FEDERAL COURT OF AUSTRALIA

Southern Cross Mining Services Pty Ltd v Mickala Mining Maintenance Pty Ltd [2020] FCA 1064

ORDERS

THE COURT ORDERS THAT:

1.    The application by the first respondent for leave to amend its statement of cross-claim in support of the notice of cross-claim is refused as to the proposed amendments to paragraph 5(a)(vii) and paragraph 5(d) of the statement of cross-claim.

2.    The parties file and serve within seven days submissions as to the disposition of the costs of and incidental to the application to amend the statement of cross-claim, limited in the case of each party to five pages.

3.    Pursuant to r 16.53 of the Federal Court Rules 2011, leave to amend is granted in relation to paragraphs 5(a)(i), 5(a)(xxi) and 5(b).

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

REASONS FOR JUDGMENT

GREENWOOD J:

1    These proceedings are concerned with an interlocutory application filed by the first respondent cross-claimant in the principal proceeding, Mickala Mining Maintenance Pty Ltd (“Mickala”), by which it seeks leave pursuant to rule 16.53 of the Federal Court Rules 2011 (the “Rules”) to file an amended statement of cross-claim in the form of Annexure “AJC-12” to the affidavit of Mr Conaghan, the solicitor for Mickala, filed on 21 February 2020. The proposed amended statement of cross-claim is the second version of a proposed amended statement of cross-claim. The first version is Annexure “AJC-4” to Mr Conaghan’s affidavit of 6 December 2019. The statement of cross-claim as filed, was filed on 15 October 2019.

2    In the principal proceeding, the applicant, Southern Cross Mining Pty Ltd (“Southern Cross”), seeks relief in respect of contended infringements of Australian Innovation Patent No. 20130095 (the “095 Patent”) of which it is the patentee, against Mickala and Mr Damien Englebrecht. Mr Englebrecht is said by Southern Cross in its statement of claim to be Mickala’s sole shareholder, sole director, secretary and guiding mind.

3    As to both respondents, Southern Cross seeks a declaration that the respondents have infringed each of the five claims defining the invention the subject of the 095 Patent. I will return to those claims shortly.

4    Southern Cross also seeks a permanent injunction restraining the respondents from infringing each of the claims by engaging certain acts without its consent or licence; damages pursuant to s 122(1) of the Patents Act 1990 (Cth) (the “Act”); an inquiry as to the loss and damage it claims to have suffered by reason of the infringing conduct together with an order that the respondents pay the amount found due upon such an inquiry; additional damages pursuant to s 122(1A) of the Act; in the alternative to the claims under s 122(1) and (1A), the taking of an account; and other relief.

5    The 095 Patent is a patent for an invention the title of which is “Lighting Tower”. It is uncontroversial that the 095 Patent was applied for on 30 January 2013; claims an earliest priority date of 30 January 2013; was granted to the cross-respondent on 21 February 2013; was certified on 28 March 2014; and has an expiry date of 30 January 2021.

6    Although it is well accepted that the “Abstract” recited in the complete specification does not bear upon the construction of the claims defining the invention, the Abstract, for present purposes, provides a useful introduction to the subject matter of the invention. The Abstract is in these terms:

A lighting tower having a low voltage alternator, typically approximately 24V, powering an LED lighting unit. The alternator is a direct drive alternator connected directly to a small block diesel engine. The lighting tower is entirely low voltage reducing electrocution and ignition risks, and is highly efficient through the use of LED elements in the LED lighting unit and the efficient direct drive alternator.

The patent claims

7    The claims defining the invention are these:

1.    A lighting tower comprising:

an engine;

an alternator mechanically connected to the engine; and

an LED lighting unit electrically connected to the alternator,

the LED lighting unit being mounted on a manoeuvrable mast;

wherein the alternator is a low voltage alternator, having a voltage output of less than 50V, connected directly to a shaft of the engine and wherein the LED lighting unit comprises a plurality of arrays of LED elements, at least some of the plurality of arrays being arranged at an angle relative to at least some of the other arrays.

2.    The lighting tower of claim 1, wherein the LED lighting unit has at least one -24V LED light assembly having a plurality of LED elements and the alternator has a voltage output of approximately 24V electrically connected to the at least one -24V LED light assembly.

3.    The lighting tower of claim 2, wherein the plurality of LED elements are arranged in at least one two dimensional array and at least a portion of the LED elements have individual optical elements.

4.    The lighting tower of any one of the preceding claims, wherein the LED lighting unit comprises at least one capacitor electrically connected in parallel to the alternator.

5.    The lighting tower of any one of the preceding claims, wherein the alternator has an output current of between 175 to 400A DC; the LED lighting unit has 100W to 1 kW of LED lights across 3 to 24 12-36V LED light assemblies connected in parallel; and the engine has a 5 to 20hp output.

8    By its statement of claim filed on 26 July 2019, Southern Cross pleads (at paras 7 and 8) that Mickala engaged in the following conduct by which it exploited (in the sense that term is used in limb (a) of the definition of “exploit” in s 3 and Schedule 1 to the Act) products described as the “Mickala Lighting Tower Products” (the “MLT Products”) during the term of the 095 Patent:

From a date presently unknown to the [cross-respondent] but since about September 2013 the [cross-claimant] has, in Australia, made, or alternatively imported, sold, hired, supplied or otherwise disposed of; and offered to make, sell, supply or otherwise dispose of; and offered to make, sell, hire, supply or otherwise dispose of, certain LED lighting towers, described as Mickala models MLT2560-LED, MLT3840-LED, MLS2560-LED, MLT1280-LED, MLT1920-LED and Dual MLT2560-LED (the Mickala Lighting Tower Products).

Particulars

i.    The Applicant relies upon infringing conduct which occurred from about September 2013, and is continuing.

ii.    [further particulars to be provided after discovery and interlocutory steps]

9    At paras 9 and 10, Southern Cross pleads that Mickala continues to exploit the MLT Products. At para 11, Southern Cross pleads each of the features of the MLT Products, identifying 10 features. They are these:

 (a)    a lighting tower comprising:

 (b)    an engine;

 (c)    an alternator mechanically connected to the engine;

 (d)    and an LED lighting unit electrically connected to the alternator;

 (e)    the LED lighting unit being mounted on a manoeuverable mast;

 (f)    wherein the alternator is a low voltage alternator;

 (g)    having a voltage output of less than 50V;

 (h)    connected directly to a shaft of the engine;

(i)    and wherein the LED lighting unit comprises a plurality of arrays of LED elements; and

(j)    at least some of the plurality of arrays being arranged at an angle relative to at least some of the other arrays.

10    At para 12, Southern Cross pleads that the MLT Products embody each of the essential integers of Claim 1 of the 095 Patent. At paras 13, 15, 17 and 19, Southern Cross pleads particular features of each of the MLT Products and at paras 14, 16, 18 and 20, Southern Cross pleads that each of the essential integers of Claims 2, 3, 4 and 5 are embodied in each of the MLT Products. By reason of those matters together with the conduct at para 7 and related aspects of the pleading, Mickala is said to have infringed Claims 1, 2, 3, 4 and 5 of the 095 Patent. The infringements are said to be continuing.

11    Mickala denies infringement and by its notice of cross-claim seeks an order for revocation of the 095 Patent in reliance on s 138(3)(b) of the Act on the footing that the pleaded invention is not a patentable invention. In the statement of cross-claim filed on 15 October 2019, Mickala contended that the invention is not a patentable invention, so far as claimed in each of the five claims, when compared with the prior art base as it existed before the priority date for each claim, because the invention (as claimed) is not novel having regard to 20 pleaded factors: para 5(a); s 18(1A)(b)(i).

12    Mickala also pleaded that the invention, so far as claimed in each of the five claims, is not a patentable invention having regard to the relevant prior art base comparison, because each claim does not involve an inventive step having regard to the same 20 factors: para 5(b); s 18(1A)(b)(ii).

13    The invention, as to each claim, was said to be not useful and thus not a patentable invention: para 5(c); s 18(1A)(c).

14    The invention, as to each claim, was said to have been “used in secret” before the priority date for each claim and thus not a patentable invention: para 5(d); s 18(1A)(d).

15    Finally, Mickala contended that the complete specification for the 095 Patent failed to comply with the requirements of ss 40(2)(a), 40(2)(aa) and 40(3) of the Act: paras 5(e), (f) and (g).

16    On 18 October 2019, Mickala (and Mr Englebrecht) were ordered to provide Southern Cross with a statement or table setting out in respect of each piece of prior art information, concerning the lack of novelty claim, an analysis identifying by reference to the integers of each claim, the relevant parts of each disclosure relied upon to support the claim; those parts of the documents relied upon to support the claim; and those parts of any apparatus or physical object relied upon to support the claim. Mickala and Mr Englebrecht were also ordered to provide a response to a request by Southern Cross for particulars of the statement of cross-claim. That request was contained in an 18 page document setting out a schedule of complaints concerning the adequacy of the statement of cross-claim.

17    The response was provided on 29 November 2019.

18    By the particulars, Mickala abandoned 12 of the matters formerly said to support the lack of novelty claim. It abandoned the “not useful” s 18(1A)(c) claim and it abandoned the claims based on non-compliance with s 40 of the Act.

