to make an application to amend the Patents. The second point of difference concerns the costs of the preparation of the evidence of Ms Andrea Jane Shaw.

The Amendments

5    Repipe submits that it is considering an application to amend the Patents to address the deficiencies identified in the Reasons. It seeks until 15 January 2020 to consider and prepare that application.

6    It is not in dispute between the parties that the Court has wide discretionary power to allow the amendment of a patent. Section 105 of the Patents Act 1990 (Cth) relevantly provides:

Order for amendment during an appeal

(1A)    If an appeal is made to the Federal Court against a decision or direction of the Commissioner in relation to a patent application, the Federal Court may, on the application of the applicant for the patent, by order direct the amendment of the patent request or the complete specification in the manner specified in the order.

Orders for amendment generally

(2)    An order under subsection … (1A) may be made subject to such terms (if any) as to costs, advertisements or otherwise, as the court thinks fit.

…

(4)    The court is not to direct an amendment that is not allowable under section 102.

7    It is also common ground between the parties that, with no final orders having been made, the appeal proceeding remains on foot for the purposes of s 105(1A) and that the Court is not functus officio.

8    Repipe refers the Court to Meat and Livestock Australia Ltd v Cargill, Inc (No 2) (2019) 139 IPR 47 (at [72]-[76], [92] and [103]), but particularly to the following passage in Beach J’s reasons:

It is a long-established practice in Australian patent law that if the Commissioner or the Court upholds objections to the grant of a patent, the decision-maker will refrain from refusing the application in circumstances where it appears that the objections may be cured by amendment.

9    Reliance is also placed for Repipe on Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd (2012) 99 IPR 1510 where Yates J commented on the broader purpose considerations of s 105 (at [161]):

The court does not approach the exercise of its discretion under s 105 of the Act in a manner that is hostile or antipathetic to amendment. Like any other discretion to be exercised judicially, the discretion under s 105 is to be exercised in the light of all relevant factors: Wimmera (No 3) at 39,790. The discretion is a wide one: Smith Kline & French at 569; ICI at [37]. Moreover, the facility for amendment provided by s 105 is a beneficial one. Generally speaking, the approach of the court in relation to the exercise of the discretion should be one that will achieve the evident purpose of the provision: CSL at [54]. Put simply, the power under s 105 of the Act exists for the benefit of the patentee to validate what would otherwise be an invalid or partly invalid patent: Les Laboratoires Servier at [59].

10    There is no requirement that an application under s 105 of the Act be made before or concurrently with a hearing as to the validity of a patent specification, that is clear from authorities: see, for example, Les Laboratoires Servier v Apotex (2016) 247 FCR 61 (at [265]). As such, Repipe contends that had the matter still been before the Commissioner, it could have applied to amend to remove a lawful ground of objection raised in the course of examination: s 104(1) of the Act. The Commissioner also has power to direct the patentee to file a proposed amendment: s 106 of the Act. However, the Commissioner’s delegate refused to provide that opportunity.

11    The chief dispute between the parties on this issue is whether the deficiencies identified in the Patents as revealed in the Reasons are capable of being overcome by an appropriate amendment. Repipe contends that the deficiencies are curable by amendment, but wishes to have a period of time to consider its position in this respect and, if it decides to apply, to formulate the proposed amendments. The Commissioner contends that any application to amend the Patents would be futile as the deficiencies identified in the Reasons, being the absence of any disclosure of any manner of manufacture in the specifications as a whole, are not possible to amend to introduce such subject matter.

Consideration

12    In the Reasons, I observed (at [93]-[94] and [101]):

93    I am not persuaded the Patents in this case are readily distinguishable. No specific application software has been claimed or even identified in any claim of the Patents. No computing programming logic or code is disclosed anywhere in the Patents. The substance of both inventions is a mere scheme that can be implemented using some unidentified software application to cause a server computer and smartphone to perform the steps identified in the claim. To implement the scheme, a reader must use his/her own skill and knowledge to write an appropriate software application. No such application is disclosed in the Patents.

