" ald . CATCHWORDS Patents - Petition for extension - whether opponent to petition for extension can plead invalidity in defence to petition - whether opponent to petition for extension can cross-claim for revocation - distinction between "plain" or "manifest" invalidity and "mere" invalidity - whether practical advantages and s.63 of the Supreme Court Act justified hearing petition for extension at the same time as cross-claim for revocation. E.I. DU PONT DE NEMOURS & COMPANY v. CADBURY SCHWEPPES PTY. LIMITED & ORS No.G139 of 1987 Beaumont, Spender and Burchett JJ. Sydney 20 July 1987 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G139 of 1987 ) GENERAL DIVISION ) ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES BETWEEN: E.I. DU PONT DE NEMOURS & COMPANY Appellant AND: CADBURY SCHWEPPES PTY. LIMITED COCA-COLA OPERATIONS PTY. LIMITED SOUTHERN CROSS BEVERAGES LIMITED COCA-COLA BOTTLERS (BRISBANE) LIMITED Respondents MINUTES OF ORDER Judges making orders: Beaumont, Spender and Burchett JJ. Date orders made: 20 July 1987 Where made: Sydney THE COURT ORDERS: 1. Grant leave to appeal. 2. Appeal allowed. 3. Set aside the orders made by the Supreme Court on 20 March 1987 dismissing with costs the appellant's motions with respect to the pleadings filed by the respondents; in lieu thereof order that - (a) paras.l(a) to (f) of the first respondent's particulars of objections be struck out; (b) paras.19(b) and 20 of the second, third and fourth respondents' defence be struck out; (c) liberty be reserved to the respondents to re-plead if so advised. 4. The respondents pay the appellant's costs of its motions in the Supreme Court and of this appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. e IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G139 of 1987 ) GENERAL DIVISION ) ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES . BETWEEN: E.i. DU PONT DE NEMOURS & COMPANY Appellant AND: CADBURY SCHWEPPES PTY. LIMITED COCA-COLA OPERATIONS PTY. LIMITED SOUTHERN CROSS BEVERAGES LIMITED COCA-COLA BOTTLERS (BRISBANE) LIMITED Respondents CORAM: Beaumont, Spender and Burchett JJ. DATED: 20 July 1987 REASONS FOR JUDGMENT BEAUMONT J. This is an application for leave to appeal from orders made by a Judge of the Supreme Court of New South Wales dismissing several interlocutory motions in a petition seeking the extension of a patent. The motions raised the important questions first, whether an opponent to a petition for extension of a patent may plead the invalidity of the patent in defence to the petition; and, secondly, whether an opponent may cross-claim, in the petition for extension, for revocation of the patent. It is convenient, in the first instance, to consider the defence and particulars of objection to the granting of the extension filed by one of the opponents, Cadbury Schweppes Pty. 2. Limited ("Cadburys"). According to Cadburys, the patent 1s invalid for the following reasons: "(a) the complete specification of the Letters Patent does not comply with the requirements of Section 40 of the Patents Act 1952.... (b) The alleged invention...was not novel in Australia on the priority date of each such claim... (c) The alleged invention...was obvious and did not involve an inventive step... (d) The alleged invention...18 not an invention within the meaning of the said Patents Act. (e) The alleged invention...is not useful. (f) ...the invention...made only a small advance in the known art." The grounds relied on in paras.(a) to (e) are, in their terms, statutory grounds of invalidity (see Patents Act, 1952, s.100(1); cf. s.59(1)). The ground pleaded in para.(f) is not. In the Supreme Court, it was submitted on behalf of the petitioner, E.I. Du Pont Nemours & Company, ("Du Pont") that, since the validity of the patent is not in issue in a petition for extension, 1t was not open to an opponent in the extension proceedings to assert its invalidity as a defence to _ the application to extend. Du Pont accepted that 1t was open to an opponent to assert that the patent was "quite clearly" or "plainly" or "manifestly" invalid, but, it said, this involved an inquiry of a very different kind from that raised by a contention of "mere" invalidity. Accordingly, Du Pont moved to strike out this part of Cadburys' defence. After a careful analysis of the authorities, the learned Judge dismissed Du Pont''s motion. Du Pont now seeks to appeal against this decision. Because of the comprehensive survey of the cases undertaken by his Honour, it will suffice to mention only a selection of the authorities dealing with the question, A convenient starting point are the observations made almost a century ago by Grove J. in In the matter of Stoney's Patent (1888) 5 R.P.C. 