19    On 6 December 2019, Mickala foreshadowed an amended statement of cross-claim which it would seek to file and rely upon with leave. The proposed amended statement of cross-claim provided further details of an advertisement published on 8 January 2012 said to render the pleaded invention not novel; further details of a patent application concerning the “774 Patent” which, if read together with the “Coolon document”, was said to render the 095 Patent invalid; further details concerning a demonstration of a lighting tower by Mr Istvan Torok; additional matters concerning the lack of inventive step claim; and further details concerning the claim that the pleaded invention was “used in secret” (the para 5(d) claim), adding a new element to that claim at para 5(e) in addition to the pleading at para 5(d).

20    That version of the amended statement of claim was replaced with another version of an amended statement of cross-claim on 21 February 2020 (the “ASOCC”) which is the subject of the present application for leave.

21    By the ASOCC, Mickala abandons the lack of novelty claim concerning the effect of the conjunction of the 774 Patent and the Coolon document. Mickala also abandons the “secret use claim” by reference to the earlier foreshadowed new para 5(e) matter, but maintains the secret use claim by reference to para 5(d).

22    As to the lack of novelty claim, para 5(a)(i), if leave were to be given, would now be in the following terms:

Claims 1 to 5 of the 095 Patent Lack Novelty

5.    Claims 1 to 5 of the 095 Patent are, and at all material times have been, invalid and the 095 Patent is liable to be revoked.

Particulars

Lack of Novelty

(a)    The alleged invention, insofar as is claimed in Claims 1 to 5 of the 095 Patent, is not a patentable invention within the meaning of s 18(1A)(b)(i) of the Patents Act 1990 (Cth) because, when compared with the prior art base as it existed before each of the priority dates of claims 1 to 5, the alleged invention is not novel in light of the following.

Self-publication by the Cross-respondent

(i)    The advertisement published in Australia on or before 8 January 2012 on pages 2 to 3 of the Summer 2011-12 volume of the Australasian Mine Safety Journal, being Volume 3 No. 8 of that publication, whereby [Southern Cross] offered to sell one or more lighting towers styled 12HKP3000 SKIDLED, 12 HKP3000, and 8HVL2000 LED. A copy of this volume of the journal that contains the advertisement was received on 8 February 2012 at the State Library of New South Wales, [the address in Sydney]. A copy of this volume of the journal that contains the advertisement was received on 24 January 2012 at the Commonwealth Scientific and Industrial Research Organisation library at Clunies Ross Street, Black Mountain in the Australia Capital Territory.

23    Southern Cross raises no objection to the proposed amendment to para 5(a)(i). This paragraph, however, bears on the questions in issue concerning the proposed amendment to para 5(d) concerning the “secret use” claim.

24    The proposed para 5(a)(vii) concerning Mr Torok’s demonstration of a lighting tower is in these terms:

Demonstration by Istvan Torok

(vii)    The demonstration on or about 10 June 25 or 26 May 2011 by Istvan Torok of a lighting tower he designed and built, which took place at the “Inventor’s Competition” that was held at the North Queensland Field Days event at 2 Wattle Street, Walkamin in Queensland, which event was open to the public and at which no obligation to keep the working of the lighting tower secret was imposed on those members of the public who attended. As to the requirements of Rule 34.46 of the Federal Court Rules 2011 (Cth), despite having attempted unsuccessfully to contact the person to whom possession of the lighting tower was given after the demonstration, a Hossam Boksmati, in order to ask whether the lighting tower remains in existence, the Respondents are not aware of whether the lighting tower in question remains in existence and cannot at this time particularise where or whether it can be inspected.

(insertions and deletions as per proposed ASOCC)

25    Paragraph 5(a)(ix) is not the subject of any proposed amendment by Mickala. However, Southern Cross raises questions as to the adequacy of it having regard to the same principles by which the proposed para 5(a)(vii) is criticised. Paragraph 5(a)(ix) is in these terms:

Sales of Prior Products

(ix)    A sale in Australia in about September 2012 by Trojinovation Pty Ltd to a company identified as Anitua of two lighting towers styled EcoTower, built in accordance, or substantially in accordance, with the invention disclosed in the 774 Patent. As to the requirements of Rule 34.46 of the Federal Court Rules 2011 (Cth), the Respondents are not aware of whether the lighting towers in question remain in existence and cannot at this time particularise where or whether they can be inspected.

26    An amendment is also proposed to para 5(a)(xxi). No objection is made to this amendment and it is not necessary to set that paragraph out here.

27    The proposed amendment to para 5(d) is in these terms:

Secret Use

(d)    Further or in the alternative to the allegation that the alleged invention was not novel by reason of the matters particularised in paragraph (a)(i) above, Tthe alleged invention, insofar as is claimed in Claims 1 to 5 of the 095 Patent, is not a patentable invention within the meaning of s 18(1A)(d) of the Patents Act 1990 (Cth) because it was used in secret by the Cross-respondent in Australia before the priority dates of each of Claims 1 to 5. for the reasons that:

(i)    the Cross-respondent caused the advertisement that appears on pages 2 to 3 of the Summer 2011-12 volume of the Australasian Mine Safety Journal to be published in Australia on or before 8 January 2012; and

(ii)    by placing the advertisement the Cross-respondent’s object was to bring about a sale of one or more lighting towers made in accordance with the alleged invention.

(insertions and deletions as per proposed ASOCC)

28    It is convenient at this point to set out below the relevant parts of r 34.46 of the Rules:

34.46    Dispute of validity of patent-particulars of invalidity

(1)    A party who disputes the validity of a patent under the Patents Act must include in the pleading or other document in which the party disputes the validity, particulars of the grounds of invalidity on which the party relies.

(2)    If a ground mentioned in subrule (1) is that the invention is not a patentable invention because of information about the invention in a document or through the doing of an act or thing, the particulars must specify:

(a)    for a document – the time when, and the place where, the document is alleged to have become publicly available; and

  (b)    for an act or thing:

    (i)    the name of the person alleged to have done the act; and

(ii)    the period within which, and the place where, the act is alleged to have been done publicly; and

    (iii)    a description that is sufficient to identify the act; and

(iv)    if the act relates to apparatus or machinery - whether the apparatus or machinery exists and, if so, where it can be inspected.

…

(4)    A party is not entitled to tender any evidence in, or make any submissions in support of, a ground for revocation or rectification not stated in the application.

29    Regulation 12.4 of the Patent Regulations 1991 (Cth) made under s 228 of the Act is set out below:

Applications to revoke patents

(1)    An applicant to a prescribed court for an order to revoke a patent under subsection 138(1) of the Act must include, in the pleading or another document disputing the validity of the patent:

(a)    particulars of the grounds on which the applicant relies; and

 (b)    for an innovation patent – the date on which the patent was certified.

(2)    If 1 of those grounds is that the invention is not a patentable invention because of information about the invention in a document or through the doing of an act, the particulars must specify:

(a)    in the case of a document – the time when, and the place where, the document is alleged to have become publicly available; and

  (b)    in the case of an act:

    (i)    the name of the person alleged to have done the act; and

(ii)    the period in which, and the place where, the act is alleged to have been done publicly; and

    (iii)    a description that is sufficient to identify the act; and

(iv)    if the act relates to apparatus or machinery-whether the apparatus or machinery exists and, if so, where it can be inspected.

(3)    Except by leave of the court:

(a)    evidence is not admissible to prove a ground of invalidity that has not been disclosed in the particulars in relation to that ground; and

(b)    evidence as to apparatus or machinery that exists at the date of lodgment of the particulars is not admissible unless it is proved that the party relying on the evidence:

(i)    if the apparatus or machinery is in his or her possession – has offered the opportunity to inspect it; or

(ii)    in any other case – has used reasonable endeavours to obtain its inspection;

to, or by, each other party to the hearing of the application.

(4)    The court may:

(a)    extend the time for giving particulars; and

(b)    allow the amendment of particulars.

30    As to r 16.53 of the Rules, a party may apply to the Court for leave to amend a pleading. Any such application engages the exercise of a discretion. The discretion is exercised according to settled principle. There is a distinction between the discretion of a court to allow a party to amend its pleading on that party’s motion and the requirement to make all such amendments as may be necessary to determine the real questions in controversy: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 (Aon) at [14]. The discretion conferred by r 16.53 is broad: University of Sydney v ResMed Limited( No 5) [2012] FCA 232 at [14]. The principles guiding the exercise of the discretion are those set out in Aon generally. However, the question is often one of whether leave ought to be given to amend a pleading to raise a new or fresh issue in circumstances where the proposed amendment properly frames a cause of action. The question alive in this case is whether the proposed amendment, as to one matter, properly pleads the elements of the claim arising under the Act sought to be advanced and as to the other, whether Mickala has complied with particular obligations material to the proposed amendment.

31    Rules 34.46(1) and (2) of the Rules adopt the elements of Regulations 12.4(1) and (2). The Rules adopt the same imperative terms as Reg 12.4(1) and (2) that a party seeking an order to revoke a patent “must include” and “must specify” particulars of the grounds relied upon for the order. The Rules follow that text because the obligation arises under the Act and Regulations.

