FEDERAL COURT OF AUSTRALIA Capral Aluminium Ltd v G & J Koutsoukos Holdings Pty Ltd [2004] FCA 1199 INTELLECTUAL PROPERTY – patents – re-examination of patent during litigation – whether directions should be made by the Court concerning materials and submissions to be provided to the Commissioner of Patents Patents Act 1990 (Cth) s 97(3) Patents Regulations 1991 reg 9.2 CAPRAL ALUMINIUM LTD (ACN 004 213 692) v G & J KOUTSOUKOS HOLDINGS PTY LTD (ACN 009 449 012) N 850 OF 2004 MOORE J 14 SEPTEMBER 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 850 OF 2004 BETWEEN: CAPRAL ALUMINIUM LTD (ACN 004 213 692) APPLICANT AND: G & J KOUTSOUKOS HOLDINGS PTY LTD (ACN 009 449 012) RESPONDENT G & J KOUTSOUKOS HOLDINGS PTY LTD (ACN 009 449 012) CROSS-CLAIMANT CAPRAL ALUMINIUM LTD (ACN 004 213 692) FIRST CROSS-RESPONDENT TO THE CROSS-CLAIM COMMISSIONER OF PATENTS SECOND CROSS-RESPONDENT TO THE CROSS-CLAIM JUDGE: MOORE J DATE OF ORDER: 14 SEPTEMBER 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: UPON the application of the Respondent by its Notice of Motion filed 13 July 2004 and UPON the hearing of Mr D K Catterns QC of counsel for the Applicant and Mr R J L McCormack of counsel for the Respondent and UPON reading the affidavits of Mr Errol John Harwood sworn 11 June, 9 July and 10 August 2004, respectively, it is ordered that: 1. The Respondent is granted leave to file the Amended Particulars of Objection dated 23 August 2004, as handed up to Moore J on 30 August 2004, by 6 September 2004. 2. Any further requirements for filing and service of the Amended Particulars of Objection be dispensed with. 3. The Commissioner of Patents ("Commissioner") is hereby directed to re-examine Australian Patent No. 736536 ("Patent in Suit") in accordance with law and in accordance with these orders and shall provide a written report to the Court as soon as practicable but in any event by no later than 28 October 2004. 4. In re-examining the Patent in Suit, the Commissioner is to have regard to: (i) The documents on which an assertion by the Respondent is based that the invention, so far as claimed in any claim and when compared with the prior art base as it existed before the priority date of that claim, is not novel and does not involve an inventive step. (ii) Any statement by the Respondent of the relevance of each of the documents mentioned in 4(i). 5. The Applicant is to elect whether it wishes to proceed with or discontinue its claim, such election to be notified in writing by the Applicant's solicitors to the Respondent's solicitors on or before 17 September 2004. 6. The documents and statement referred to in order 4 are to be provided to the Commissioner by the Respondent by no later than 28 September 2004. 7. The parties have liberty to apply on two days written notice in the event of the Applicant electing to discontinue its application in the within proceedings and/or discontinuance by the Respondent of its cross claim, should either the Applicant or the Respondent wish to make application to have the order referred to in order 3 herein recalled. 8. In the event of the Applicant electing to discontinue its claim against the Respondent, under order of the Court or pursuant to order 5 herein, the Applicant is to pay the Respondent's costs of and incidental to these proceedings save and except for those costs as thrown away by the Applicant by reasons of the Respondent's application for leave to amend its Particulars of Objection, as referred to in order 1 above, if any, for the period between 2 July 2004 and 12 August 2004 inclusive, such costs to be assessed, if not agreed, on a party-and-party basis. 9. The costs of and incidental to the Respondent's Notice of Motion be reserved, pending receipt of the Commissioner's report to the Court, pursuant to order 3 herein. 10. Proceedings be stood over for further directions at 9.30 am on 3 November 2004. 