518 at pp.521-2: "We do not in this Court (and this has been decided in a great number of instances) go at all minutely into any question which touches the validity of a patent. If a patent is obviously and ex facie old that would be considered by this Court, and probably this Court would not prolong such a patent. As much as that I think has been said in several cases where a patent was ex facie and obviously old; but we do not go into any nice questions touching the validity of a patent, as to its inventive merit, or as to its being a mere application in the sense of those cases which began with Brooke v. Aston. It has been, I say, well decided that we do not look curiously into these matters if there is apparently some degree of prima facie novelty and utility. It appears to us that looking at this matter prima facie upon such evidence as we have heard before us, this patent 1s one which ought to be prolonged...Whether a Court of Law should ultimately decide the patent (1f it ever came before a Court of Law) to be valid or invalid on the ground of want of inventiveness...is a matter which this Court does not go into, and which must be decided, if it ever is decided, in another court." This approach was taken by Parker J. 1n In the Matter of Johnson's Patent (1908) 25 R.P.C. 709 at pp.723-4: "Por the purpose of determining the nature of the disclosure made and its value to the public, questions of novelty and subject-matter, though not directly in issue, are necessarily of considerable materiality; for, without considering what was already known at the date of the Letters Patent, it is impossible to arrive at any adequate conception of the nature of the disclosure made by the patentee, and, in the same way, the value of this disclosure to the public cannot altogether be independent of the extent of inventive ingenuity required to arrive at the thing disclosed. While, therefore, it would be wrong to allow detailed scientific evidence such as 4. 1s usual in actions for infringement or Petitions for revocation, evidence as to novelty or subject-matter cannot be altogether excluded. It is the duty of the Petitioner at the outset to bring to the notice of the Court all that may in any way affect the judgment of the Court in these matters. The length to which the Petitioner's witnesses should be cross-examined, and the extent to which an objector should be allowed to bring evidence impeaching the validity of a Patent on the ground of want of novelty or subject-matter, must be left to the determination of the Judge who hears the petition, having regard to the nature of the individual case. As a general rule, if, after hearing the evidence of a petitioner's witnesses there be, in the opinion of the Court, a prima facie case for upholding the validity of the patent in respect of novelty and subject-matter, the Court need not in my opinion, investigate the matter further. It is always open to an Objector to challenge the validity of a patent in proceedings more appropriate for that purpose." More recently, in Elitex-Zavody ——_- Textilniho Strojirenstvi's Patent (1974) R.P.C. 447 Whitford J. restated the rule as follows (at p.450): "It is accepted on all sides that on a petition the issue of validity 1s not normally considered, and will indeed only be taken into consideration ina case in which the patent is quite clearly invalid. It is said by the opponents that this 1s such a case, because the patent was obtained = on a false representation, and I shall shortly have to deal with this point. Apart from that, the petition is opposed upon most of the usual grounds; that is to say, it 1s opposed upon the adequacy of the remuneration and upon other points associated therewith, and questions as to whether the petitioners have been' sufficiently diligent, though on one basis neither the opponents nor the Comptroller-General challenge what is asserted, at least before me, to be the merit of the invention." The High Court of Australia has followed the English rule. In In Re Dunlop's Patent (1922) 31 C.L.R. 579, Starke J. said (at p.582): "I do not, of course, inquire into the novelty or 5. utility of the...invention so far as it affects the validity of the grant." Likewise, in Ex parte Waygood Otis Limited; in re Waygood Otis Limited, (1940) 14 A.L.J. 86, Evatt J. said that "it 1s the duty of the Court to assume the validity of a patent unless it is plainly invalid." Williams J. (Gillette Industries Limited v. Commissioner of Patents (1943) 67 C.L.R. 529) was of the same opinion (at pp.531-2): "Counsel for the Commissioner contended that the prior publications tendered in evidence showed that the letters patent,...were bad for want of novelty and that on this ground