FEDERAL COURT OF AUSTRALIA New England Biolabs, Inc v F Hoffman-La Roche AG [2003] FCA 1460 PATENTS – amendment of complete specification prior to grant of patent – whether the Federal Court has a discretion to refuse to allow an amendment request under s 104(1) of the Patents Act 1990 (Cth) in an appeal against a decision of the Commissioner of Patents under s 104(7) of the Patents Act 1990 (Cth) on the ground of alleged inequitable conduct on the part of the patent applicant – whether regs 5.3(4), 10.4 and 10.5 of the Patents Regulations 1991 (Cth) are ultra vires as not being authorised by the Patents Act 1990 (Cth) – whether regs 5.3(4), 10.4 and 10.5 of the Patents Regulations 1991 (Cth) are constitutionally invalid The Constitution Ch III Administrative Decisions (Judicial Review) Act 1977 (Cth) Federal Court of Australia Act 1976 (Cth) ss Patents Act 1903 (Cth) Patents Act 1952 (Cth) Patents Act 1990 (Cth) Patents Regulations 1991 (Cth) F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 cited New England Biolabs Inc v Commissioner of Patents (2001) 110 FCR 357 cited NEW ENGLAND BIOLABS, INC v F HOFFMAN-LA ROCHE AG N1305 OF 2003 EMMETT J 4 NOVEMBER 2003 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1305 OF 2003 BETWEEN: NEW ENGLAND BIOLABS, INC APPLICANT AND: F HOFFMAN-LA ROCHE AG RESPONDENT JUDGE: EMMETT J DATE OF ORDER: 4 NOVEMBER 2003 WHERE MADE: SYDNEY THE COURT NOTES THAT: 1. grounds 6, 7 and 8 of the notice of appeal filed 3 September 2003 are not pressed and are abandoned. THE COURT ORDERS THAT: 2. Order 5 made on 17 October 2003 be rescinded; 3. the question whether this Honourable Court has a discretion to refuse to allow an amendment request under s 104(1) of the Patents Act 1990 (Cth) in an appeal against a decision of the Commissioner of Patents under s 104(7) of the Patents Act 1990 (Cth) on the grounds set out in Exhibit 1A, be decided separately from and before any other question in the proceeding; 4. the question in Order 3 be answered 'No'; 5. the applicant pay the respondent's and the Commissioner of Patent's costs of the separate decision; 6. the proceeding be fixed for directions on 14 November 2003. 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 N1305 OF 2003 BETWEEN: NEW ENGLAND BIOLABS, INC APPLICANT AND: F HOFFMAN-LA ROCHE AG RESPONDENT JUDGE: EMMETT J DATE: 4 NOVEMBER 2003 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This proceeding is a further round in a dispute that was the subject of reasons that I published on 27 June 2001: see New England Biolabs Inc v Commissioner of Patents (2001) 110 FCR 357. The dispute concerns the question of whether the respondent, F Hoffman-La Roche AG ('Roche'), should be refused leave to amend, prior to grant of a patent, its complete specification, on the ground of the conduct of Roche prior to making its request for leave to amend. Amendment is opposed by the applicant, New England Biolabs, Inc ('NEB'), on the ground of alleged inequitable conduct on the part of Roche in connection with the prosecution of its patent application. NEB asserts that Roche, in order to advance the central assertion that its patent application related to a patentable invention, made a number of representations that Roche knew to be false and misleading. NEB asserts that such inequitable conduct was such as to disentitle Roche to the favourable exercise of any discretion to grant leave to amend as requested. 2 Roche is the assignee of patent application number 632857 ('the Application'). On 14 January 1993, the acceptance of the Application was advertised and, on 14 April 1993, NEB filed a notice of opposition. On 12 November 1997, a delegate of the Commissioner of Patents ('the Commissioner') made a decision upholding NEB's opposition in relation to certain claims in the complete specification but rejecting the opposition in relation to the balance of the claims. The delegate allowed Roche a period of 60 days to propose amendments to overcome problems identified in the claims that were successfully opposed. Roche, however, did not propose any amendments during that period. 3 Both parties appealed from the decision of the delegate in so far as it was contrary to the interests of the relevant party. On 28 April 2000, in giving a ruling on the admissibility of evidence in the course of the hearing of that appeal, I expressed my views as to the nature of opposition proceedings and an appeal under s 60 from a decision in opposition proceedings: see F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56. As a consequence of that expression of views, NEB discontinued its appeal. However, in connection with that discontinuance, NEB undertook to apply for revocation of any patent granted on the Application within three days of grant. 