FEDERAL COURT OF AUSTRALIA B Braun Melsungen AG v Terumo Corporation [2004] FCA 384 EI Dupont De Nemours & Co v Imperial Chemical Industries PLC (2002) 54 IPR 304 cited AB Hassle v Pharmacia (Australia) Pty Ltd (1995) 33 IPR 63 applied B BRAUN MELSUNGEN AG and B BRAUN AUSTRALIA PTY LTD v TERUMO CORPORATION V 121 OF 2004 SUNDBERG J 2 APRIL 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 121 OF 2004 BETWEEN: B BRAUN MELSUNGEN AG FIRST APPLICANT B BRAUN AUSTRALIA PTY LTD (ACN 002 945 155) SECOND APPLICANT AND: TERUMO CORPORATION (ARBN 010 106 902) RESPONDENT JUDGE: SUNDBERG J DATE OF ORDER: 2 APRIL 2004 WHERE MADE: MELBOURNE Upon the applicants, by their Counsel, undertaking to: (a) submit to such Order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person whether or not a party, adversely affected by the operation of Order 1 below or any continuation (with or without variation) and; (b) pay the compensation referred to in (a) to the person there referred to. THE COURT ORDERS THAT: 1. The respondent be restrained, until the trial of this proceeding or until further order, whether by itself, its directors, officers, servants or agents or otherwise howsoever, during the term of Australian Letters Patent No 703988 ("the Patent in suit") and any extension thereof, from infringing the Patent in suit and, in particular, from importing, making, selling, supplying, exporting or otherwise disposing of or offering or causing to import, make, sell, supply, export or otherwise dispose of, or using or keeping for the purpose of doing any of those things: (i) the respondent's Surshield Surflo II Safety Cannula; and (ii) any other intravenous catheters as claimed in claims 1, 3, 4, 12 and 15 of the Patent in suit; 2. The costs of the application be reserved. 3. The directions hearing be adjourned to 7 May 2004. 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 121 OF 2004 BETWEEN: B BRAUN MELSUNGEN AG FIRST APPLICANT B BRAUN AUSTRALIA PTY LTD (ACN 002 945 155) SECOND APPLICANT AND: TERUMO CORPORATION (ARBN 010 106 902) RESPONDENT JUDGE: SUNDBERG J DATE: 2 APRIL 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 By application filed on 9 February 2004 the applicants seek, amongst other relief, an injunction restraining the respondent, during the term of Australian Letters Patent No 703988 ("the Patent"), from infringing the Patent and, in particular, from importing, making, selling, supplying, exporting or otherwise disposing of or offering the respondent's Surshield Surflo II Safety Cannula ("Surshield Cannulas") and any other intravenous catheters as claimed in claims 1, 3, 4, 12 and 15 of the Patent, without the licence or authority of the applicants. The matter now before me is a claim for interlocutory relief in essentially the terms set out above. 2 By their statement of claim the applicants allege that (a) the first applicant is the registered proprietor of Australian Letters Patent No 730988 for an invention entitled "Spring clip as needle tip protection for safety IV catheter" the complete specification of which was published and became open to the public on 8 March 1999; (b) since 5 February 2004 the second applicant has been the exclusive licensee in Australia of the Patent; (c) the Patent is subsisting, valid and of full force and effect; (d) the respondent, without the licence or authority of the applicants, has infringed claims 1, 3, 4, 12 and 15 of the Patent; (e) unless restrained, the respondent will continue to infringe the Patent; (f) the applicants have suffered loss and damage by reason of the infringement. The applicants' Particulars of Infringement allege the importation of Surshield Cannulas and their supply and/or sale or offer for sale to three hospitals in Brisbane and Gosford on dates in late 2003. 3 By its defence the respondent admits (a) above, subject to production of a certificate of registration; does not admit (b) or (c) above; denies (d) above, and says that its apparatus does not have the essential features of the claims alleged to have been infringed, and particularises these features; as to (e) above admits that it intends to deal with its apparatus by importation and sale, and says it is lawfully entitled to do so; and denies (f) above. 4 Order 58 rule 15(1) of the Rules of Court provides that a party who disputes the validity of a patent must deliver with the pleading or other document in which the party disputes the validity of registration, particulars of the grounds of invalidity on which the party relies. No such particulars have been delivered, and the application for interlocutory relief proceeded on the basis that the validity of the patent was not put in issue by the respondent's non‑admission of the allegation that the Patent is subsisting and valid. 