an extension of the patent should be refused. But even upon application by a petition the Court does not enquire into the novelty or utility of the invention so far as it affects the validity of the grant, except as incidental to the inquiry required by subsection 4 whether, in relation to the public, the invention has conferred upon them some special or peculiar advantage, or is of that high degree of merit which, if everything else were satisfactory, would entitle the patentee to a prolongation of his patent..., although the Court would not prolong a patent which was manifestly bad....In the present case the prior publications appear to me to throw considerable doubt upon the validity of many of the claims in the specification, but I am not prepared to say that any of the claims are manifestly bad." In refusing an extension of a patent based on a foreign prior application because it was manifest that there was disconformity between the claims of the Australian Patent and the basic foreign application, Williams J. said In re Northey Rotary Engines Limited's Patent (1950) 81 C.L.R. 332 (at p.334): "But it seems to me that Mr. Thomas 18 right in his contention that the modified form is not the same invention as that applied for in the United Kingdom and is therefore bad for disconformity. If I had any 6. doubt on the point I would not accede to the contention, but 1t appears to me not only to be right, but manifestly right, and to raise an insuperable objection to the grant of any extension of this part of the Letters Patent." The only case which lends any possible support to Cadburys' contention that an opponent may plead "mere", as distinct from "plain", invalidity is the decision of Mason J. (as he then was) in In re Massey Ferguson (Australia) Ltd. (1976) 50 A.L.J.R. 684. In dismissing an extension petition, his Honour said (at p.686): "In the first instance I must evaluate the nature and merits of the invention in relation to the public, for in the absence of such an evaluation it is impossible to decide whether the remuneration received by the patentee is adequate or inadequate. It is at this point necessary to consider a submission made by the Commissioner of Patents that the patent is invalid for want of novelty or obviousness. This contention is based on the existence of three prior patent specifications each of which is claimed to constitute an anticipation of the petitioner's cutting mechanism which, it will be recalled, was not confined in its application to Sugar-cane harvesters... In the absence of other evidence as to what was known or used before the petitioner lodged its specification and of expert evidence as to. the precise effect of the three specifications already mentioned I am not prepared to hold that' the petitioner's patent is invalid. However, the three specifications taken in conjunction with the absence of evidence of the kind to which I have referred raise a serious question as to the degree of inventive ingenuity, if any, inherent ain_ the petitioner's patent... In the circumstances, therefore, although I am not prepared to find that the patent is invalid, the petitioner has not satisfied me that the patent involves inventive ingenuity..." Mason J. made no reference to the question debated here. It would appear that, if, in fact, the Commissioner had pleaded "mere" invalidity by way of opposition, the petitioner did not 7. argue before Mason J. that this was not, directly at least, an issue in the petition. In the circumstances, Massey Ferguson cannot be regarded as an authority on the present point. The English rule has also been applied in the Supreme Court of Victoria. In re Imperial Chemical Industries Limited's Patent Extension Petitions (1979) 1983 V.R. 1, Fullagar J. followed the settled course of authority (at p.7): "In the end the matter comes down to one of degree - how clearly must a patent be invalid before a Court will refuse to extend it on that ground alone? of course the invalidity must be very clear indeed, but in the present case I am in the end left with no doubt whatever' that the first patent "prior publishes' (Tamoxifen)...and that claim 5 of the first patent actually claims it. ...There 1s ample authority for the view that the Court will not extend a patent which is plainly invalid..." There is nothing in the legislative framework in which the present extension application is brought which might suggest that the established rule should not be applied here. Extension of patents 1s dealt with by Part Ix of the Patents Act. A patentee who considers that he has been inadequately remunerated by his patent may present a petition to the Court (s.90(1)). A person interested may file a caveat against the