32    Both the Rules and Regulation 12.4 provide that if the invention is said not to be a patentable invention because of the doing of an act, the particulars must specify the name of the person alleged to have done the act; the period when and the place where the act is said to have been done publicly; a description of the act sufficient to identify it; and, if the act relates to “apparatus or machinery”, whether the apparatus or machinery exists and if it does, where it can be inspected.

33    Mickala contends that the final element mentioned above (found at r 34.46(2)(b)(iv) and Reg 12.4(2)(b)(iv)) recognises, by the use of the word “whether” that one possibility in a particular case is that the apparatus or machinery no longer exists. If the applicant for revocation says that it does exist, that party must say where it can be inspected. If the apparatus or machinery does not exist, the respondent to the revocation claim is placed in a difficult position of trying to properly address a contention that the act of a person of publicly displaying or demonstrating particular apparatus or machinery on a particular date at a particular place had the effect of anticipating the essential integers of the relevant claim. In such a case, the patentee is deprived of any opportunity to inspect and closely examine the apparatus or machinery, its components and its functionality. How might a patentee properly cross-examine and test the oral evidence of a person who asserts as a matter of description and narrative that every one of the essential integers of each claim of a patent in suit was present in the apparatus or machinery as displayed at the place on the relevant day.

34    The imperative obligation of a claimant for revocation is that the party “must specify” whether (yes or no) the apparatus or machinery “exists”. The difficulty a patentee faces in responding to a claim that the pleaded invention is not a patentable invention because of the doing of an act by a person that relates to apparatus or machinery said to embody and thus anticipate the essential integers of the relevant claim or claims, is recognised by Reg 12.4(3). Regulation 12.4(3)(a) provides that, except by leave of the Court, “evidence” is “not admissible” to prove a ground of invalidity that has not been disclosed “in the particulars in relation to that ground”. It also provides that, except by leave of the Court, evidence as to apparatus or machinery “that exists at the date of lodgement of the particulars” is not admissible, first, unless, if the apparatus or machinery is in the possession of that party, the party has offered the patentee (in this case) the opportunity to inspect it (Reg 12.4(3)(b)(i)); or, second, “in any other case”, the evidence is not admissible unless the claimant for revocation has “used reasonable endeavours to obtain” the inspection of the apparatus or machinery by the patentee (Reg 12.4(3)(b)(ii)), relevantly in this case.

35    In order to try and address the prejudice to a respondent to a claim for revocation based on an act by a person at a particular moment in time relating to apparatus or machinery, the Regulation recognises that the patentee will be at forensic disadvantage (prejudiced) in seeking to address the claim if no opportunity is available to inspect the apparatus or machinery and closely examine it. That is so where the apparatus or machinery “exists” “at the date of lodgment of the particulars” (Reg 12.4(3)(b)). The position is much more difficult where the apparatus or machinery does not exist. At that point, however, a patentee knows it must confront a claim based on oral evidence and a narrative as to the apparatus and machinery without any examination or inspection of the apparatus or machinery in question displayed or demonstrated at the relevant time and place.

36    Another possibility is that a claimant for revocation may not know whether (yes or no) the apparatus or machinery exists but nevertheless seeks leave to amend the claim for revocation to advance a case of invalidity in the patent based on the oral evidence of witnesses some of whom may have designed and publicly displayed or demonstrated the apparatus or machinery, as the act of invalidity relied upon by the claimant for revocation.

37    That is this case.

The demonstration by Mr Istvan Torok

38    The first point of contention in this proceeding concerns the claim that each of the claims of the 095 Patent lack novelty because on 25 or 26 May 2011, Mr Istvan Torok demonstrated a lighting tower (which he designed and built) at an “Investor’s Competition” held at the “North Queensland Field Days” event at 2 Wattle Street, Walkamin in Queensland where the event was open to the public and at which no obligation to keep the working of the lighting tower secret was imposed on the members of the public attending the event.

39    Mickala pleads that after the demonstration by Mr Torok, possession of the lighting tower was given to Mr Hossam Boksmati, and despite Mickala having attempted unsuccessfully to contact Mr Boksmati in order to ask him whether the lighting tower demonstrated at the event by Mr Torok (and given into his possession) remains in existence, Mickala is “not aware” whether the lighting tower remains in existence. Mickala says that it “cannot at this time particularise where or whether it can be inspected”.

40    Thus, Mr Torok’s lighting tower as displayed on 25 or 26 May 2011 at the public event, said to be an act that renders the claims of the 095 Patent invalid and the invention not a patentable invention, might or might not exist depending upon what Mr Boksmati might or might not have done with it, and Mickala simply cannot say where, or whether, Mr Torok’s lighting tower displayed on the day, can be inspected.

41    Mickala says that it is committed to trying to contact Mr Boksmati and find out whether the Torok lighting tower displayed on 25 or 26 May 2011 exists. But so far, it has had no success.

42    In Mr Conaghan’s affidavit of 6 December 2019, he annexes at “AJC-6” a series of newspaper articles which concern Mr Torok and his lighting tower and steps he took to display his lighting tower at the Field Day relied upon by Mickala. Some of the articles show photographs of Mr Torok and his lighting tower. The articles briefly describe the circumstance that Mr Torok displayed his lighting tower at the Field Day as pleaded. The articles describe the lighting tower in very general terms. Other photographs of the tower are also annexed to Mr Conaghan’s affidavit. Some of these photographs were taken “at about the time of” the demonstration in May 2011. There is also a Channel 7 news report on compact disk. In the video, prior to the Field Day competition, Mr Torok is interviewed about his tower. He demonstrates extensions of the manoeuvrable mast.

43    Mr Conaghan also observes in his affidavit of 6 December 2019 that, on that day one of his support lawyers working under his supervision, Ms Slunecko advised him that Mr Torok had told her that he, Mr Torok, had given the lighting tower demonstrated at the Field Day (as pleaded) to a Mr Hossam Boksmati. Mr Conaghan also says that Ms Slunecko attempted to contact Mr Boksmati by telephone on 11 November 2019, on 14 November 2019 and again on 25 November 2019 although these attempts were unsuccessful. Mr Conaghan also says that he has been advised by Ms Slunecko that she has not received any response from Mr Boksmati or anyone on his behalf.

44    Although there is a further affidavit by Mr Conaghan filed on 21 February 2020, there is no reference in that affidavit to any further attempts beyond the three telephone calls by Ms Slunecko in November 2019 to try and locate and contact Mr Boksmati with a view to putting Mickala in a position to be able to “specify” “whether” the Torok lighting tower displayed in May 2011 and relied upon as rendering the patent in suit invalid, “exists”.

45    Mickala says that it has done the best it can. It says that: “we just haven’t been able to contact him. We don’t even know if he’s still alive… but we’ve done all we can do” (T, p 6, lns 34-36). In any event, it says that it has used reasonable endeavours to determine whether Mr Boksmati has the Torok lighting tower and, if not, where it might be or whether it exists somewhere. Mickala also says that it has given the solicitors for Southern Cross the contact details for Mr Torok (but not Mr Boksmati’s details) so as to provide Southern Cross with the opportunity to determine whether the tower exhibited on the relevant day exists and, if so, whether arrangements can be made to inspect it.

46    Mickala says that it ought to be given leave to amend its pleading to rely upon the public demonstration of the Torok lighting tower and if the Torok lighting tower is ultimately found to exist and located, it can then be the subject of inspection by the patentee.

47    Southern Cross says that this approach urged by Mickala is very unsatisfactory and prejudicial. Southern Cross says that Reg 12.4(3), subject to leave, provides a claimant for revocation with three choices.

48    First, it can identify the apparatus or machinery said to anticipate the claim by public demonstration and if it is in its possession, it can offer the patentee an opportunity to inspect it.

49    Second, the claimant for revocation can specify that the apparatus or machinery “does not exist” and then the patentee knows it has to try and meet a case based on oral evidence from someone describing things and asserting particular features of the apparatus or machinery said to have the consequence of invalidating the patent on the ground of lack of novelty.

50    Third, the claimant for revocation can say that it does not have possession of the apparatus or machinery but has used reasonable endeavours to obtain its inspection by the patentee.

51    The complaint Southern Cross makes is that Mickala seeks to amend its cross-claim to rely on the Torok demonstration within the limits of the particulars given, without having engaged with the three options. That follows because Mickala has not said, one way or the other, whether the Torok lighting tower displayed at the Field Event as pleaded, exists or not. Southern Cross says that if the Torok lighting tower exists at the date of giving the particulars, Reg 12.4(3)(b) makes plain that it is important for the patentee to have an opportunity to inspect it. Southern Cross contends that the beginning and the end of the explanation as to what happened to the particular Torok lighting tower relied upon, critically, to invalidate the patent in suit, is that “Mr Torok [told Ms Slunecko that he] gave the lighting tower he demonstrated at the [Field Day] to a Mr Hossam Boksmati”. That is all that is revealed by the affidavit.. Mr Torok’s remark resulted in three telephone calls made to Mr Boksmati in November 2019. There is no forensic explanation of when possession of the critical apparatus or machinery was given over to Mr Boksmati or where it occurred or the circumstances in which it occurred or the contact details for Mr Boksmati or any other details of efforts to chase down Mr Boksmati and any trail leading to the Torok lighting tower in question, its whereabouts or condition. There is no context given to Mr Torok’s remark to Ms Slunecko at all. There is nothing that might help to reveal what became of the critically important Torok lighting tower displayed on 25 or 26 May 2011 or where it might be. No investigator seems to have been appointed to try and track down Mr Boksmati and the particular Torok lighting tower in question. With great respect, Mickala has to do a little more than make three telephone calls to Mr Boksmati in November in 2019.