4 In the original notice of appeal, Roche had foreshadowed an application to the Court for orders directing amendment of the complete specification. However, in the course of a directions hearing following the discontinuance, I tentatively expressed the view that the Court may not have power to direct amendment. Roche, therefore, abandoned its application for orders directing amendment and, instead, filed a request for leave to amend under s 104 of the Patents Act 1990 (Cth) ('the Act'). That request is the subject of the dispute that is now before the Court. The question of an order for the sealing of a patent was deferred until the question of amendment under s 104 was finally dealt with. 5 A delegate of the Commissioner granted leave to amend on 20 October 2000 and the proposed amendment was advertised on 9 November 2000. NEB filed a notice of opposition to the amendments on 9 February 2001. NEB also took proceedings in this Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth) seeking to impugn the Commissioner's decision to grant leave to amend on the ground that the Commissioner's delegate failed to have regard to the alleged inequitable conduct. 6 That proceeding was dealt with in my reasons of 27 June 2001 in which I concluded that the Commissioner had no discretion to refuse to grant leave to amend on the basis of the conduct of Roche prior to requesting leave. I concluded that the Commissioner had no discretion to decline to allow the amendments requested on the basis of the conduct of Roche trying to make its request for leave to amend. I, therefore, dismissed the application by NEB: see New England Biolabs Inc v Commissioner of Patents (2001) 110 FCR 357. 7 After the amendments were advertised for opposition, and were opposed by NEB, Roche proposed further amendments, which included withdrawal of certain of the earlier proposed amendments. On 11 November 2002, the Deputy Commissioner advised that, while he did not accept Roche's submission that the proposed amendments did not materially alter the request, he was prepared to proceed on a particular basis to expedite matters if both parties consented. 8 On 5 March 2003, leave was granted to amend in accordance with the amended proposals. That direction was the subject of advertisement on 6 March 2003. There being no further opposition filed, the Commissioner's delegate then proceeded to deal with the amended amendments. 9 Before dealing with NEB's contentions, it is desirable to say something about the scheme of the legislation. That scheme is set out in my reasons of 27 June 2001, to the extent that it was relevant to the decision I gave at that time. The question presently before the Court, however, raises different issues. NEB has appealed, pursuant to s 104(7) of the Act, against the Commissioner's decision allowing the amendments. Shortly stated, NEB contends that, notwithstanding the determination that I made concerning the discretion of the Commissioner in dealing with the amendment request, there is, nevertheless, a discretion in the Court to refuse leave to amend on the hearing of an appeal under s 104(7). 10 Because the evidence that would be adduced in relation to such a question would be extensive, the parties asked that the Court determine a preliminary question separately from and prior to the determination of all other questions that would be raised in the appeal. That question is whether this Court has a discretion to refuse to allow an amendment request under s 104(1) of the Act in an appeal against a decision of the Commissioner under s 104(7), on the grounds set out in NEB's detailed comments of 21 August 2000 to the Commissioner on Roche's proposed amendments. In those comments, NEB raised its assertions of inequitable conduct on the part of Roche. 11 The question of amendment arises in several circumstances as contemplated by Pt 2 of Ch 10 of the Act. Section 104 deals with amendments by the Commissioner pursuant to a request made by an applicant for a patent or by a patentee. Section 105 empowers the Court to direct amendment in the course of any 'relevant proceedings' in relation to a patent. '[R]elevant proceedings' is defined in Sch 1 as proceedings for infringement or revocation or in which the validity of a patent is in dispute. 12 Sections 106, 107 and 108 empower the Commissioner to direct that the filing of a statement of proposed amendments for the purpose of removing grounds of invalidity. Section 106 applies where the patent has been granted, s 107 applies where a complete patent application has been made and s 108 applies where a patentee of a petty patent has applied for an extension of the term. Section 108 has no current application having been repealed in connection with the amendments to the petty patent scheme. 13 Roche's application was made under s 104. Under s 104(1), an applicant for a patent may ask the Commissioner for leave to amend the complete specification for any purpose. Section 104(2) provides that where an applicant asks for leave to amend a complete specification, the Commissioner must consider and deal with the request in accordance with the Patents Regulations 1991 (Cth) ('the Regulations'). Regulation 10.2 governs the manner in which the Commissioner is to consider and deal with the request. Section 104(3) provides that, subject to the Regulations, the Commissioner may allow an amendment subject to conditions. 