5 The applicant filed a large number of affidavits, some of considerable length. It will be necessary to deal later with the expert evidence relating to infringement. As to the other material, it is sufficient to say at this stage that in February 2003 the first applicant launched the Introcan Safety IV Cannula onto the market in each Australian State. This product has a self activating safety clip that shields the sharp needle end when the needle is retracted. The safety clip significantly reduces the risk of needle stick injuries. The first applicant's Divisional Manager – Hospital Care, Kathleen Elliott, became aware that the respondent was attempting to sell the Surshield Cannula in Australia in late September 2003. She did not become aware of a trial being conducted of the respondent's device until "in or about November 2003". Ms Elliott describes the difficulties the first applicant encountered in obtaining samples of the respondent's product. 6 Although many other matters were canvassed in the affidavit material, the central issue on the application for interlocutory relief was whether the applicants had established the existence of a serious question to be tried as to infringement of the Patent. Evidence for the applicants was given by Associate Professor La Brooy. He has postgraduate qualifications in engineering. He is currently the Discipline Director (formerly known as the Head of Department) of Aerospace & Systems Engineering at RMIT. Between 1987 and 2002 he was Discipline Leader of both Mechanical and Manufacturing Engineering at RMIT. Between 1985 and 1987 he was Director of the Victorian Centre for Robotics and Automation, and before that Senior Teaching Fellow within the Department of Mechanical Engineering at Monash University. His publications cover a wide range of manufacturing engineering topics. 7 In his first affidavit Professor Le Brooy said he had been asked by the applicants to compare the respondent's device with the claims of the Patent and determine whether each of the features of the claim is present in that device. He identified twenty one features of claim 1. There is no dispute that the respondent's device has most of those features. Those that are in dispute are as to an IV catheter that includes: (xi) a unitary needle guard substantially positioned in the interior of the said catheter hub and including (xii) ‑ a resilient portion engaged by said needle shaft when said needle is in said ready position, (xiii) ‑ a section of said resilient portion of said needle guard being urged by said needle shaft into a retaining relationship with said catheter hub when said needle is in the ready position, (xiv) ‑ a distal wall extending from said resilient portion and (xv) engaging the needle spaced from said needle tip when said needle is in said ready position and (xvi) movable within the interior of said catheter hub to a blocking position distal of said needle tip when said needle is in its retracted position, … characterised in that, (xviii) said section of said resilient portion is a bent portion …. 8 Of feature (xi) Professor La Brooy says: "The Terumo device utilises a unitary needle guard 40. The unitary needle guard is shown for example in Photographs 1 to 4 and 6 to 11 and in Figures 1 to 6. As shown in Figures 1 to 6 and also in Photographs 4 and 12, the needle guard is made up of a stainless steel metal portion 40a. The metal is formed to include an arm 42 to which a small plastic capsule 42a is held captive. A further arm 42b extends beside arm 42 and is formed by welding a small further piece of metal to arm 42 at the location I have indicated by 42c. The needle guard 40 of the Terumo device is a unitary needle guard because all of the elements are secured to each other in a fixed relationship to form a sub assembly that can be treated as a single entity. That is, after it is manufactured as a single prefabricated unit, the sub assembly so formed can be installed in the catheter hub. When the needle is removed from the catheter hub, the whole of the sub assembly or unit becomes attached to the needle and is removed with it. As shown in Photograph 1 and Figures 1 to 3 the needle guard 40 is positioned within the interior 36 of the catheter hub 26. The Terumo device thus includes feature (xi) of claim 1." 9 The Professor says this of feature (xii): "The arm 42 and plastic capsule 42a together form a resilient portion engaged by the needle shaft 16a when the needle 16 is in the ready position. The resilience or springiness is provided by arm 42 and arm 42b. The engagement with the needle shaft 16a can be seen in particular in Photograph 12 and Figure 3. The engagement is achieved between a lower edge of the plastic capsule 42a and the needle 16. I have labelled the point of engagement on the capsule with the letter 'c'. Thus the Terumo device includes feature (xii) of claim 1." 