52    These are all matters for the claimant for revocation to address and undertake.

53    It is not consistent with Reg 12.4(2)(b)(iv), Reg 12.4(3), r 34.46(2)(b)(iv) and ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) for Mickala to say, on the basis of the limited statements and inquiry referred to in the affidavits, that it simply does not know whether the Torok lighting tower in question exists and now it wants to get on with its claim of lack of novelty in the invention as claimed based on the act of displaying the particular Torok lighting tower at the Field Day as pleaded, essentially leaving it to the patentee to locate the tower should it wish to inspect it.

54    Mickala says that it will keep looking for the Torok lighting tower displayed that day, but in the meantime, it seeks leave to rely upon the act relating to the apparatus or machinery within the limits of the particulars it gives, as invalidating the 095 Patent.

55    As things stand, it may be that the Torok lighting tower displayed at the Field Day as pleaded exists. Plainly, it is not in the possession of Mickala. Mickala has provided Southern Cross with extensive particulars of the disclosure (by reference to the integers of each claim) which is said to have been made by reason of Mr Torok’s demonstration of his lighting tower as pleaded. It is not necessary to set out those matters in these reasons. It can be assumed for present purposes that the contention will be that the oral evidence given by Mr Torok (and possibly others) in support of the particulars given to Southern Cross as to the things said to be disclosed by the demonstration in May 2011, will be that each essential integer of each claim is said to have been disclosed by the demonstration by Mr Torok on either 25 or 26 May 2011 of the apparatus or machinery described as the Torok lighting tower.

56    I am not satisfied that leave ought to be given to allow a cross-claim to be made for revocation of the 095 Patent on the basis of the present formulation and the approach to whether the critical apparatus or machinery exists. The claim as framed relies upon an act of displaying and demonstrating a particular Torok lighting tower at a Field Day in May 2011. Mickala has not done enough to try and determine whether the Torok lighting tower exists, and in circumstances where the apparatus or machinery may or may not exist, the patentee is exposed to the prejudice of not being able to test whether the tower (if it exists), as displayed, exhibits the integers of the relevant claim. In a sense, Mickala’s application is premature. If it emerges after proper and reasonable inquiries that the relevant Torok tower does not exist and Mickala specifies that position, with the result that the case is confined to whatever the quality of the descriptive oral or affidavit evidence is as to features of the apparatus or machinery as demonstrated that day, an application to amend to rely upon the act of demonstration of the Torok lighting tower supported by appropriate particulars drawn from the evidence might then be made.

57    At that point, Southern Cross may have to answer such a claim on that basis.

58    An inevitable difficulty, however, with such a case is that it is well accepted that an allegation of prior public use must be strictly proved: Aspirating IP Ltd v Vision Systems Ltd (2010) 88 IPR 52 at [202]; Windsurfing International Inc v Petit (1983) 3 IPR 449 at 489; Davies v Lazer Safe Pty Ltd [2018] FCA 702 at [335]. As Gummow J observed in Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 at 524-525 (Jenkinson J agreeing at 523) proving an alleged anticipation by the recollection of witnesses and by drawings in catalogues and brochures is to be approached with “some caution”.

59    Accordingly, I refuse leave to amend to rely upon the act of demonstration of the Torok apparatus or machinery having regard to the evidence concerning the state of the present inquiries made by Mickala as the claimant for revocation.

The secret use claim

60    The second point of contention concerns para 5(d) and the claim that the invention is not a patentable invention, so far as claimed by each of the five claims, “because it was used in secret” by Southern Cross before the priority date of each claim by reason of Southern Cross causing a particular advertisement to be published on or before 8 January 2012 in the Australasian Mine Safety Journal (the “AMSJ”) with the object of bringing about a sale of one or more lighting towers made in accordance with the pleaded invention.

61    The text of the statutory ground relied upon by Mickala is in these terms:

18    Patentable inventions

…

Patentable inventions for the purposes of an innovation patent

(1A)    Subject to subsections (2) and (3), an invention is a patentable invention for the purposes of an innovation patent if the invention, so far as claimed in any claim:

…

(d)    was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee’s or nominated person’s predecessor in title to the invention.

62    Mickala’s position is that it has pleaded a case of lack of novelty based on publication of the advertisement in the AMSJ in Australia on or before 8 January 2012: para 5(a)(i); [22] of these reasons. No objection is taken to that pleading.

63    However, Mickala understands the position of Southern Cross to be that it will contend that the advertisement does not disclose “all the inner workings of the machine” such as whether the alternator is a low voltage alternator; whether the low voltage alternator has a voltage output of less than 50V; whether such an alternator is connected directly to a shaft of the engine; and other such matters. Thus, Mickala contends that, to the extent Southern Cross has not disclosed such integers (or others) of the claims, the alternative case to be advanced is that Southern Cross has kept aspects of the pleaded invention “secret” within the understanding of the term “secretly used” in s 18(1A)(d) of the Act, in the patent area before the priority date.

64    The pleaded facts are that Southern Cross secretly used the pleaded invention by causing the advertisement to appear in the AMSJ on or before 8 January 2012 and the object of so placing the advertisement was to bring about a sale of products (one or more lighting towers) made in accordance with the pleaded invention (that is, embodying the essential integers).

65    Thus, the elements of the claim are said to be causing the advertisement to be placed for the object of making a sale of a product made up of “inner workings” where those products, and those inner workings, are the subject of patents, and the advertisement does not disclose the integers of the relevant claims of the patent for the product and its inner workings. As a result, the patentee is said to have enjoyed a period, before the filing of the patent application, during which it has derived a commercial benefit of placing an advertisement for the sale of products with the object of bringing about a sale of products embodying the invention as claimed without disclosing the essential integers of the claims for the invention. Thus, the patentee was provided with a de facto extension of the patent term by securing private advantage without the corresponding public disclosure as the price of the grant of the monopoly.

66    The emblematic authority for these propositions is said to be Azuko Pty Ltd v Old Digger Pty Ltd (2001) 52 IPR 75 (“Azuko”), a decision of the Full Court of this Court.

67    Azuko was concerned with claims by “OD” of infringement of two patents concerned with the features of a “down hole reverse circulation percussive hammer incorporating a face sampling drill bit” (the “hammers”), by “A” and “S”. The respondents denied infringement and cross-claimed for revocation of the patents on a number of grounds including that the alleged inventions had been secretly used before the priority dates. That question came down to one of whether “manufacture simpliciter” of the hammers before the priority date, but with a view to eventual sale after the application was made for the patents (and therefore manufacture and stockpiling of hammers), had the result that the invention had been secretly used before the priority date: Azuko, Gyles J at [178]; Beaumont J at [72] generally agreeing with Gyles J “that there was no relevant “use” within the meaning of s 18(1)(d)” Neither of those steps (manufacture and stockpiling) had been done in public. Moreover, what was done was intended to be confidential: Gyles J at [178].

68    In Azuko, Gyles J concluded that the making of the hammers was not “use” of the invention “for relevant purposes” (that is to say, relevantly for these proceedings, for the purposes of s 18(1A)(d) of the Act): Gyles J at [179] and [183].

69    That result was said to follow as a natural outcome of the governing principle. That principle was said to derive from Morgan v Seaward (1837) 2 M & W 544; 150 ER 874 and particularly the observations of Parke B at M & W 559; ER 880 (“Morgan”). In Morgan, Parke B observed that if an inventor could “sell his [or her] invention” keeping the secret (of it) to himself or herself (for example, a product or a substance), and when it was likely to be discovered by another (typically a trader), file an application for a patent, he or she might by such conduct have obtained, in a practical sense, a monopoly for “a much longer period” than the statutory period of the grant. As Gyles J observes, the same point was made by Lord Diplock in Bristol-Myers Co v Beecham Group Ltd [1974] AC 646 (“Bristol-Myers”) although with particular focus upon the factor that would engage the principle.

70    Lord Diplock at 680-1 observed that if an inventor has “already reaped commercial benefit” from a “de facto monopoly” arising out of “concealment” from traders of, in that case, how the new substance could be made, the patent subsequently obtained will be susceptible of revocation as the inventor “will not be permitted to prolong his monopoly” for an additional statutory period. The critical matter for Lord Diplock was whether the inventor had reaped a commercial benefit from a de facto monopoly (a “use” in these senses) owing to his or her concealment of the essential features of the invention.

71    At [180], Gyles J noted the primary judge’s references to the relevant historical basis for the “secret use ground of revocation” and at [181], Gyles J formulated a “practical test” of the content of that principle derived from the observations of Lord Diplock and Parke B referred to earlier.