extension (s.91). On the hearing of the petition, a caveator shall be made a party respondent to the petition, and the Commissioner shall he entitled to appear and be heard (s.92). The court shall, in considering its decision, have regard to (a) the nature and merits of the invention in relation to the public; (b) the profits made by the patentee as_ such; and (c) all the circumstances of the case (s.93). If the court is of the opinion that the patentee has been inadequately remunerated by his 8. patent, the court may order the extension of the term of the patent or order the grant of a new patent (s.94(1)). It will he noted that no mention is made in Part IX of the validity of the patent as a potential issue in the petition. Nor is there anything in the Rules of Court which would indicate that the usual practice should be departed from. Proceedings under the Patents Act are dealt with by Division 2 of Part 81 of the Supreme Court Rules, dealing with intellectual property. The Rules of Court relating to a statement of claim and to proceedings commenced by statement of claim shall, so far as they are capable of application, apply to a petition under the Patents Act and to proceedings commenced by petition (r.19(2)). A petition shall join the Commissioner as a defendant (r.19(5)). In proceedings on a petition under s.90 of the Patents Act, the plaintiff shall, unless the Court otherwise orders, move for a hearing for directions under Part.26 (r.20). A petition under s.90 shall join any caveator and the Commissioner as defendants (r.23). Particulars of the caveator's defence shall include particulars of objections to the granting of the extension (r.28). Under Part 26, which is the general provision in the rules empowering the Court to give directions in any matter, the court may give such directions for the conduct of any proceedings as appear convenient (whether or not inconsistent with the rules) for just, quick and cheap disposal of the proceedings (r.1). In the present matter, directions were given by Cohen J. on 22 August 1986. They included a direction that the defendants file defences with particulars required by r.28 of Part 81. It follows that there is nothing in the rules or in any direction 9. given which could lend support to any suggestion that the Court should depart from the established practice that "mere", as distinct from "plain", invalidity cannot be raised as an answer to an extension application. Both the rules and the directions are silent on the point. It is only reasonable to assume that they proceed upon the footing, first, that the question in the petition is that provided by s.94(1), i.e., whether the patentee has been inadequately remunerated; and secondly, that, in @etermining that question, the Court must consider the matters specified in s.93. As has already been said, no mention 1s made in s.93 or s.94(1) of the validity of the patent as a potential issue in the petition. However, the learned Judge was not persuaded of the merits of an approach that permitted an opponent to raise "plain" or "obvious" invalidity but did not allow a defence of "mere" invalidity. His Honour said (at p.26 of his reasons): "To my mind no reason appears in any of the authorities cited why the ambit of relevance which it seems to be accepted on all hands extends to whether a patent 1s manifestly bad or appears to be so on its face would not extend to the patent's being bad in a manner which was not manifest or did not appear on its face, but which appeared only after making a determination of fact on material which was more or less complex." The learned Judge was of the opinion that this conclusion was reinforced by the provisions of s.63 of the Supreme Court Act 1970 (N.S.W.) as follows: "The Court shall grant, either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between 10. the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided." His Honour concluded (at p.33) that the material pleaded in the defence - "raises a reasonable defence: they raise matters which are relevant to each defendant's objections; they bear on whether the extension claimed should be granted, whether this 1s an exceptional case, on the term of any extension to be granted and on whether the Court should order the issue of a new patent." With all respect, I cannot accept this analysis. Although the inquiry contemplated by Part IX of the Patents Act and its precursors is a summary proceeding, it is not at large. It is not open to an opponent to raise any matter in resisting the petition. The statutory inquiry 1s directed at the question whether the patentee has been inadequately remunerated (ss.90(1); 94(1)). In determining that question, the Court 1s to have regard to