10 Of feature (xiii) he says: "The resilient portion of the needle guard of the Terumo device (made up by the arm 42 and capsule 42a) is urged into a retaining relationship with the catheter hub 26 when the needle is in the ready position. The engagement of the plastic capsule at point 'c' described in paragraph 22 results in the capsule 42a and attached arm 42 being urged upwardly to a position in which a knob 46 forming part of the capsule 42a engages with the catheter hub 26. This can be seen in Figures 1 to 3 and Photograph 4 for example. I have labelled the contact between the knob 46 and the catheter hub 40 with the letter 'a'. The Terumo device therefore includes feature (xiii) of claim 1." 11 Of feature (xiv) he says: "The Terumo device includes a distal wall 42d formed as part of the plastic capsule 42a. The distal wall 42d extends from the point 'c' I referred to in paragraph 22. This can be seen in Figure 3 and Photograph 12. The Terumo device thus includes feature (xiv) of claim 1." 12 Feature (xv) was the subject of this observation: "The distal wall 42d referred to in paragraph 24 extends from point 'c' in Figure 3 and therefore the lower end (as viewed in Figure 3) of distal wall 42d engages the needle 16 at a point spaced from the needle tip 18 when the needle is in a ready position. This can be seen in Photograph 12 and Figure 3 where the point 'c' of contact between the distal wall 42d and the needle 16 is shown spaced from the tip 18 of the needle. The Terumo device thus has feature (xv) of claim 1." 13 Professor La Brooy says this of feature (xvi): "The distal wall 42d of the Terumo device is movable within the interior of the catheter hub 26 to a blocking position distal of the needle tip 18 when the needle is in a retracted position. This can be seen in Figure 6 and Photograph 13 where once the needle is moved to the retracted position in the catheter hub, the tip of the needle 18 passes the point 'c' which allows the arm 42 and capsule 42a to move in the direction indicated by arrow 'A' (Figure 3) from the position shown in Figure 3 and Photograph 12 to the position shown in Figure 6 and Photograph 13 where the distal wall 42d blocks any movement of the needle tip to the left. The Terumo device thus has the feature (xvi) of claim 1." 14 Feature (xviii) was commented on as follows: "Feature (xviii) of claim 1 requires that the section which I have described as a knob 46 of the resilient portion that engages the catheter hub is a 'bent portion'. To me the term 'bent portion' refers to any portion that is curved but not straight. The knob 46 formed on the top of capsule 42a is curved (see for example, Photograph 4) and is therefore in my view a bent portion. The Terumo device thus includes feature (xviii) of claim 1." 15 Professor La Brooy's affidavit elicited a response from the respondent's patent attorney, Mr Munt. Mr Munt has a bachelor's degree in Engineering (Materials). Immediately after graduating he joined the patent attorney firm Davies & Collison as a trainee patent attorney. From 1982 he worked in the Intellectual Property Department of BHP. In 1985 he joined Clement Hack & Co as a patent attorney. He has been with that firm ever since. Mr Munt identifies four bases upon which he contends the Terumo device does not infringe claim 1. The first relates to Professor La Brooy's feature (xii). Mr Munt says: "17. … the stainless steel component of the Terumo device includes a 'resilient portion'. Specifically, the 'resilient portion' is the arms of the stainless steel component on which the plastic component is mounted. The arms are described as 'arm 42' in the La Brooy Affidavit. 18. However, the 'resilient portion' of the stainless steel component of the Terumo device is not 'engaged' by the needle shaft in the terms of claim 1 when the needle is in a retracted position. 19. In a situation involving two components, the word 'engaged' indicates to me that there is a direct interaction between two components resulting in direct transfer of force from one component to the other component. This is not the case with the Terumo device. Specifically, the arms of the stainless steel component do not contact the needle shaft. The Terumo device does not infringe claim 1 on the basis." 