Flexible Lace Steeling Lacings Co v Beltreco Ltd [2000] FCA 523

FEDERAL COURT OF AUSTRALIA

Flexible Steel Lacing Co v Beltreco Ltd [2000] FCA 523 FLEXIBLE STEEL LACING COMPANY v BELTRECO LTD & ANOR NG 935 OF 1997 HELY J 17 APRIL 2000 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 935 OF 1997

BETWEEN: FLEXIBLE STEEL LACING COMPANY

APPLICANT

AND: BELTRECO LTD & ANOR

RESPONDENT

JUDGE: HELY J

DATE OF ORDER: 17 APRIL 2000

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. Any affidavit evidence to be filed by the respondent on the issue of prior publication by the showing of the relevant pamphlet by Ron Slattery to Les Brown prior to 4 May 1984 be filed and served by 8 May 2000. 2. The hearing of the Notice of Motion be adjourned to 9 May 2000. 3. The hearing of evidence and submissions on the issue of prior publication by the showing of a pamphlet by Ron Slattery to Les Brown be adjourned to 15 and 16 May 2000. 4. Submissions continue and be completed on the case as currently pleaded. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 935 OF 1997

BETWEEN: FLEXIBLE STEEL LACING COMPANY

APPLICANT

AND: BELTRECO LTD & ANOR

RESPONDENT

JUDGE: HELY J

DATE: 17 APRIL 2000

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The evidence in this matter concluded shortly prior to lunch on 12 April 2000. At about lunchtime on that day documents came into the possession of Mr Skelton of Prok International Limited, one of Australia's largest manufacturers of pulleys. The documents came to the respondent's attention at about lunchtime on the same day when they were delivered to counsel's chambers. The documents included two letters. First, a letter of 4 May 1984 on the letterhead of Prok International Limited addressed to Mr Barnes, Belle Banne Australia. That letter stated as follows: "Following a recent visit to Ron Slattery he showed me your pamphlet on Ceramic Lagging for Pulleys. We would appreciate you sending Two (2) copies of the Lagging Brochure to us at your earliest convenience. Best regards, Les Brown." 2 Second, a letter of 14 May 1984 on the letterhead of Belle Banne (Aust) Pty Limited addressed to Mr Brown at Prok International Ltd which stated: "Just a short note to confirm receipt of your letter regarding Ceramic Lagging for Pulleys. As indicated by phone we will be in a position to submit details of our new lagging range in about 6 weeks. Obviously we are very interested in working in close co-operation with Prok in this area and will keep you informed of our progress. I will contact you prior to my next trip to Melbourne in about 2-3 weeks." 3 If the ceramic lagging for pulleys referred to in the letter of 4 May 1984 was the lagging that is the subject of these proceedings, then subject to the precise contents of the pamphlet, publication of it would probably constitute an anticipation. This would invalidate the patents in suit as the earliest available priority date for the claims of those patents is 26 June 1984. The respondent now seeks leave to amend its particulars of invalidity so as to rely upon the showing of the pamphlet by Ron Slattery to Les Brown prior to 4 May 1984. The respondent also seeks an adjournment of the proceedings in order to make inquiries of Les Brown in relation to the pamphlet. The respondent does so on the basis that the letters in question ought to have been discovered, or alternatively on the basis that through no fault of its own, the material in question only came to the respondent's attention at the last minute and it is potentially fatal to the applicant's claim. 4 Discovery was given by reference to categories of documents. Four categories were listed. Only two are relevant for present purposes and they are categories 1 and 4. Category 1 was as follows: "All documents relevant to the applicant's entitlement to the patents at issue." 5 In my opinion, the documents in question were not discoverable in terms of paragraph 1. Both the terms of the paragraph and the context in which it appears indicates that the subject matter of paragraph 1 is title to the patent (which was in issue) rather than validity of the patent. 6 Category 4 was as follows: "All documents which comprise or demonstrate the research and development undertaken in respect of the claimed invention of the patents at issue not later than the Priority Date, 26 June 1984." 7 Whether the documents are discoverable in terms of paragraph 4 depends upon whether the pamphlet demonstrates the research and development undertaken in respect of the claimed invention prior to 26 June 1984. If the pamphlet relates to the invention, then again subject to its precise terms, it probably satisfied that description. The applicant's solicitors gave consideration to the need to discover the documents and indeed to the whole issue of prior publication, because if established, it would be fatal to the applicant's claim. The instructions which the solicitors were given included an instruction that the pamphlet referred to in the letter of 4 May 1984 was not referable to the invention the subject of these proceedings, but to a product called Green Lagging which originated in Japan. The pamphlet was said to be with respect to that product. If those instructions are correct then the letter would not be discoverable in terms of paragraph 4. 8 Mr Barnes has sworn an affidavit in support of the motion in which he says: "10. In May 1984 there were no leaflets, brochures, technical specifications or other similar documents which referred to or contained any details of the products which were to become Belle Banne flexible strip lagging." Mr Slattery has also sworn an affidavit in opposition to the motion in which he says: "7. I did not receive any product bulletins or sales or marketing brochures or leaflets relating to Belle Banne's flexible ceramic strip lagging until much later than May 1984, I believe in 1986." 