94    It is not sufficient to rely on the form of the claims rather than their substance. This is clear from the authorities. It is not appropriate for Repipe to simply rely upon the field on which ingenuity is claimed to exist, being the field of computer technology. The language used by patent attorneys when drafting and amending claims cannot convert what is, in substance, an unpatentable business method or scheme into a patentable invention by merely asserting that the invention is in the field of computer technology or by using words in the claim or specification that refer to computer technology: Myriad (at [144]). The issue must be addressed as a matter of substance. As a matter of substance, there is no meaningful technical content in the description in the body of the claims or specification. There is only a scheme. The fact that the scheme may be quicker using a computer than using a paper system is a function of computers not the Patents: see, for example, RPL (at [85] and [104]).

…

101    The claimed inventions are as to a business method. Even if construction of the specifications alone were to produce a different characterisation, that would be to elevate form over substance. The Patents may well contain a good idea, but they are not a manner of manufacture and are not patentable subject matters.

(See also [93]-[94] of the Reasons.)

13    As the Commissioner identifies, these findings concerning the absence of any disclosure of patentable subject matter in the specification are at the core of this Court’s reasoning. Although the Full Court’s decision in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 145 IPR 1 was not delivered until after the hearing in the present case (which did inform the Reasons), the principle of finality of litigation is important. The parties filed supplementary submissions on Encompass and so were heard on the decision.

14    Issue was taken by the Commissioner with Repipe having not identified or foreshadowed the nature of the proposed amendments, or attempted to explain how it would be possible to amend the specification so as to introduce patentable subject matter and thus overcome the Court’s findings regarding the absence of manner of manufacture. In reply submissions, Repipe annexed indicative amended forms of claims 1 of the each of the respective Patents and each with a new dependent claim (in the same form for both Patents). These indicative amendments were provided to demonstrate that it would not be futile to grant Repipe leave to amend. Repipe submitted that the precise form of the amendments, and amendments to additional claims, would be disclosed in Repipe’s application to amend, if leave to amend were granted.

15    Repipe submitted that the indicative amendments comply with s 102(1) of the Act, which identifies what amendments are not allowable. Specifically, s 102(1) of the Act provides:

Amendment of complete specification not allowable if amended specification claims or discloses matter extending beyond that disclosed in certain documents

(1)    An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim or disclose matter that extends beyond that disclosed in the following documents taken together:

(a) the complete specification as filed;

(b) other prescribed documents (if any).

16    The proposed amendments to claim 1 of each of the Patents are based on the disclosure of the claims considered in the Reasons and [0058], [0068], and [0071] of the 560 Patent; [0063], [0073] and [0076] of the 943 Patent, which indicate that specific software is required for the server and the smartphone and also provide technical content which would enable a skilled person to put into effect the inventions when they follow the description provided in the specifications. The proposed new dependent claim is based on [0009], [0012], [0059], [0068] and [0071] of the 560 Patent; and [0009], [0018], [0064], [0076] and [0078] of the 943 Patent. Repipe submitted that this new claim provides for improved timeliness and accuracy of risk information by applying GPS tracking to the time and location of each access or upload in real time: as discussed in the Reasons (at [12]).

17    Repipe contends the inventions as claimed with the proposed amendments are not mere schemes, they are not mere instructions to perform a business method with a computer as was the case in Encompass, and they are not merely uses of generic computers as was the case in Commissioner of Patents v RPL Central Pty Limited (2015) 238 FCR 27. I am not convinced as to the correctness of these contentions at this stage. But I am mindful that the prejudice to Repipe in not being permitted the opportunity, within a short time frame, to attempt a suitable amendment would be much greater than it would be to the Commissioner. In those circumstances, I would permit the limited opportunity sought be Repipe.

A further observation on this issue

18    I note for completeness that an oversight occurred which resulted in judgment on this request being distributed to the parties and orders being entered prior to Repipe being heard in reply. The parties were in agreement that, in the circumstances, it was appropriate that the orders be set aside to provide Repipe with the opportunity to file written submissions in reply. I considered that I had the power to do so. In Cameron v Cole (1944) 68 CLR 571, Rich J observed that (at 589):

It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside; and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside (Craig v. Kanssen). In such a case there has been no valid trial at all. The setting aside of the invalid determination lays the ghost of the simulacrum of a trial, and leaves the field open for a real trial (Crane v. Director of Public Prosecutions).