14 Section 104(4) provides, in effect, that any person may, subject to and in accordance with the Regulations, oppose allowing an amendment. Regulation 5.3(4) provides that a person must not oppose the allowance of a proposed amendment of a complete specification except on the grounds that the amendment is not allowable under s 102 of the Act. Under s 104(5), the Commissioner must not allow an amendment that is not allowable under s 102. Section 104(7) provides that an appeal lies to the Federal Court against the decision of the Commissioner allowing a requested amendment. 15 An amendment directed pursuant to s 105 clearly involves the Court. Under s 109, an appeal lies to the Federal Court against a direction of the Commissioner under s 106 or s 107. Section 106 provides that, where the Commissioner is satisfied that a grant of patent is invalid on grounds that could be removed by appropriate amendments of the specification, the Commissioner may, in accordance with the Regulations, direct the patentee to file a statement of proposed amendments of the specification for the purpose of removing those grounds. 16 Under 106(4), if the Commissioner is satisfied that the amendments set out in a statement are allowable and would remove the grounds on which the patent is invalid, the Commissioner must allow the amendments. 17 Section 107(1) provides that, where the Commissioner is satisfied that there are lawful grounds of objection to the complete specification of a complete application, but that those grounds of objection could be removed by appropriate amendments, the Commissioner may, in accordance with the Regulations, direct the applicant to file a statement of proposed amendments for the purpose of removing those grounds. 18 Section 154(1) confers jurisdiction on the Federal Court with respect to matters arising under the Act. Section 160 provides for certain powers of the Court on hearing an appeal against a decision or direction of the Commissioner. 19 Chapter 10 of the Regulations deals with amendments. By reg 10.4, the Commissioner must refuse a request for leave to amend in the circumstances there specified. By reg 10.5(1), the Commissioner must grant leave to amend in the circumstances there set out. The only grounds mentioned in the Regulations for not allowing an amendment are that the proposed amendments are not allowable under s 102, unless the amendment is for the purpose of correcting a clerical error or obvious mistake. 20 The proposed amendments are not allowable under reg 10.3. The proposed amendments would not otherwise be allowable under the Act or the Regulations. That is, as I held in my reasons of 27 June 2001, the Commissioner does not have any discretion to refuse leave to amend on grounds other than those that I have just specified. As I have said, reg 5.3(4) provides that a person must not oppose the allowance of a proposed amendment of a complete specification except on grounds that the amendment is not allowable under section 102. That provision relates only to complete specifications, as does s 102. Section 104 generally, of course, extends to amendment, not only of complete specifications, but also a patent request and any other filed document. 21 NEB begins with the proposition, which is indisputable, that an appeal to the Court under s 104(7) is only an appeal in name. It is, in fact, an original proceeding, being the first judicial proceeding in relation to an opposition to amendment. In such an 'appeal', the Court is exercising the judicial power of the Commonwealth as a Court constituted under Ch III of the Constitution. NEB contends that, in considering an 'appeal' under s 104(7), the broad nature of the powers conferred on the Court under s 160 must also be taken into account. Those powers include: * the admission of further evidence; * permitting the examination and cross-examination of witnesses; * ordering an issue of fact to be tried as the Court directs; * making any order that, in all the circumstances, the Court thinks fit; and * ordering a party to pay costs to another party. Significantly, the powers also include the power to affirm, reverse or vary the Commissioner's decision or direction. 22 NEB accepts that any discretion on the part of the Court that exists on the hearing of an appeal under s 104(7) must be exercised judicially, taking into account all relevant matters in the particular case. It accepts that the kinds of matters to be taken into account in exercising any such discretion may well be akin to those identified in the jurisprudence relating to the exercise of the Court's discretion under s 105 of the Act. 23 NEB contends that, since an appeal from a decision or direction of the Commissioner is not an appeal strictu sensu but, rather, proceeds before the Court as a hearing de novo,and, since the Court is not limited to considering the evidence that was before the Commissioner but can exercise a discretion pursuant to s 160, an appeal under s 104(7) should be treated as attracting the same discretion as is conferred on the Court by s 105. 