72    Those paragraphs are in these terms:

180    The trial judge drew attention to the relevant historical basis for the secret use ground of revocation, namely, to prevent a patentee from gaining a longer monopoly than the statutory period by enjoying a period of de facto monopoly through the secret use before the priority date, without meeting the corresponding obligation attaching to such a monopoly, namely, the public disclosure of the invention [Gyles J then referred to the observations of Parke B in Morgan].

181    This passage [a reference to the observations of Lord Diplock at 680-1] suggests a practical test: has what occurred amounted to a de facto extension of the patent term? The answer to this will usually depend upon whether the patentee reaped commercial benefit from what was done before the priority date. In the present case, in my opinion, there has been no de facto extension of the term of the patent by making the articles in question.

73    At [183], Gyles J said this:

183    The test of illegitimate extension of the patent term yields satisfactory results in differing circumstances. If the invention is a process or method, to secretly use the process or method to make goods for sale can readily be seen as a secret commercial use of the invention which would extend the patent if done prior to the priority date. Another example of secret commercial use of that character is if the product which is manufactured according to a product claim is then secretly used as part of a manufacturing process to make other goods before the priority date. Another example would be the use of a device made according to the [patent in suit in the proceedings] as part of a drill rig engaged in commercial drilling, but in conditions of secrecy, prior to the priority date. To make an article for ultimate sale has, no doubt, a commercial aspect, but it does not amount to use of the product made and does not involve any de facto extension of the term of a patent claiming the product. The manufacturing of goods is not, in my opinion, commercial use of those goods.

[emphasis added]

74    Southern Cross says that the act, said to demonstrate that the invention, as claimed, was secretly used, is the placing of an advertisement in a journal coupled with a particular pleaded “object” of obtaining a sale. Southern Cross says that as the act of manufacturing patented products and stockpiling those products before the priority date for later sale (after the filing of the patent application) was found not to constitute acts of “reaping commercial benefit” or seeking to obtain a “de facto extension” of the term of the patent by making the articles in question, it is difficult to see how the act of placing an advertisement in relation to the products in an industry journal could be regarded as having “secretly used” the invention, as claimed, in the patent area before the priority date.

75    The advertisement is in evidence as Exhibit “RJF-12” to the affidavit of the solicitor for Southern Cross, Ms Forsyth, affirmed on 11 February 2020. It is a single page advertisement from a two page print excerpt. The first page is simply the cover page of the AMSJ. The second page is the advertisement itself, headed “Southern Cross Group”, referring to Southern Cross. The advertisement contains a large photograph depicting three fully extended lighting towers. Adjacent to that photograph, the advertisement lists the specifications of a “heavy duty skid lighting tower”, a “tandem axle lighting tower”, and a “single axle lighting tower”, and below the photograph, text details the qualities of the towers, such as there being no need to conduct statutory checks required for high voltage equipment due to their low voltage status.

76    For each of the three advertised lighting towers, the disclosed specifications include: the standard equipment, length, width and height (in millimetres); fully extended mast height (in metres); the engine model, speed (in revolutions per minute), continued power (in kilowatts) and number of cylinders; the alternator, its voltage measurements and style and the tower’s rating voltage (using the measurements A and VDC, or amperes and voltage direct current, each tower having a 28VDC rating voltage and being equipped with a 24VDC-200A LINZ alternator with electronic regulation); fuel tank type, fuel tank capacity (in litres); type of lights (24VDC spot and flood beam lights in each case); mast extension (hydraulic operation in each case), number of mast sections (2 or 3, depending on which tower), mast rotation (each is able to rotate 340 degrees by hydraulic operation); light bar tilt (each is able to tilt 90 degrees by electric operation); noise rating (67 decibels each); and engine protection (each engine is equipped with fail safe shutdown, providing protection against issues stemming from the engine’s temperature or being low on oil or water). In relation to voltage, the advertisement adds this: “The Southern Cross LED Lighting Towers are COMPLETE EXTRA LOW VOLTAGE Unit with absolutely no high voltage in any part of the [unit’s] electrical system”. It also says this: “Extra low voltage (no HV statutory checks required)”. A heading directly above one of the lighting towers depicted in the large photograph says this: “Extra Low Voltage Safety”. In relation to the alternator, the advertisement says this, “The revolutionary Linz direct drive alternator also minimises maintenance costs”.

77    As mentioned earlier, Mickala relies upon the advertisement as a ground of its lack of novelty claim. It says that the advertisement discloses the essential integers of the claims. Southern Cross does not accept that the advertisement discloses all the essential integers of either Claim 1 or any of the other claims. Southern Cross says that the advertisement “does not disclose many of the essential integers of the claim”. Nothing is served by entering into that debate in these proceedings. It would be undesirable to do so. It is a matter for trial. However, let it be assumed for present purposes that the advertisement discloses some of the integers of Claim 1 (and the other claims) but not all of the integers. Upon that assumption, the question to be presently decided is this. If Mickala makes good at trial the pleaded facts that Southern Cross has caused the advertisement to be placed in the edition of the AMSJ in question coupled with an object of bringing about a sale of one or more lighting towers in accordance with the invention as claimed, does that conduct, as so pleaded, give rise to at least an arguable cause of action in reliance on s 18(1A)(d) of the Act which ought properly be the subject of leave to amend?

78    If the ultimate position at trial is that the advertisement is shown to publicly disclose all the essential integers of the claims, the invention, as claimed, lacks novelty. Moreover, the public disclosure of the invention as claimed (if it be the case), is entirely inconsistent with secret use. If, by reason of the advertisement, Southern Cross has engaged in public disclosure of some of the integers but not all, how does secret use find expression in the impugned conduct?

79    In challenging the adequacy of the proposed pleading on the secret use ground, Southern Cross relies upon the explanatory principles identified by Burley J in Coretell Pty Ltd v Australian Mud Company Pty Ltd (2017) 250 FCR 155 at [216] to [221]; Jagot J and Nicholas J agreeing, respectively, at [1] and [2]. Those observations of Burley J take up and apply the observations of Gyles J in Azuko, and other authorities. Those observations are set out below:

216    First, the reference to “use” in the context of “not secretly used” in s 18(1)(d) (and s 18(1A)(d), which is relevantly the same), does not have the same meaning as “exploit”, but nor does it exclude the other aspects of the monopoly reflected in the definition of “exploit”. Rather, a correct understanding of the word arises from an understanding of the word “use” derived from the historical genesis of the secret use provision; Azuko (per Gyles J [180]-[185]), Beaumont J agreeing at [72]) …

217    … However, Gyles J concluded that “use” and “exploit” were not synonyms for the purpose of s 18(1)(d) of the Act. “Use” had a narrower meaning and was to be understood by reference to a practical test, which was consistent with the historical antecedent of the secret use provisions. This called for an inquiry as to whether, by virtue of the impugned conduct, the patentee had reaped commercial benefit from what was done before the priority date. If so, the patentee had obtained a de facto extension of the patent term: Azuko at [181].

218    … The mere retention of products for ultimate sale, after the filing of a patent, of manufactured items that fell within the claim did not amount to relevant “use”. …

219    Justice Gyles noted, however, that the proposed definition of “use” within s 18(1)(d) does not depend on “use” being exclusive to other aspects of the monopoly granted to the patentee within the definition of “exploit” in the Act (at [186]). It may be that the various kinds of exploitation within that definition may overlap in different circumstances, for example, to “sell” goods may be seen as a “commercial use” of the goods.

220    The view expressed by Gyles J was referred to with apparent approval by Dowsett J in Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257 (Grove Hill) at [212], [213] (French J – as he was then – and Gyles J generally agreeing at [125], [349]).

221    Secondly, in Grove Hill, Dowsett J considered that although the words “secretly used” in s 18(1)(d) and “secret use” in s 9(a) are not defined in the Act, it is likely that secret use and public use are mutually exclusive (at [212]). That was the approach adopted by Gyles J in Azuko at [178] and [182]-[183].

[emphasis as per counsel’s outline at [18]]

80    In those observations, Burley J addresses the topic of the meaning of the term “use” in the context of the phrase “not secretly used” in s 18(1)(d) and those observations relevantly apply in the context of s 18(1A)(d).

81     In those observations, Burley J considered whether the term “use” or “used” has the same meaning as the term “exploit” in the Act. Section 13 of the Act gives the patentee the exclusive rights during the term of the patent to “exploit” the invention. The scope of the grant is contained in the breadth of the definition of the term “exploit” in s 3, Sch 1. The term “use”, however, for the purposes of the phrase “not secretly used” does not have the same meaning as “exploit” with the result that a patentee need not necessarily engage in one of the statutory conceptions of the term “exploit” to be found to have made “use” of the invention as claimed for the purposes of s 18(1A)(d) of the Act. That follows from the particular history of the evolution of the secret use provision as explained by Parke B in Morgan, Lord Diplock in Bristol-Myers and Gyles J in Azuko.

82    The relevant “use” engaging the statutory conception of “not secretly used” in s 18(1A)(d) is taking a step (perhaps not a step constituting an act falling within the term “exploit”, but nevertheless possibly including such an act in the relevant class of case) from which it can be concluded that the patentee has, before the priority date, “reaped commercial benefit from what was done before the priority date” (Azuko, Gyles J at [181]) such that there has been a use of the invention. There must also be a use of the invention as claimed. I will return to that matter later in these reasons.