16 The second basis relates to features (xiii) to (xvi). Mr Munt says: "20. … the plastic component of the Terumo device includes a 'distal wall' that, in the terms of claim 1, (a) engages the needle when the needle is in the ready position and (b) is movable within the interior of the catheter hub to a blocking position distal of the needle tip when the needle is in a retracted position. 21. Claim 1 of the Braun patent also requires that the 'resilient portion' include a 'section' that is 'urged' by the needle shaft into a 'retaining relationship' with the catheter hub when the needle is in the ready position. 22. The Terumo device does not include a 'section' of the resilient portion that is 'urged' by the needle shaft into a retaining relationship with the catheter hub when the needle is in the ready position and does not infringe the claim on this basis. 23. Specifically, the catheter hub and the plastic component and not the resilient portion of the Terumo device are in a 'retaining relationship' when the needle is in the ready position and the plastic component is 'urged' into the retaining relationship by direct contact of the needle shaft on the plastic component." 17 The third basis relates to feature (xviii). Mr Munt says: "26. The term 'bent' portion implies to me that the portion be formed by bending a material into a particular configuration. This is appropriate terminology for a needle guard that is formed from stainless steel only. However, the plastic component, and more particularly the projection, of the Terumo device is not formed by a bending operation …." 18 The fourth basis relates to feature (xi). Mr Munt says: "27. Claim 1 of the Braun patent also requires that the needle guard be a 'unitary' needle guard. The word qualifies the term 'needle guard'. I interpret the word as requiring that the needle guard be a one‑piece construction. Therefore, the two component needle guard of the Terumo device is not a 'unitary' needle guard …." 19 In his second affidavit Professor La Brooy takes issue with Mr Munt's opinions. As to Mr Munt's comments on feature (xii) Professor La Brooy says: "In … my first affidavit I explain that the 'resilient portion' is formed by the combination of the arm 42 and plastic capsule 42a. That is the 'resilient portion' is formed by two components namely the plastic capsule 42a and the arm 42. The plastic capsule 42a is immovably mounted or secured on the arm 42 which is the stainless steel component referred to in the opinion. The plastic capsule 42a and the arm 42 (stainless steel portion) act as a single unit. The resilience is provided by the flexing of the arm. I do not understand the words 'resilient portion' as in any way excluding two immovably secured parts constituting the 'resilient portion'. This leads to the conclusion set out in … my first affidavit that there is an engagement between the needle shaft 16a and the lower edge of the plastic capsule 42a which forms part of the resilient portion." 20 As to Mr Munt's features (xiii) to (xvi) the Professor says: "… The reasoning in [Mr Munt's] report involves the same argument that the 'resilient portion' is formed only by the stainless steel component to which the plastic capsule is attached. As explained immediately above, the resilient portion is the combination of the plastic capsule 42a and the arm 42. Consequently, as explained in … my first affidavit the knob 46 forming part of the capsule 42a is urged into a retaining relationship with the catheter hub 26 when the needle is in the ready position. Further, as explained in … my first affidavit a distal wall 42d, being part of the plastic capsule 42a engages the needle 16 and this results in the 'resilient portion' made up of the capsule 42a and arm 42 being urged into engagement with the catheter hub. In this regard it is the resilience of the arm 42 that provides the downward force against which the needle urges the plastic capsule into engagement with the catheter hub." 21 As to Mr Munt's comments on feature (xviii) Professor La Brooy says: "… The report asserts that a bent portion can only be something that is formed by a bending operation. As explained in … my first affidavit I regard the term 'bent portion' as referring to any portion that is curved not straight. The term bent portion includes things that have been formed by a bending operation but it does not exclude other things that are non‑straight. For example a 'bent arm' could be manufactured by casting rather than bending." 