Grace Australia Pty Ltd v MBT Holding AG [2002] FCA 1512

FEDERAL COURT OF AUSTRALIA

Grace Australia Pty Ltd v MBT Holding AG [2002] FCA 1512 PATENTS – particulars of inventive step ordered

Federal Court Rules O12 r5(1)(a) Bailey v Commissioner of Taxation (1977) 136 CLR 214 applied Flexible Steel Lace Co v Beltreco Ltd (2000) 49 IPR 331 cited GRACE AUSTRALIA PTY LTD (ACN 080 660 117) v MBT HOLDING AG V 94 of 2002 HEEREY J 18 NOVEMBER 2002 MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 94 OF 2002

BETWEEN: GRACE AUSTRALIA PTY LTD (ACN 080 660 117)

APPLICANT

AND: MBT HOLDING AG

RESPONDENT

JUDGE: HEEREY J

DATE OF ORDER: 18 NOVEMBER 2002

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. Within 21 days the respondent file and serve particulars of the inventive step claimed to be the subject of its Australian Patent No. 649428. 1. The respondent pay the applicant's costs of the motion by notice dated 8 November 2002. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 94 OF 2002

BETWEEN: GRACE AUSTRALIA PTY LTD (ACN 080 660 117)

APPLICANT

AND: MBT HOLDING AG

RESPONDENT

JUDGE: HEEREY J

DATE: 18 NOVEMBER 2002

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The applicant on 18 February 2002 commenced a proceeding seeking revocation of the respondent's Australian patent number 649428 which is a patent for "Improved Shotcrete Compositions". The respondent, after entering an appearance on 8 March 2002, filed a defence on 26 April 2002 consisting of bare denials. No issue of infringement arises in the case. 2 The applicant by a notice of motion dated 8 November 2002 sought particulars pursuant to O12 r5(1)(a) of the Federal Court Rules of the inventive step on which it relies in support of its denial of the applicant's allegation in par 3 of the particulars of grounds of invalidity that the alleged invention, so far as is claimed in each and every claim of the patent, was obvious and did not involve an inventive step. 3 The particulars of invalidity which were filed at the same time as the initiating application allege a number of grounds. Ground 1 alleges want of novelty and gives particulars in which it is stated that the applicant will rely - "upon common general knowledge in Australia at the said priority dates and also upon each of the following instances of prior publication and prior user and prior art information." 4 There followed details of three construction projects in New South Wales and Victoria and of - "widespread use in Victoria and elsewhere throughout Australia prior to January 1990 by a large number of diverse persons (who are at present unknown to Grace) in Victoria and elsewhere throughout Australia of a pumpable concrete mixture sold and supplied by Readymix in the construction of swimming pools." 5 The particular goes on to describe that process. A further particular is of a pumpable concrete mixture sold and supplied by Readymix between November 1986 and November 1988 in the construction of Bourke Place in Melbourne, Victoria. The process is described. There is reference in both these particulars to a "lignosulfonate water-reducing set retarder known by the brand name DARATARD". There are then particulars of three Australian patents and a number of Japanese and US patents and three publications in Australia. 6 Ground 3 alleges obviousness and lack of inventive step: "(a) having regard to what was known or used in Australia on or before the priority date of each such claim; and further or alternatively (b) when compared with the prior art base as it existed before the priority date of each such claim." Particulars: "Grace refers to and repeats the matters set out in paragraph 2 above [ie the want of novelty particulars]. Grace will also rely on common general knowledge in Australia as at the priority date." 7 In support of the application, counsel for the applicant says that there is an ambiguity and lack of clarity in the patent and in particular it is not clear whether the process, the subject of most of the claims, involves distinct functions of stabilisation and retardation and whether retardation involves something beyond stabilisation. Counsel also submitted that, consistently with the usual function of particulars, it is highly desirable to limit the area of dispute and thus the time and cost of the litigation and that it may be wasteful if the applicant has to gather evidence to counter every possible ground on which it might be shown that the invention was not obvious. 8 In opposition to the application, counsel for the respondent points out, correctly, that the onus of establishing obviousness is on the applicant. However, the fact that the ultimate onus lies on the party seeking particulars is not necessarily fatal to an order for particulars, as is clearly shown by the decision of the High Court in Bailey v Commissioner of Taxation (1977) 136 CLR 214. The Commissioner had included in the assessment of the taxpayer the amount of a distribution by a company in which the taxpayer had been a shareholder. The taxpayer's objection was disallowed and the taxpayer appealed to the Supreme Court of New South Wales. From correspondence between the parties it appeared that the Commissioner relied upon the operation of s 260 of the Income Tax Assessment Act 1936 (Cth) to subject the distribution to tax in the hands of the taxpayer. The taxpayer requested particulars of the "arrangement" upon which the application of s 260 was based. The High Court held that the Supreme Court had power to order the Commissioner to give particulars of the arrangement and that in the circumstances such particulars should be given: see per Gibbs J at 219, Mason J at 220 and Jacobs J at 221. In particular, having regard to the point at issue in the present case, reference should be made to the statement of Jacobs J: "A court has inherent power to order particulars. It is far more usual to order particulars of an allegation or claim which the party advancing it bears the burden of proving than particulars of a matter which may be alleged without undertaking the burden of its proof; but this is so because the latter case is comparatively rare. The present case is such a case because of the operation of s 190(b). But rules or practices as to particulars much be sufficiently flexible to allow all parties to an action or matter to meet with necessary evidence and without delay to court processes questions which may be raised at the hearing. Their purpose is to concentrate and define the issues of fact and to prevent surprise and consequent delay. 9 Counsel for the respondent pointed out that to succeed on the ground of obviousness the applicant would have to establish what was the state of the common general knowledge and the art in Australia at the priority date and satisfy the Court that having regard to that knowledge the process claimed in the patent was "so obvious that it would at once occur to anyone acquainted with the subject and desirous of accomplishing the end": Flexible Steel Lace Co v Beltreco Ltd (2000) 49 IPR 331 at 366. 10 Counsel for the respondent argued that at worst there should only be an order for particulars of inventive step after the applicant had given general particulars of common general knowledge. There may be some force in that as a matter of general principle. However, in the present case, as I have already indicated, very substantial particulars of common general knowledge were given by the applicant as far back as February of this year. There has been no complaint about the adequacies of these particulars or a request for any further particulars. Realistically the respondent has been for a substantial period of time in possession of what might be called at least the main thrust and substance of the applicant's case as to common general knowledge. It is true that what the inventor actually thought was the inventive step is not conclusive, although it is certainly a starting point and the respondent proposes to lead evidence of those matters in the present case. 11 It was said that there would be hardship on the respondent, this invention having allegedly been made in Switzerland, if it had to search throughout Australia for what was the relevant common general knowledge to meet the allegation of obviousness. But there is no affidavit evidence from the respondent to base that assertion and what I have said earlier about the details of the applicant's particulars and the lack of complaint thereof thus far by the respondent suggests there is not a great deal of force in the argument. 12 I think, for those reasons, it is reasonable to make the order sought. The draft order contained a rather imposing set of questions, about twenty-one, if one includes sub-questions, which were designed, one might expect, to discourage the respondent from supplying a bland paraphrase of the patent in purported compliance with the order for particulars. I do not propose to make an order requiring the answer of those questions but I wish it to be clearly understood that the respondent is required to meet the substance of the order, that is, supply what is truly going to be said to be the inventive step urged at the trial of this matter. 13 There will be an order that within 21 days the respondent file and serve particulars of the inventive step claimed to be the subject of its Australian Patent No. 649428. The respondent must pay the applicant's costs of the motion. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.