83    There is, however, in my view, an additional element to such a claim to be found within the formulation of Gyles J, although the authorities are not as clear on the topic as they might be. In Azuko, Gyles J at [181] (Beaumont J agreeing at [72] in the terms earlier mentioned) extensively quotes as authoritative the observations of Lord Diplock in Bristol-Myers at 680-1 including Lord Diplock’s remarks noted at [70] of these reasons which recognise that the vice in conduct which resulted in the statutory prohibition on secret use, is conduct of an inventor reaping a commercial benefit from a de facto monopoly in his or her invention “owing to his [or her] concealment from all other traders” of, put simply, the essential elements of the invention. The important elements are reaping a commercial benefit from a de facto monopoly owing to concealment. Concealment gives rise to the de facto monopoly which enables the commercial benefit to be extracted or reaped.

84    In Azuko, Gyles J, with great respect, put the “practical test” he formulated at [181] in slightly shorthand terms rather than the formulation precisely adopted by Lord Diplock. Gyles J observed that the practical test is: has “what occurred” amounted to a de facto extension of the patent term. Gyles J also observed that the answer will usually depend upon whether the patentee has reaped commercial benefit “from what was done” before the priority date. Gyles J formulates the practical test by adopting the phrase “de facto extension” of the term which is a reference to Lord Diplock’s de facto monopoly. However, by framing the test by using the terms “what occurred” and “what was done”, without identifying the content of the conduct, it is not clear whether Gyles J is expressly adopting, as an element of “what must have occurred” or “what must have been done” in making out a claim of secret use, the act of exercising a de facto monopoly or a de facto extension of the term owing to concealment by the inventor as a result of which the inventor has been able to extract, from that de facto monopoly, monopoly rents (as the economists would say) or as Lord Diplock would say, reap commercial benefits or commercial advantage.

85    Gyles J, by extensively quoting at [181] the observations of Lord Diplock, leading to the formulation of his Honour’s own observations, seems to have adopted the notion that what lies at the heart of secret use is deriving commercial gain from a de facto monopoly or extension brought about by concealment of the essential features of the invention.

86    Accordingly, concealment is an essential element of the claim and the reference to “not secretly used” seems to suggest “deliberate” concealment. Concealment is said by Lord Diplock to be the very thing that gives rise to the de facto monopoly that presents the opportunity to extract commercial advantage in the period before the priority date. However, neither Gyles J nor Beaumont J expressly address “concealment” in that sense.

87    The background facts in Bristol-Myers, briefly, were these. In 1962, Beecham had discovered ampicillin. In that year, the company produced a considerable quantity of a substance called ampicillin trihydrate although Beecham’s officers and researchers did not recognize that steps and processes they had taken had resulted in its production. Some of the ampicillin trihydrate was blended with ampicillin, reduced into capsules for sale and sold by way of trade. In late 1963, Beecham discovered that ampicillin trihydrate had special properties and particular advantages over ampicillin, as a result of which Beecham dedicated its production facilities to ampicillin trihydrate rather than ampicillin. In March 1963, Bristol-Myers applied for a patent for ampicillin trihydrate. Beecham filed an opposition to the application on the ground that the invention, so far as claimed, had been used in the United Kingdom before the priority date: s 14(1)(d), Patents Act 1949 (UK). However, s 14(3) of that Act provided that for the purposes of s 14(1)(d), “no account shall be taken of any secret use”. Thus the questions were whether ampicillin trihydrate had been used by Beecham before the priority date of the Bristol-Myers claims and whether any contended use relied upon by Beecham constituted “secret use”, in which event, that use would be disregarded as prior use grounding opposition to the application.

88    In the House, Lords Reid, Morris, Diplock, Cross and Kilbrandon accepted that the sale of the ampicillin trihydrate capsules by way of trade was use of the invention so far as claimed. However, Lord Reid and Lord Morris did not accept that the conception of “secret use” was to be understood according to its natural meaning as importing the taking of steps to “deliberately conceal” use of the invention. Lord Diplock (Lord Kilbrandon agreeing at 689), expressed the following observations. As to the context of the “use” relating to the sale of the capsules, Lord Diplock said this at 684:

What they [Beecham] rely upon is their subsequent sale upon the market of the ampicillin trihydrate which was put into capsules of ampicillin. What they had done was to sell something that was in fact ampicillin trihydrate. That neither they knew nor those who bought the capsules from them could know that what the capsules contained included ampicillin in that particular form could not alter that fact. They intended to sell those capsules which they in fact sold, and to sell them by way of trade. The extent of their own knowledge of the composition or the qualities of the contents of the capsules they were selling was no more relevant than the extent of the knowledge of those who bought the capsules from them. Bristol-Myers were not entitled to a monopoly which would prevent Beechams from selling or their customers from buying in the course of trade what they had sold or bought before.

89    Lord Diplock then considered the second question of whether the prior use by way of sale of the ampicillin trihydrate capsules was a “secret use” within the meaning of the section. As to that question, Lord Diplock introduced his remarks in this way at 684-5:

My Lords, to describe the unconditional sale of a substance on the open market without any of the parties to the sale taking any steps intended to conceal what they are doing as a “secret use” of that substance seems to me to be an abuse of language. What is relied upon in the instant case as making Beechams’ sales of the trihydrate “secret” is the finding of the Patents Appeal Tribunal that no purchaser of the capsules would have been able to ascertain by analysis that any trihydrate was present in them.

[emphasis added]

90    Lord Diplock also said this at 685:

My Lords, in its ordinary connotation, particularly as descriptive of actions, I agree with the Court of Appeal and the Shorter Oxford English Dictionary (1933), vol. 2, p. 1826, that “secret” means: “Done with the intention of being concealed; clandestine.” To ascribe to it a meaning wide enough to include actions done “unwittingly,” a state of mind which is incompatible with any intention to conceal is, in my view, a misuse of the adjective “secret” or, as Edmund Davies L.J. points out in his judgment [in the Court of Appeal], even more so of the adverb “secretly” which is the form in which it would have to be read into section 14(1)(d) where it would qualify the verb “was used.” To sell something to the public unconditionally and thereby to put it out of one’s power to stop them finding out anything that can be found out about it is, in my view, the very opposite of “secret” use of the thing that it sold.

My Lords, I see nothing in the context of section 14 itself to indicate that “secret use” in subsection (3) bears anything other than its ordinary meaning.

[original emphasis]

91    Lord Reid, in his short judgment, observes at 665 that he cannot agree that the term “secret” means “deliberately concealed” although “no doubt that is the normal meaning of the word”. Lord Reid observes at 665 that analogically the phrase “secrets of nature” merely means “something undiscovered without any implication of deliberate concealment”. Lord Reid considered that giving the word its most usual meaning would lead to an unreasonable result which would be avoided by taking the less usual meaning. Lord Reid illustrated what he considered to be an unreasonable result of adopting the meaning attributed to “secret use” by Lord Diplock, in this way:

I think that here the result would be unreasonable. I can see nothing in the act or its apparent policy to justify what seems to me to be a strange result: If one man, he who makes the concealment, alone knows the truth, it is secret, but if no one at all knows the truth it is not secret.

[emphasis added]

92    Lord Reid considered that the facts of the Bristol-Myers case provided an illustration of an unreasonable result that would be avoided by adopting a different approach to that of Lord Diplock on the question of construction. The contention giving rise to the feared unreasonable result and the answer thought to avoid that result was put this way at 666:

[Beecham] submitted a further argument to the effect that if a substance is sold that use cannot be secret in any circumstance. No doubt that is true as a general rule because, at least in the absence of some special contractual provision, any purchaser is free to investigate the nature of what he has bought. And investigation will generally reveal its true nature. The purchaser has the means of knowledge.

But in this case the sales by [Beecham] did not give to any purchaser the means of knowledge. It is admitted that no known method of examination or analysis would have enabled any scientist to discover that there was any ampicillin trihydrate in any of the ampicillin sold by the respondents before the priority date… The fact is that the trihydrate could not have been detected at any time relevant to this case. If I am right in holding that “secret” applies to a case where no-one knew the truth, a fortiori it must apply to a case where no one could have known the truth.

93    Lord Morris at 673 considered that the question of whether the use of ampicillin trihydrate by Beecham was or was not secret use raised “a question of no little difficulty”. Lord Morris regarded it as important to bear in mind that the question arose in the context of proceedings by way of opposition to the grant of a patent and not within “any question of the revocation… of a grant if made”. The ground of opposition arising under s 14(1)(d) of the 1949 (UK) Act (and its relationship with secret use in s 14(3) of that Act) was new to the statutory patent law of the United Kingdom: at 673. In the context of a claim for revocation of a grant of a patent, the relevant question under that Act was whether the invention as claimed “was secretly used”: s 32(1)(l): Lord Reid at 665; Lord Morris at 674. It is not clear whether the views reached by Lord Morris in attributing meaning to the phrase “secret use” in the context of opposition proceedings might have been different had Lord Morris been considering the phrase “secretly used” in the context of a claim for revocation of a grant. At 674, Lord Morris said this:

There is undoubtedly a measure of ambiguity in the words “secret use”. A secret is something that is kept from knowledge. Must it be within the knowledge of some and only kept from the knowledge of others? Must the notion of “secret use” involve that there is a deliberate withholding by some of knowledge from others? Or is there “secret use” if there is use without there being any knowledge of such “use”. There is clearly force in the contention that the words “was secretly used” (as in section 32) may contain a nuance of meaning (not possessed by the words “any secret use”) suggesting conscious deliberate action. But, on the other hand, it can rationally be said that something was secretly used if its use was not and could not be known. Furthermore, it can be said that if there is inquiry whether something was or was not used the question of intention may have little relevance.