24 Since the Court is a court established pursuant to Ch III of the Constitution, the Court must exercise the judicial power of the Commonwealth. Section 19 of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act') confers on the Court such original jurisdiction as is vested in it by laws made by the Parliament. One of those laws is s 154 of the Act, to which I have referred (at [18] above). NEB refers also to the broad powers conferred on the Court by s 23 of the Federal Court Act, namely, to make orders of such kinds, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. 25 Section 160 of the Act does not purport to limit the power of the Court under s 23 of the Federal Court Act but, rather, amplifies those powers in a proceeding brought before the Court under the Act. There is no doubt that the matter of amendment of Roche's complete specification is properly before the Court. The issue is the nature and extent of the Court's power in relation to that matter. 26 NEB contends, in effect, that the powers of the Court extend beyond the powers of the Commissioner so as to invest the Court with a discretion to refuse amendments notwithstanding that the Commissioner had no discretion. NEB accepts that reg 5.3(4) is a hurdle in the way of its progress. It contends, first, that, properly construed, reg 5.3(4) and Ch 10 of the Regulations do not operate to restrict or remove a discretion that would otherwise be invested in the Court under s 104(7). NEB says, in the alternative, that if the Regulations do have that effect, then they are ultra vires asnot being authorised by the Act. NEB says in the further alternative that, if they are so authorised, they are constitutionally invalid. 27 The restriction contained in reg 5.3(4) and in regs 10.4 and 10.5 are part of a new statutory scheme of which the Act and the Regulations, as a whole, form part. It does not assist, therefore, to have regard, as NEB would urge, to the scheme that applied under earlier legislation, such as the Patents Act 1903 (Cth) and the Patents Act 1952 (Cth). It may be that the scheme has been altered but, unless the current legislative scheme is ambiguous as to its effect, then the earlier scheme is of no assistance in construing or determining the effect of the current legislative regime. 28 NEB's primary contention is that the plain and ordinary meaning of reg 5.3(4) is that it limits the grounds on which a person may oppose an amendment request to the grounds set out in s 102 and that does not involve any fetter on the discretion of the Court in considering whether to allow such a request. NEB asserts that the Regulation does not, on its face, purport to remove or place any fetter on the discretion of the Court, nor does it purport to limit the Court's powers or jurisdiction. The only express restriction it seeks to impose is on an opponent. 29 Regulation 5.3 has the heading 'Filing of opposition', and so, NEB asserts, given its plain meaning, it applies only to limit what may be specified by an opponent as a ground of opposition. However, if the persons who are authorised by s 104 to oppose allowing an amendment must not oppose the allowance of an amendment on particular grounds, there is simply no basis upon which any other grounds can be relied on in such an opposition proceeding. 30 True it is that reg 5.3(4) restricts the grounds upon which a person may oppose allowing an amendment. That, however, is something contemplated by the terms of s 104(4) itself. That is to say, a person may oppose allowing an amendment but only in accordance with, and subject to, the Regulations. A requirement that opposing allowance of an amendment be in accordance with the Regulations is to be construed as procedural. However, a requirement that opposing allowance of an amendment is a right that is subject to the Regulations clearly contemplates that the Regulations may restrict the right of opposition. That is precisely what regs 5.3(4), 10.4 and 10.5 achieve. 31 The Parliament, in enacting s 104, elected to leave to the Executive the drafting of both substantive and procedural requirements in connection with amendment. The Parliament clearly contemplated that the Regulations would have both substantive and procedural significance in relation to amendments. 