the nature and merits of the invention, the profits made and "all the circumstances of the case" (s.93). But to direct the Court to take into account "all the circumstances of the case" does not mean that it is open to an opponent to invite the determination by the Court of any legal issue, even if the resolution of that question might involve consideration of some facts which, to a limited extent, could be relevant to the inquiry contemplated by Part IX. On the contrary, there is every reason to suppose that it was intended by the legislature that in the performance of its statutory function under Part IX, the Court would confine itself to inquiring into the alleged inadequacy of the patentee's ll. remuneration in order to determine whether it is appropriate to grant an extension of the patent. It follows, in my view, that 1t 18 no part of the Court's function under ss.90, 93 and 94 to pass upon the validity of the patent. In particular, in the exercise of that function, it is not, 1n my opinion, appropriate that, en passant, the Court make a declaration of the validity or of the invalidity of the patent. The relevant judicial duty is to consider the different question whether the patentee has been inadeguately remunerated. The validity of the patent is not, in terms, a relevant consideration in the inquiry under Part IX. Not only is it not expressly a relevant matter to be taken into account, but there is no basis for the making of an implication that the validity of the patent is a matter which must, or even might, be taken into account in determining whether an extension should be granted. It is difficult in the extreme to see any reason either of logic or of experience, for the making of such an implication. A patent may be declared invalid only 1f£ a specific ground of invalidity is made out (see the Patents Act, Part XI, s.100(1)). Again, the statutory inquiry under Part XI is not at large. It is confined to the question whether one of the stated grounds of invalidity exists. The inquiry under Part XI differs, in essential respects, from an inquiry under Part IX. To confuse the two inquiries would inevitably cause uncertainty as to the issues in the proceedings, and consequential uncertainty in areas such as the admissibility of evidence. In my opinion, the validity of the patent 1s not, directly at least, in 1ssue 1n an inquiry under Part IX. Its validity 1s presumed for the purposes of the inquiry. 12. This is not to say that it is never open to an opponent of an extension application to raise the validity of the patent. He may do so by bringing his own proceedings under Part XI for revocation of the patent (see, e.g., In the matter of Fleming's Patent (1919) 36 R.P.C. 55 at p.70). Nor 1S 1t to deny an opponent the right to oppose a petition for extension on the ground of "plain", as distinct from "mere" invalidity. This is not a merely verbal distinction. Very different considerations are involved as a matter of principle. In the case of an assertion of "mere" invalidity, what 1s sought to be raised are issues of the kind described in s.lo00(1). On the other hand, a contention that there 1s "manifest" or "plain" invalidity involves a different inquiry; that is to say, whether, on a limited examination of the material, it is obvious that to embark upon a full hearing of the extension application would be an exercise in futility because 1t is plain that the patent is bad. In such an extreme case, the Court has a residual discretion to intervene at an early stage, and, in the interests of all the parties, to call the proceedings to a premature halt. As has been noted, this is the approach taken in England for almost a century and in this country for more than half a century. It is consistent with principle and offers' the practical advantage of saving time and expense in the pursuit of an obviously hopeless application. Moreover, 1t 1S an approach which has found favour in analogous circumstances in other jurisdictions. For instance, in proceedings for judicial review 13. where a strong case for the exercise of discretion to refuse relief has been made out, the Court may dismiss the proceedings at an early stage, without entering upon a full examination of the merits (see Lamb v. Moss (1983) 49 A.L.R. 533 at p.564). Further, in my view, the provisions of s.63 of the Supreme Court Act have no application in the present case. There is no question here of any needless multiplicity of actions. On the contrary, as has been said, it would be wrong to throw together proceedings under Part IX and the very different proceedings under Part XI. It follows, in my opinion, that paras.