9 That evidence tends to support the proposition that the documents in question were not discoverable. What Mr Les Brown has to say on this issue is not known as he left Prok in 1985 and inquiries to locate him made since last Wednesday have so far proved unsuccessful, although I was informed a short time ago that subject to verification, the respondent believes that it has now located Mr Brown. And as I said before, the respondent seeks an opportunity to make inquiries of Mr Brown in relation to the circumstances surrounding the showing of the pamphlet referred to in the 4 May letter. 10 If the letters to which I have referred ought to have been discovered and were not, I would unhesitatingly allow the respondent's application. On the evidence currently before me, I am not satisfied that the documents were discoverable. On that evidence I think that they were not, but a final judgment as to whether the letters ought to have been discovered depends upon whether the pamphlet related to the invention and that of course is the ultimate issue which the respondent seeks to agitate. 11 Factors which support the respondent's application include, firstly, that if the pamphlet related to the invention then it is both fatal to the applicant's claim and the letters to which I have referred ought to have been discovered. Secondly, on no view of the matter is it the respondent's fault that the information only came into its possession at the last minute. Thirdly, the respondent has made reasonable efforts to locate Mr Les Brown since receipt of the information and there is at least a fair prospect that he may be located in the near future. 12 Factors which militate against the granting of the application include the following. First, on the evidence so far available, late revelation of the documents is not due to any fault on the part of the applicant. Second, the evidence of Messrs Barnes and Slattery on the motion is that the pamphlets did not relate to the invention. The terms of the letter of 14 May 1984 tend to confirm that this is so. This evidence is, however, untested and absent some input from Mr Les Brown it is not really susceptible to proper testing. 13 What I am confronted with is a balancing exercise. The letter of 4 May 1984 on its face and unless explained suggests that the applicant may encounter real problems in relation to prior publication. The applicant's solicitors recognised this fact. Internally, the applicant investigated this matter and was satisfied that the letter was explained such that the pamphlet referred to in it was not a prior publication. The evidence of Messrs Barnes and Slattery on the motion tends to confirm that this is so. But through no fault of anyone's the respondent has not had an adequate opportunity of investigating this aspect of the matter. 14 I propose in any event to reserve my decision. The possibilities are that Mr Brown will not be found or that he will be unhelpful or that what he says may favour the applicant. If that should come to pass, then there will be some waste of time, some comparatively minor increase in cost and the respondents will be free to continue the sale of the allegedly infringing products in the meantime. Should the applicant succeed then those continued sales would be for its benefit. 15 The other possibility is that Mr Brown will support the respondent. If he does, and if his evidence is accepted, then two things follow. The first is that the correspondence to which I have referred turns out to have been discoverable. The second is that it proves fatal to the applicant's case. If that were the case, then an obvious injustice would be done to the respondent if it were denied the opportunity which it seeks. If it proves not to be the case then the applicant's position can be substantially protected by costs orders and by the payment of interest. The result of that balancing exercise is that I should accede to the substance of the respondent's application, but some regard has to be paid to the position of the Court and its list and the demands on its time. Also, I have to take into account the fact that whilst there is a prospect that some relevant evidence may be obtained from Mr Brown, on the basis of the evidence before me, I would not assess the prospect of that proving to be the case as preponderant. 16 Consequently, I direct that any affidavit evidence to be filed by Mr Brown or other evidence on the issue of prior publication by the showing of the relevant pamphlet by Ron Slattery to Les Brown prior to 4 May 1984, be filed and served by 8 May 2000. Subject to any submissions from counsel, I would propose to adjourn the hearing of the notice of motion to 9 May 2000. I would indicate that if no evidence is filed from Mr Brown by 8 May 2000, which if accepted would support the proposed amendment, then I would dismiss the motion and consider the question of costs. If evidence is filed which supports the proposed amendment then subject to any new developments I would propose to allow it. Unless otherwise persuaded I would hear evidence and submissions on the issue of prior publication by the showing of a pamphlet by Ron Slattery to Les Brown, on 15 and 16 May 2000. In the meantime, I propose that submissions should continue and be completed on the case as it is currently pleaded. I certify that the preceding fourteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.