32 While an appeal under s 104(7) is in the original jurisdiction of the Court and is a proceeding de novo, nevertheless, it is not a proceeding at large. In hearing an appeal under s 104(7), the Court stands in the shoes of the Commissioner. To that extent, the powers of the Court, or the function of the Court, under s 104(7), are to be contrasted with the power conferred on the Court under s 105. When exercising the function conferred by s 104(7), the Court must do so within the framework laid down by the Act, including valid regulations made under the Act. 33 There is nothing surprising in the proposition that, in hearing a so-called 'appeal', the Court is constrained by the same limitations that constrained the Commissioner as to the question that was to be decided. The appeal is against the decision of the Commissioner. Section 160(d) provides expressly that the Court 'may affirm, reverse or vary the Commissioner's decision'. It would be surprising if the Court could embark on the determination of a question that was simply not raised before the Commissioner and the Court could do so in a proceeding characterised by the Parliament as an 'appeal' against the Commissioner's decision. 34 As a matter of construction, I consider that the effect of s 104(7) and s 154 of the Act is to confer on the Court jurisdiction to deal with the matter that was before the Commissioner. The matter before the Commissioner was whether the amendment requested should be allowed. The effect of the Regulations, which complement and supplement s 104, is that, unless specific grounds were established, the Commissioner was required to allow the amendments. That is the decision against which an appeal lies. The Court, albeit that it has greater or additional powers by reason of s 160, is required to decide the matter that was before the Commissioner. 35 Section 228 of the Act empowers the Governor-General to make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed and prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to the Act. There is also specific power to make regulations making provision for and in relation to the amendment of patent requests, provisional and complete specifications and other filed documents for any purpose (see s 228(2)(c)). Clearly, s 104(4) contemplates that the Regulations may make provisions in relation to the opposition to allowance of amendments. I consider that the Regulations to which I have referred, namely, regs 5.3(4), 10.4 and 10.5, are within the regulation making power conferred by s 228. 36 That leads me to the final contention on behalf of NEB that, if the Regulations have the construction which I have found they have and they are within the power conferred by the Act, then they are invalid as being beyond constitutional power. That contention is, in my view, answered by the conclusion that I have already expressed, namely, that the matter that is before the Court on an appeal under s 104(7) is the matter that was before the Commissioner. The Court is not constrained in the exercise of a discretion; the Court is constrained to decide the issue or the question that is before it. That is not a fetter on the exercise of judicial power. 37 The effect of the Regulations is to preclude opposition to amendment except on the grounds contemplated by the Regulations, to which I have referred. The matter before the Court is whether or not any of the grounds on which opposition can be maintained have been made out. There can be no opposition on the grounds described in NEB's detailed comments of 21 August 2000. I do not consider that the scheme of s 104 and the Regulations operates in any way to interfere with the exercise by the Court of the judicial power of the Commonwealth. They simply constrain the rights of an opponent, such as NEB, to oppose amendment and limit the grounds upon which there can be opposition to amendment. 38 I consider that the question posed for separate determination (at [10] above) should be answered 'No'. 39 The question of the costs of this preliminary determination has been raised. Senior counsel for NEB accepts that, if the question is determined adversely to NEB, it is appropriate that the costs of the hearing be ordered against NEB. The question arose in relation to the position of the Commissioner, who has appeared on the hearing of this question, as she is entitled to do under the Act. The Commissioner contended that, if the question had been answered contrary to the contentions of the Commissioner, there should be no order as to costs against the Commissioner. The Commissioner supported Roche's contentions and has therefore, in effect, been successful on this question. Having regard to the position taken by NEB, it follows that NEB should bear the costs of this preliminary determination, both of Roche and of the Commissioner. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 12 December 2003 Counsel for the Applicant: B N Caine SC with C Dimitriadis Solicitors for the Applicant: Blake Dawson Waldron Counsel for the Respondent: D K Catterns QC with S C G Burley Solicitors for the Respondent: Spruson & Ferguson Lawyers Counsel for the Commissioner of Patents: S J Goddard Solicitor for the Commissioner of Patents: Australian Government Solicitor Date of Hearing: 4 November 2003 Date of Judgment: 4 November 2003