(a) to (e) of Cadburys' defence should have been struck out but leave should also have been reserved to Cadburys to re-plead in the event that it wished to contend that the patent was manifestly or plainly invalid. In my view, para.(f) should also be struck out insofar as it purports to challenge the validity of the patent. It will be remembered that the general prefatory words of the defence and particulars of objections assert that the patent is invalid for a number of reasons, including para.(f). If the claim in para.(f) were divorced from those opening words, the allegations in para.(f£) could conceivably have been relevant to the matters directed to be considered by s.93. (It will also be recalled that the matters raised in para.(f) are not statutory grounds of invalidity.) But, as presently framed, para.(f) 1s linked to a contention of "mere" invalidity. It must follow that 14. para.(f) should also have been struck out on the basis that leave to re-plead be reserved. Another opponent, J. Gadsen Pty. Limited ("Gadsen") filed a defence. In para.10 of its defence, Gadsen denied para.l2 of the petition. In that paragraph, Du Pont alleged that the invention "was the result of considerable time, expense and inventive ingenuity." However, Gadsen chose to append extensive "particulars" to its denial. In those particulars, Gadsen asserted, inter alia, grounds of statutory invalidity in similar terms to the allegations made by Cadburys. Du Pont moved to strike out the particulars. For the reasons already mentioned, the learned Judge refused the motion. Du Pont has not sought to appeal against this decision. In the result, it will be a matter for the trial judge to determine whether the particulars travel beyond the mere denial in para.10 of the defence. Coca Cola Operations Pty. Ltd., Southern Cross Beverages Pty. Ltd. and Coca Cola Bottlers (Brisbane) Limited (which, collectively, I shall refer to as "Coca Cola"), also opposed the petition and filed a defence which included a defence by way of cross-claim for revocation of the patent. In para.19(b) of the defence, Coca Cola objected to the extension on the basis that any extension or new patent would be liable to be revoked on the grounds in particulars of objection. In those particulars, Coca Cola asserted a number of grounds of statutory invalidity but it was not suggested that the patent was plainly or manifestly invalid. In para.20 of the defence, Coca Cola alleged, by way of cross-claim, that the patent was invalid for the reasons given in 15. the particulars of objection. Coca Cola claimed a declaration of invalidity and an order that the patent be revoked. The learned Judge held that it was open to Coca Cola not only to plead the statutory grounds of invalidity by way of defence to the petition but also to cross-claim for revocation in the petition. Turning first to the defence in the strict sense, it must follow from what has been written about the Cadburys' defence that I must respectfully disagree with his Honour here also. In my view, para.19(b) of the defence should have been struck out and leave to re-plead reserved. The learned Judge was of the view that there were practical advantages in hearing the application for extension and the application for revocation together. His Honour also saw nothing in the language of Part IX of the Patents Act which precluded the bringing of a cross-claim for revocation within a petition for extension. The learned Judge found further support for his view in s.63 of the Supreme Court Act. Again, with all respect, I cannot agree with this approach. In the first place, there are practical disadvantages in attempting to merge the distinct questions of extension on the one hand and revocation on the other. As has been said, they raise very different questions of fact and of law. To hear them together can only serve to introduce confusion into the minds of the parties as to the true issues in the composite proceedings. 16. Secondly, it is wrong in principle to attempt to merge into a single proceeding two such distinct matters. The extension application is intended to be a summary proceeding with a primary emphasis on economic considerations, viewed in the light of the actual use of the patent since its grant. By contrast, proceedings for revocation can be expected to focus attention on the very different question of the alleged inventive step involved which 1s considered as at a much earlier point of time, i.e., the relevant priority date. It follows, 1n my opinion, that it 1s both wrong in principle, and not in the interests of the parties in practical terms, to allow a cross-claim for revocation in extension proceedings. To introduce such a cross-claim would be tantamount to pleading "mere" invalidity by way of defence. The settled course of authority holds this to be impermissible. Put differently, to reject a defence of "mere" invalidity but to allow a cross-claim for revocation would be to permit to be done indirectly what cannot be done directly, that is, by the "back door" (cf. James v. Eve (1873) L.R. 6 H.