22 As to Mr Munt's comments on feature (xi) the Professor says: "… In … my first affidavit I explained that the Terumo device is a unitary needle guard because all of the elements are secured to each other in a fixed relationship to form a sub‑assembly that can be treated as a single entity. I also explained that the needle guard is manufactured as a single prefabricated unit, so that it can be installed as a unit in the catheter hub. The term 'unitary' does not require that the needle guard be formed from a single piece of material, rather it must act as a unit in its operation as a needle guard. It is quite common to refer to assembled collections of parts as a unit. As an example of this common use terminology the specification of the '988 patent refers at page 20 line 8 to a 'unitary assembly' when referring to the combination of the needle and the needle guard." 23 The proper construction of a patent, the meaning of words used in it, and whether particular integers or features are or are not present in an allegedly infringing article are ultimately matters for the court. However, the court can be assisted in relation to these matters by the evidence of a skilled addressee as to how he or she would read and understand the document. See, for example, EI Dupont De Nemours & Co v Imperial Chemical Industries PLC (2002) 54 IPR 304 at 323. Professor La Brooy is undoubtedly a skilled addressee for present purposes. See [6]. I doubt whether Mr Munt is. His qualifications are not in manufacturing engineering, and he has never been in practice as an engineer. I will not at this interlocutory stage rule his report inadmissible. I will simply say that because, unlike Professor La Brooy, Mr Munt cannot be described as an independent expert, and because his expertise is nowhere near as directly relevant to the task in hand as is Professor La Brooy's, I have derived much less assistance from his evidence than from the Professor's as to whether there exists a serious question to be tried as to infringement. In my view there is such a question as to the matters upon which the two experts crossed swords. 24 One matter upon which they did not expressly clash must be mentioned. Counsel for the respondent contended that the Terumo product did not possess feature (xiv) because the distal wall, which they identified as the inside wall of the plastic component, does not extend from the resilient portion. Mr Munt quoted the words of feature (xiv) – a "distal wall extending from the resilient portion" – but did not suggest it was not present in the Terumo product. Indeed, speaking of features (xiii) to (xvi), he said "the plastic component of the Terumo device includes a 'distal wall' that, in terms of claim 1, (a) engages the needle when the needle is in the ready position and (b) is movable …." The only problem he identified was an entirely different one. See [16]. Mr Munt must have been satisfied that feature (xiv) was present in the Terumo device. By not raising the question in its evidence the respondent disabled the Court from having the assistance of Professor La Brooy who regarded feature (xiv) as being present, and whose second affidavit attempted to deal with Mr Munt's opinions. In any event, after the conclusion of argument the applicants filed a supplementary submission on this point. In its rejoinder the respondent opposed the granting of leave to the applicants to make the supplementary submission. I have considered the grounds of that opposition. In the circumstances I have described, it is appropriate that the applicants have leave. 25 The supplementary submission can be summarised as follows. In Professor La Brooy's discussion of clause 15, he identifies a feature depicted in Figure 3 with the number 42a as a distal wall. He notes that there are two distal walls: that and the one numbered 42d. The Professor has already described the 'resilient portion' as comprising both the arm 42b and the arm 42 to which a small plastic capsule is held captive. See [9]. The distal wall 42e extends from the arm 42b. The distal wall formed by 42e satisfies features (xv) and (xvi). It engages the needle spaced from the needle tip when the needle is in the ready position, and is moveable within the interior of the catheter hub to a blocking position distal of the needle tip when the needle is in the retracted position. The applicants draw attention to the fact that claim 15 contemplates that there may be two distal walls – "said needle guard includes two distal walls which overlap one another and form a distal barrier to said needle when said needle guard is in its said blocking position". As to this Professor La Brooy says: "It can be seen from Figure 6 that in the blocking position the two distal walls 42d and 42e overlap in the sense that one is in front of the other. The distal wall 42e includes a hooked end 42f which assists in capturing the end of the needle if for some reason it penetrates or otherwise moves past the first distal wall 42d. The Terumo device therefore has all the features of claim 15." 