If the phrase “was secretly used” inevitably implies conscious deliberate action the result would be that the use would have to be conscious deliberate use and use the secrecy of which was also the result of conscious deliberate action. I would find it difficult to construe the phrase “was secretly used” by applying an objective test to the word “used” and a subjective test to the word “secretly”. Rather would I think that just as user may be established in fact as something that took place so also that the secrecy of the user may similarly be established. If there may be use of a thing without an intention to use it so the accompanying element of secrecy (if it existed) may be without any pre-requisite of intention.

94    Lord Morris at 676 ultimately concluded that the kind of prior use that would disentitle an applicant from being granted a patent was use that gave knowledge of it or the means of knowledge of it to the public. Secret use would be use that did not so give knowledge.

95    Lord Cross thought that it may be that when the United Kingdom parliament adopted the phrase “secret use” it did so “in contradistinction to “public” or “open” use”: at 687. Lord Cross accepted that “in ordinary parlance there is a great difference between using something “unwittingly” and using it “secretly”” and yet there were considerations that suggested that “secret use” ought to be construed “in an “objective” rather than in a “subjective” sense”: at 687. Ultimately, Lord Cross thought it “satisfactory to hold that if a man by selling the article in question puts it out of his power to prevent a purchaser from discovering, if and when he can, the presence in it of the substance in question he has made a “non-secret” use of the substance whatever be his own state of mind and whether or not analysis is, in the existing state of knowledge, possible”: at 688-9.

96    This question was taken up in Australia in Melbourne v Terry Fluid Controls Pty Ltd (1993) 26 IPR 292. In that case, the applicant’s patent had been granted in respect of “an electrically-insulated heat resisting air cylinder for use as an actuator for a fused salt electrolytic cell crust-breaking implement” for use in pot reduction smelting processes in the industrial reduction of alumina to aluminium. The patent in suit was the subject of a cross-claim for revocation on the ground that the invention as claimed was anticipated by the importation into Australia by “SMC” (and adjustments made to the cylinders by SMC) of particular cylinders delivered to a potential purchaser “Alcoa” for installation in a potline reduction smelter. SMC had hoped to supply 1050 cylinders to Alcoa in due course. The adjustments to the cylinders were not made by SMC until after the priority date and nothing done before the priority date amounted to prior use justifying want of novelty by reference to the cylinders. Shortly after the priority date the cylinders were delivered to Alcoa. The contention of the cross-claimant was that the use of the cylinders (the use consisting of adjustments and delivery to Alcoa for trial and evaluation) amounted to “secret use” for the purposes of s 100(1)(g) and s 100(2) of the Patents Act 1952 (Cth). In that context, Jenkinson J said this at 302:

This is not a case of unconditional sale on the open market, as was in question in [Bristol-Myers]. Nor is it a case of trial and evaluation for the purpose of assisting the manufacturer to learn whether his product needs improvement, or to learn how it may be improved. This is a case of demonstration of a product to a potential buyer. I think that the application of the reasoning of the majority in the Bristol-Myers case to a case of this kind requires that “secret use” cannot be found unless the supplier of the product for trial, first, intends that knowledge of the design be restricted to those of the potential buyer’s employees and officers whose function it is to participate in making the trial or the evaluation, and second, has reasonable grounds for believing, either that his intention is known to the employee or officer of the buyer whose function it is to make his intention known to the participants in the trial and the evaluation, or for believing that the participants will assume that that is his intention.

There was no evidence on which to base a finding of a belief, or of grounds for a belief, in the mind of any officer or employee of SMC that the relevant intention, if it existed, was known to any officer or employee of Alcoa, or that the participants in the trial and evaluation at Portland should assume that those who were in control of SMC had the relevant intention.

97    The reasoning of Lord Diplock and Lord Kilbrandon in Bristol-Myers taken together with the emphasis by Jenkinson J on the question of intention and his Honour’s adoption of the construction reflected in the reasoning of Lord Diplock and Lord Kilbrandon, no doubt led to the observation at [13610] in Patent Law in Australia, 3rd Edition, Bodkin that “the authorities support the proposition that deliberate concealment is a necessary element of secrecy”, citing the observations of Lord Diplock and noting the role of intention reflected in the reasoning of Jenkinson J in Melbourne v Terry Fluid Controls Pty Ltd.

98    In attributing meaning to statutory text, I apply the following principles: Thiess v Collector of Customs (2014) 250 CLR 664 at [22]; Wilson v Anderson (2002) 213 CLR 401 at [8]; Lacey v Attorney-General for the State of Queensland (2011) 242 CLR 573 at [43]; CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] and [71]; Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]; Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at [14], [35] – [40]; and s 15AA of the Acts Interpretation Act 1901 (Cth). I have recently set out these principles in detail in Application by Isentia Pty Limited [2020] ACopyT 2 at [60]-[73]. I will not set the principles out in detail in these reasons.

99    As already mentioned, the particular text in question is to be found in s 18(1A)(d) of the Act which concerns whether an invention is a patentable invention for the purposes of an innovation patent. Section 18(1) is concerned with that question in relation to a standard patent. The distinction is important because of the processes which apply administratively to each. In the case of an innovation patent, the Commissioner undertakes a formalities check in respect of the application and if satisfied on the balance of probabilities that the application passes the formalities check, the Commissioner must accept the patent request and complete specification: s 52. An application for the grant of a standard patent is subject to an opposition procedure described in Chapter 5 of the Act. Chapter 9A of the Act addresses the topic of examination, re-examination and opposition in relation to innovation patents. Section 101A deals with the examination by the Commissioner of the complete specification relating to an innovation patent. That examination is to be the subject of a report under s 101B(1) and the matters to be examined include whether the invention, so far as claimed, complies with s 18(1A)(a), (b) and (c), and other matters: s 101B(2). Questions arising under s 18(1A)(d) (whether the invention as claimed was secretly used) are not within the scope of the examination: s 101B(2)(a)-(i). The examination is to be the subject of a certificate under s 101E(2) of the Act if the Commissioner is satisfied of the matters recited at s 101E(1) of the Act. Those matters do not engage questions arising under s 18(1A)(d) of the Act. A certificate issued under s 101E is susceptible of revocation under s 101EA and s 101F of the Act. After an innovation patent has been certified by the Commissioner, the Commissioner may be called upon to conduct a re-examination of the complete specification. However, the grounds for revocation of the patent upon re-examination engage questions arising under s 40(2) or (3) of the Act, questions arising under s 18(1A)(a), (b) or (c) and questions of whether the invention is not a patentable invention under s 18(2) or (3). None of these questions engage issues in relation to secret use. An innovation patent might be revoked under s 101J of the Act. The Minister or any other person with standing may oppose an innovation patent that has been certified and seek revocation of it on one or more of the grounds set out in s 101M. None of those grounds engage questions arising under s 18(1A)(d) of the Act. By s 138(3)(b) the Court may revoke an innovation patent on the ground that the invention is not a patentable invention, which has the effect of engaging s 18(1A)(d) and thus the question of whether the invention is a patentable invention for the purposes of an innovation patent if the invention as claimed in any claim was or was not secretly used in the patent area before the priority date of the claim. This is the statutory mechanism by which the question of whether or not the invention, so far as claimed in any claim, was or was not secretly used.

100    As to the meaning of the term “secret” and the derivative term as an adverb, “secretly”, the Oxford English Dictionary (online edition, accessed on 23 July 2020) attributes a number of meanings to the word “secret” as an adjective. At one level, the word means “kept from knowledge or observation; hidden, concealed”. As a part of that meaning, the word has a predicative meaning in the sense of “to keep secret” and in that sense it means: “kept from public knowledge, or from the knowledge of persons specified; not allowed to be known, or only by selected persons”. In the sense of a “secret place” it means “removed from the resort of men; retired, remote… secluded”. In the sense of secret actions, negotiations or agreements, it means “done or entered into with the intention of being concealed; clandestine”. In the sense of doctrines, signs, methods of procedure, it means “kept from the knowledge of the uninitiated”. In the sense of feelings, passions or thoughts it means “not openly avowed or expressed; concealed, disguised; also, in stronger sense, known only to the subject, inward, inmost”. In the sense of a committee or conclave, it means “conducted with secrecy; that keeps its deliberations unknown to the public”. It can also mean “hidden from sight; not discernible or visible; unseen”. As to a door, chamber drawer, passage or mechanical contrivance it means “designed to escape observation or detection”. In the sense of an agent it means “works in secret”. In the sense of a life, a secret life is “a private life of a nature concealed from the common observer”.