(Citations omitted and emphasis added.)

19    This articulation of principle is applicable to a circumstance in which, by order of the Court, a party has been given a right to be heard. Regard can be had to the exceptional circumstances of this case enlivening the ‘fundamental principle’ described by Rich J.

20    A federal court has such implied power as is a necessary corollary of the nature of judicial power itself (rather than ‘inherent jurisdiction’). The implied power is construed as being no less in relation to the jurisdiction vested in it than the inherent power of a court of unlimited, or general, jurisdiction.

Costs Of Ms Shaw’s evidence

21    It is trite to say that costs generally follow the event, though the Court has a wide discretion in relation to the award of costs: s 43(2) and s 43(3) of the Federal Court of Australia Act 1976 (Cth), including to make different awards of costs in relation to different parts of the proceedings (s 43(3)(b)). Repipe accepts that, generally speaking, the Commissioner should have her costs of the proceedings to date, however, Repipe contends the Commissioner should not be awarded costs in respect of the preparation of Ms Shaw’s evidence, which was not read or otherwise used at the trial.

22    The following background is agreed between the parties:

(1)    On 10 December 2019, Repipe’s lawyers wrote to the Commissioner’s lawyers and advised that Repipe would be seeking leave to rely on the workplace health and safety (WHS) evidence filed in the Patent Office, comprising a statutory declaration of Mr Michael McDonald and Mr Craig Hyde.

(2)    On 14 March 2019, the Commissioner filed an affidavit with WHS evidence by Ms Andrea Jane Shaw.

(3)    On 15 April 2019, Repipe filed the evidence of Michael McDonald in reply to Ms Shaw’s evidence.

(4)    On 23 May 2019, Repipe advised the Commissioner that it would not be relying on or filing any evidence of Mr Craig Hyde (including his original statutory declaration);

(5)    On 28 May 2019, the Commissioner filed its objections to Repipe’s evidence, which included an objection to all of Mr Michael McDonald’s evidence.

(6)    In the lead up to the appeal counsel conferred in relation to the objections to evidence, and on 24 June 2019 it was agreed that the parties would not file any WHS evidence. A document setting out the basis of this agreement was filed with the Court on the first day of trial.

23    Repipe’s position is simple: the Commissioner ought not have her costs of preparing evidence she chose not to use at trial, particularly as that evidence was not purely responsive to evidence served by Repipe; rather her responsive evidence represented a very small proportion of her evidence as a whole.

Consideration

24    Ms Shaw’s evidence concerned whether the claimed inventions made any relevant contribution to the field of WHS. Her affidavit was clearly responsive to Repipe’s contention to the contrary. It is not sufficient to identify that only a small proportion of her affidavit expressly responded to Repipe’s WHS evidence. The preceding evidence supported that position and, read as a whole, the affidavit was responsive to Repipe advising the Commissioner that it intended to seek to rely on the WHS evidence.

25    It was subsequently agreed between the parties that their respective WHS evidence would not be read. The basis for that agreement was recorded in a document handed up at the commencement of the hearing and which recorded:

For the purpose of this appeal, the appellant does not rely on any contribution that the claimed invention might make to workplace health and safety/risk management as supporting a finding of manner of manufacture.

26    Ms Shaw’s evidence was obtained by the Commissioner in response to Repipe’s contention that the invention claimed in the Patents made a relevant contribution to the field of WHS. The affidavit was ultimately not read when that contention was abandoned by Repipe. In these circumstances the evidence was appropriately sought and there is nothing to warrant disentitling the Commissioner to her costs of obtaining it. The circumstances are not such to justify the Court exercising its discretion to depart from the norm that costs follow the event.

Conclusion

27    For these reasons the appeal should be dismissed with costs, subject to Repipe having an opportunity to file an amended application by 15 January 2020.

Associate:

Dated:    19 December 2019