26 The respondent's rejoinder contests the applicants' supplementary submission at several levels. However, an inspection of Figure 3 and the enlarged model of the respondent's device used for demonstration purposes in Court sustains the submission to the extent required on this interlocutory application. The respondent's rejoinder contains respectable arguments against the applicants' submission that will require careful examination at trial. As has often been said in applications of this type, the presentation of cogent arguments on each side of an issue often underlines the existence of a serious question. This is such a case. By reason of the foregoing I have concluded that there is a serious question to be tried on the issue about a distal wall extending from the resilient portion, as well as on those upon which the experts crossed swords. 27 The balance of convenience favours the grant of interlocutory relief. While the respondent will suffer inconvenience and loss if an injunction is granted, a number of considerations tip the balance in favour of the grant. The validity of the Patent is not in issue. Thus the applicants have the exclusive right to exploit the invention during the term of the patent, leading to advantages to them when the term ends. The loss of that head start constitutes irreparable harm. See AB Hassle v Pharmacia (Australia) Pty Ltd (1995) 33 IPR 63 at 77. It is clear that the respondent intends to compete for hospital contracts between now and the trial. That will cause irreparable harm to the applicants. 28 Not to grant interlocutory relief may well prejudice third parties. At present the respondent has not entered into any contracts with hospitals or other customers with respect to Surshield Cannulas. If no injunction is granted, it is likely that such contracts will be entered into. If the applicant succeeds at trial, that will cause serious disruption to those third parties. They will not be able to obtain supplies of the product because the respondent will be enjoined from performing the contracts, and they will not be able readily to secure and work with an alternative product. In this connection, the evidence on both sides was to the same effect. Hospitals take a considerable time (up to a year) to make a purchasing decision. Medical personnel take time to be trained and become accustomed to using new equipment. On the other hand, if interlocutory relief is granted, third party rights will not be detrimentally affected, for no such contracts will exist. 29 If no injunction is granted and the applicant succeeds at trial, damages will not be an adequate remedy. The presence of other competitors in the market for products similar to the applicants' will make it difficult, if not impossible, reliably to quantify sales lost by the applicants due to the respondent's product as opposed to the products of other competitors. On the other hand, should an interlocutory injunction be granted but the respondent be successful at trial, it can readily quantify its loss. 30 The respondent's contention that its business will be irreparably harmed is, in my view, greatly overstated. Except on a trial basis, it has yet to sell any of the relevant devices. Further, it has a substantial existing business in other medical products that will not be affected by the injunction. I do not accept the submission that the grant of the injunction will cause the respondent's existing customers to shy away from its other standard (non‑safety) products. The respondent's marketing personnel should have no difficulty in explaining that the injunction has nothing to do with safety or quality considerations, and is granted solely in connection with a patent dispute with the applicants in relation to one product. 31 The respondent has submitted that relief should be denied because of the applicants' delay in seeking it. The delay has been partly explained by the difficulty encountered by the applicants in obtaining copies of the respondent's product and by the Christmas vacation at the end of 2003 and beginning of 2004. Proceedings were issued early in February 2004, including a claim to interlocutory relief. In the circumstances the delay does not disentitle the applicants to relief. 32 I will grant the applicants the injunctive relief they seek. I certify that the preceding thirty‑two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. Associate: Dated: 2 April 2004 Counsel for the Applicants: D Shavin QC and M Barker Solicitors for the Applicants: Davies Collison Cave Solicitors Counsel for the Respondent: BJ Hess and SB McNicol Solicitors for the Respondent: Baker & McKenzie Date of Hearing: 30 March 2004 Date of Judgment: 2 April 2004