-L. 335 at p.344; Oxley County District Council v. Macleay River County District Council (1964) 65 S.R. (N.S.W.) 13 at p.28). The cross-claim should have been struck out. In my opinion, this is a proper case for the grant of leave to appeal. It raises important questions which travel beyond ordinary or routine matters of practice and procedure. 17. I would propose the following orders: l. Grant leave to appeal 2. Appeal allowed. 3. Set aside the orders made by the Supreme Court on 20 March 1987 dismissing with costs the appellant's motions with respect to the pleadings filed by the respondents; in lieu thereof order that - (a) paras.l(a) to (f) of the first respondent's particulars of objections be struck out; (b) paras.19(b) and 20 of the second, third and fourth respondents' defence be struck out; (c) liberty be reserved to the respondents to re-plead if so advised. 4. The respondents pay the appellant's costs of its motions in the Supreme Court and of this appeal. I certify that this and the preceding stxléar (16) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Beaumont. | pila oct Associate Dated: JOY July, V9E7 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G139 of 1987 GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES BETWEEN : E.I. DU PONT DE NEMOURS & COMPANY Appellant AND: CADBURY SCHWEPPES PTY. LIMITED COCA-COLA OPERATIONS PTY. LIMITED so CROSS BEVERAGES LIMITED COCA-COLA BOTTLERS (BRISBANE) LIMITED Respondents CORAM: Beaumont, Spender and Burchett JJ. DATED: 0 July 1987. REASONS FOR JUDGMENT SPENDER J. I have had the advantage of reading in draft form the Reasons for Judgment of Beaumont J. in this matter. I agree with them. In deference to the careful and detailed reasons for judgment of the learned primary judge, and also to the submissions made on behalf of the applicants, I wish to make some further observations. The principal question before the learned primary judge was whether the opponents to a petition for extension of a patent may plead the invalidity of the patent in defence to the petition, and cross claim for revocation of the patent. The primary judge was of the view that such an approach was proper, his Honour concluding that the terms of 3.93 of the Patents Act 1952 authorised the court to have regard to any fact which is a circumstance of the case constituted by the patentee's petition for extension. Section 93 obliges the court considering an extension of term of a patent to have regard to "(a) the nature and merits of the invention in relation to the public; (b) the profits made by the patentee as such; and (c) all the circumstances of the case." In particular, his Honour' concluded "the circumstances (of the case) and also the attributes of the mature and merits of the invention in relation to the public include the fact that a ground for revocation of the patent exists and also the fact that if anew standard patent were granted under an order of the Court, a ground for revocation of that patent would exist." (my emphasis). The applications for special leave therefore involve at their centre the question of whether, om applications for an extension of a patent pursuant to s.90 of the Patents Act 1952, it is relevant to inquire whether the patent is, in fact, invalid. I agree with the characterisation of the nature of proceedings for an extension of the life of a patent pursuant to s.90 of the Patents Act 1952 given by Beaumont J. and with his reasons for holding that on such a petition, the validity of the patent, as such, is not an issue but that, if it be shown that a patent 13 "clearly", "plainly" or "manifestly" invalid, then the court, as a matter of discretion, may decline to entertain the petition further. I respectfully agree that these are distinct questions, the latter having similarities to the question of whether proceedings disclose a reasonable cause of action. I therefore respectfully differ from the conclusions of the learned primary judge in those respects. There are differences between the submissions of the various respondents. The second, third and fourth respondents ("Coca-Cola") filed a Defence and Cross-Claim, and in paragraph 19 they pleaded that they objected to an extension for a further term of ten years or any other term on grounds including, as ground (b), that any extension or new standard patent would be liable to be revoked on the grounds set out in the Particulars of Objection which accompanied the