101    As to the adverb “secretly”, it means “in a secret manner, in secret, not openly; with a hidden meaning; indirectly”.

102    I am satisfied that in s 18(1A)(d) the term “secretly used” means deliberately concealed consistent with the dominant understanding of the term “secret” and the derivative adverb “secretly”. I am also satisfied that there is nothing in the provisions of the Act which suggests that there ought to be any other meaning attributed to those words than their ordinary meaning. This is especially true in circumstances where the question arises in the context of an application for an order to revoke the grant of a patent rather than questions arising in an opposition proceeding. I am not satisfied that the term “secretly used” draws its meaning from contextual phrases such as “the secrets of nature” or “ the secrets of the universe” as suggesting a meaning of simply “unknown”, rather than “deliberately concealed”.

103    Thus as to a claim for revocation of a patent on the ground that the invention, as claimed, is not a patentable invention having regard to s 18(1A)(d), it seems clear enough that (a) there must be a “use” of the invention in the sense that the patentee has derived a commercial benefit by doing something with the invention (process or product) that produces the benefit; (b) that something, must engage use of the invention “as claimed” in the sense that the process or product used so as to produce a benefit must engage each of the essential features (or in later terms, integers as filed) of the invention; (c) the use of the invention as claimed in these senses, must engage deriving a commercial benefit from what was done before the priority date as an exercise of a de facto monopoly arising out of or “owing to” the patentee’s conduct of concealing the essential features of the process or product before the priority date; and (d) the concealment must be an act of deliberate concealment. Those elements at (c) and (d), having regard to the authorities mentioned and the approach to statutory construction, are to be found within the statutory language “not secretly used” in the context of the explanation of the historical origin of the secret use ground which now finds expression in the Act in s 18(1)(d) and s 18(1A)(d) and the accepted approach to the attribution of meaning to statutory text.

104    The elements described at (a) and (b) above are requirements of the text of the sections in express terms rather than matters of attribution of meaning to text.

105    Thus, for the purposes of pleading the elements of a claim in reliance on s 18(1A)(d), it is necessary to plead material facts which, if made good, would prove each of the matters at (a) to (d) above.

106    Does the present pleading plead material facts which, if made good, establish a basis for a claim in reliance upon s 18(1A)(d) of the Act?

107    As to that, Mickala pleads that the invention, in so far as claimed, was used before the priority date by Southern Cross by causing the advertisement to be published in the AMSJ on or before 8 January 2012 coupled with the object, in placing the advertisement, of bringing about a sale of one or more lighting towers. The earliest priority date is 30 January 2013 and thus the advertisement was published approximately one year before the priority date. The advertisement extols the virtues or attractive features of the lighting tower product. It addresses questions such as “what do you need to consider?” and “what are the benefits of the extra low voltage lighting towers?”. The advertisement is endorsed with the business address for Southern Cross, its phone number, facsimile number, website address and email address, a toll-free number and a separate website for “lighting towers” which seems to be a specific website for the product, apart from the Southern Cross website itself.

108    In this case, the advertisement is being asked to do a lot of work so far as the elements of a secret use claim are concerned. The advertisement is said to be the use of the invention and it is also said to be the expression of the commercial advantage obtained by the patentee by exercising a de facto monopoly before the priority date. The commercial advantage extracted by the patentee in the period before the priority date is said to stem from the advertisement itself. Mickala contends that an advertisement to sell a product ought to be treated logically in the same way as a sale (T, p 11, lns 23-24) assuming that the advertisement is characterised as an advertisement to sell. Mickala contends that the earlier the advertisement is placed, the greater the commercial benefit derived, because a patentee which advertises well before the priority date exposes itself to a greater level of sales and a better commercial outcome than would be the case had the patentee placed the advertisement after the priority date or a short time before the priority date. Mickala contends that, by placing the advertisement in an industry journal and bringing the virtues of the product (which is said to in fact embody all of the essential elements of the invention as claimed even though all such essential features may not be identified in the advertisement), to the attention of a cohort of companies engaged in aspects of mining and concerned about the safety of such operations, the patentee has obtained the commercial advantage of building interest in, and a reputation for, the product. More than that, however, Mickala contends that the placing of the advertisement before those who have an interest in knowing about such a product ought to be treated, analytically, as the same commercial benefit as making a sale (even though the product may not be delivered until after the priority date).

109    That seems to me to be where the contention breaks down for the purposes of a claim in reliance on s 18(1A)(d) of the Act. Although causing the advertisement to be placed in the AMSJ with the object in mind of bringing about a sale of the product might, arguably, as a matter of pleading, constitute use of the invention in one sense of the word, it can only constitute use if the patentee, before the priority date, has exercised a de facto monopoly so as to obtain or gather in a commercial advantage. If the limit of the proven fact at trial (as pleaded) is that the patentee placed the advertisement in the AMSJ a year before the priority date with the object of bringing about a sale of one or more lighting towers, those facts alone will not make good “use of the invention” in the sense that the authorities require, because placing the advertisement coupled with the pleaded object does not give rise to a commercial advantage derived by the patentee in the period before the priority date according to those authorities.

110    Mickala recognises the difficulty it faces in the limited way in which it has pleaded “use”, by failing to identify as pleaded material facts the actual commercial benefit obtained by the patentee before the priority date in the exercise of a de facto monopoly. That is why Mickala seeks to equate, in oral submissions, the placing of the advertisement coupled with the object of bringing about sales, with a sale, in fact.

111    Mickala says that it is logically the same thing.

112    Placing an advertisement published some time before the priority date in an industry journal whose subscribers might be thought to have an interest in the patentee’s product (the subject of the claims of the invention embodied in the product) is not the same thing as selling the product before the priority date as an exercise of a de facto monopoly in the product.

113    Mickala says that it wants to test the boundaries of what might constitute obtaining a commercial benefit before the priority date in the exercise of a de facto monopoly. It says that as there is no authority on the question of whether placing an advertisement, some significant time before the priority date with the object of making a sale of a product, confers commercial advantage on the patentee, so as to constitute use in the relevant sense, the pleading as presently limited to the material facts reflected in the proposed amendment is sufficient, it is said, to establish use, should the court at trial, having regard to the evidence adduced as framed by the pleading, conclude that the patentee by placing the advertisement coupled with the pleaded object, obtained, by those facts, a commercial benefit.

114    The only benefit Southern Cross could have obtained would be a sale of a lighting tower by reference to the advertisement published before the priority date. Mickala equates placing the advertisement with making a sale. The case for commercial benefit is put orally by Mickala on the footing that Southern Cross was able to make sales after the priority date (because it does not seem to be suggested that Southern Cross made sales before the priority date) sooner than it would have made those sales, had the advertisements been placed on or after the priority date.

115    That conception of the commercial benefit is not pleaded.

116    The proposed amended pleading ought to identify, with precision, the commercial benefit said to have been obtained by Southern Cross, before the priority date, as an exercise of a de facto monopoly in the product. If it is to be said, as a matter of commercial benefit, that Southern Cross made sales by accepting offers to purchase one or more lighting towers in the period between 8 January 2012 and 30 January 2013, notwithstanding that supply of the product may have occurred after 30 January 2013, that matter needs to be pleaded.

117    Apart from these matters, Mickala needs to plead material facts which, if made good, prove that Southern Cross used the invention as claimed “secretly”.

118     If the contention is, as it seems to be, that Southern Cross placed the advertisement for its product, the subject matter of which is a product that embodies all of the essential features of the invention as claimed, but disclosed only some of those features, holding others back (that is concealing others) to prevent disclosure and extract the pleaded commercial advantage (when pleaded, or indeed as presently framed), the conduct of deliberate concealment must be pleaded.

119    The remaining difficulty identified by Southern Cross is the notion that secret use and its inherent quality of concealment is mutually exclusive of public use. If the patentee has descended into the public arena and, by the advertisement, entered the forum of an industry group, without any express constraints of any kind (said at one level to be so devoid of limitations as to constitute novelty-destroying publication in the invention), a question arises as to whether the statutory concept of an invention, so far as claimed, not being secretly used, is engaged at all.

120    For present pleading purposes, I accept that a claim of using an invention as claimed, before the priority date, so as to obtain or extract a commercial benefit from the exercise of a de facto monopoly (as those concepts are understood according to the authorities), might be capable of being pleaded where a step was taken engaging a public act, but where concealment of essential features from that public act also occurred.

121    Having regard to all of these considerations, the application for leave to amend the statement of cross-claim in relation to para 5(a)(vii) concerning the demonstration by Mr Torok, and para 5(d) concerning secret use, is refused. It may be that Mickala is capable of framing a claim in reliance upon s 18(1A)(d) of the Act having regard to the observations in these reasons. If Mickala is capable of framing such a claim having regard to these reasons, it ought to formulate the proposed pleading of such a claim within fourteen days and give notice of the proposed pleading to Southern Cross. If such a pleading can properly be framed, the parties may reach agreement about the pleading. If not, and Mickala takes the view that it can frame an appropriate pleading, an application might be made about that matter.

122    As to the question of the costs of the application to amend the statement of cross-claim, the parties are directed to file and serve submissions as to costs limited in each case to five pages, within seven days.

Associate:

Dated:    27 July 2020