Defence and Cross-Claim. In paragraph 20, these defendants went on by way of Cross-Claim to allege that the Letters Patent had at all material times been invalid for reasons appearing in the Particulars of Objection, and claimed a declaration to that effect, an order that the Letters Patent be revoked, and other relief. The learned primary judge declined to order that the Cross-Claim be struck out or stayed, and refused to strike out paragraph 19(b) of those parties' Defence because, in his view, the question of invalidity was an integral part of an application for extension and therefore, in particular, the Cross-Claim for invalidity should not be struck out or stayed. As indicated, I respectfully disagree. The position of the first respondent, Cadbury Schweppes Pty. Limited ("Cadbury Schweppes"), is different from that of the Coca-Cola interests. Cadbury Schweppes filed a Defence and Particulars of Objection, which included an assertion that "The Letters Patent are and at all times have been invalid by reason that..." and it there proceeded to set out various grounds of invalidity. Mr. Shavin, counsel for Cadbury Schweppes, accepted that, on a petition for extension, a relevant question was whether the subject patent was "clearly" invalid as opposed to "mere" invalidity, but asserted that it was not necessary, or indeed proper, to plead "clear" or "plain" or "manifest" invalidity, and for this reason the pleading should not be struck out. For my part, this submission has some attraction, but 1t was not what was decided below. Accepting, as I do, that invalidity as such is not a relevant inquiry on a petition for extension, it seems to me, on reflection, to be better to require the true assertion to be advanced. An inquiry into whether a patent is invalid is an inquiry different in kind from one as to whether it 1s clearly invalid, and it seems to me that if a caveator is contending that the subject patent is clearly invalid, it is right to require that 1t should say so, and give particulars of its assertion. While this precise point was not raised in Elitex~Zavody Textilniho Strojirenstvi's Patent €1974] R.P.C. 447, it 1s worth noting that Whitford J., a judge of no little experience in these matters, said at p. 451:- "If the patent is plainly invalid, there is little point in considering the other difficult questions which arise in this case, and I turn therefore to the objection in paragraph 4(vi) of the particulars of objections, which reads:- *Letters patent No. 773,531 are clearly invalid, because they were obtained ona false representation which was made on or before the 22nd February 1954'- I draw attention to the date - 'in writing in the application form (Patents Form No. 1 Con.) filed by Mira at the Patent Office, London, W.C.2, in respect of patent application No. 5119/54. Mira represented on the said form that the first applications for protection in the convention country in respect of the invention the subject thereof were Czechoslovakian applications made on the 20th February 1953 and the 6th March 1953 respectively, and such representation was false in that the first such application was made in Czechoslovakia by the persons from whom Mira derived title on or about the 26th November 1951.'" I am also in agreement with the orders proposed by Beaumont J. | certify that this an' * > 4. preceding »ages are a truc copy o; the reasons for judgment herein of His Honour Mr. Justice Spender, rrr (vy Ir. At \ " escofata Dated WO Vek) ITE IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G.139 of 1987 ewer rvwr GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALFS BETWEEN: E.I. DU PONT DE NEMOURS & COMPANY Appellant CADBURY SCHWEPPFS PTY. LIMITED COCA-COLA OPERATIONS PTY. LIMITED SOUTHERN CROSS BEVERAGES LIMITED COCA-COLA BOTTLERS (BRISBANE) LIMITED Respondents CORAM: Beaumont, Spender & Burchett JJ. DATE: 20 July 1987 REASONS FOR JUDGMENT BURCHETT J. I agree with the judgment of Beaumont J. I would only add that if the view of the learned judge at first instance were held to be correct, great inconvenience would almost inevitably result. For opponents would often feel compelled to plead defences held to be available to them, lest in any subseguent proceedings they should be shut out upon the principle of Port of Melbourne Authority v. Anshun Proprietary Limited (1981) 147 C.L.R. 589. This would tend to convert the skirmishing of what was designed as an expeditious procedure into a full-scale litigious war spreading to issues which otherwise might never come to be disputed between the parties. I certify that this and the preceding page are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett. ban Cael Associate Dated: 20 July, 1987.