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 N 850 OF 2004 BETWEEN: CAPRAL ALUMINIUM LTD (ACN 004 213 692) APPLICANT AND: G & J KOUTSOUKOS HOLDINGS PTY LTD (ACN 009 449 012) RESPONDENT G & J KOUTSOUKOS HOLDINGS PTY LTD (ACN 009 449 012) CROSS-CLAIMANT CAPRAL ALUMINIUM LTD (ACN 004 213 692) FIRST CROSS-RESPONDENT TO THE CROSS-CLAIM COMMISSIONER OF PATENTS SECOND CROSS-RESPONDENT TO THE CROSS-CLAIM JUDGE: MOORE J DATE: 14 SEPTEMBER 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Capral Aluminium Ltd ("Capral") is the patentee of a patent concerning security screen doors. On 24 May 2004 it commenced infringement proceedings against G & J Koutsoukos Holdings Pty Ltd ("Koutsoukos"). Koutsoukos is a manufacturer of security screen doors. In a defence filed 2 July 2004, Koutsoukos put in issue the validity of the patent. Koutsoukos cross-claimed seeking, amongst other things, revocation of the patent. 2 Koutsoukos later sought, by notice of motion filed on 13 July 2004, an order under s 97(3) of the Patents Act 1990 (Cth) ("the Act") for the re-examination of the patent by the Commissioner of Patents ("the Commissioner") by Court direction. This application was initially opposed by Capral but during the hearing of the motion on 30 August 2004, it agreed to re-examination. However, the parties subsequently could not agree on the terms of the order giving effect to the agreement for re-examination. 3 The point of difference is whether the order should include what are, in effect, directions to the Commissioner that certain material should be considered. The material is, in substance, information and submissions Koutsoukos wishes to place before the Commissioner. The draft order proposed by Koutsoukos requires, in terms, that "the Commissioner is to have regard to" specified material which includes what is said to be prior art and also Koutsoukos' submissions analysing and supplementing the material. In support of this order, Koutsoukos points to the regulations governing an application for re-examination under s 97(2) of the Act which require the applicant to furnish the Commissioner with material in support of the application: see reg 9.2 of the Patents Regulations 1991 ("the Regulations"). Capral does not oppose the Commissioner being provided with what is said to be prior art but otherwise opposes Koutsoukos, in effect, being heard by the Commissioner. 4 No submission was made that I did not have power to make the order. It is likely that the Court's power to direct re-examination under s 97(3) includes a power to make orders about the re-examination as long as those orders did not limit the statutory powers conferred on the Commissioner to undertake the re-examination. A Court exercising powers conferred by statute has, additionally, such powers as are incidental and necessary to the exercise of the power: see, for example, DJL v The Central Authority (2001) 201 CLR 226 at [25] but cf Minister for Immigration and Multicultural Affairs v Wang (2003) 196 ALR 385. 5 Several features of the statutory scheme for re-examination under Chapter 9 of the Act (which concerns the re-examination of standard patents) should be noted. Re-examination can occur after grant if an application is made under s 97(2) the Act. The applicant under that subsection might be either the patentee or "any other person". In relation to such an application, the Act is silent as to what information may or must be furnished by an applicant. However, if following re-examination, the report of the Commissioner is adverse, the patentee is given an opportunity under s 99 to dispute the report. While ultimately the Commissioner has power to revoke a patent under s 101 after re-examination under s 97(2), that power cannot be exercised unless the patentee has had a reasonable opportunity to be heard. 6 The Regulations provide that an applicant under s 97(2) (whether the patentee or any other person) furnish the Commissioner with documents supporting an assertion that the invention is not novel and, relevantly for present purposes, does not involve an inventive step: reg 9.2(2). In addition, the applicant must state the relevance of each of these documents: reg 9.2(2A). That latter requirement appears to me to require the applicant to make a statement akin to a submission concerning novelty and inventive step. Thus, and to this limited extent, an applicant who is not a patentee (that is "any other person") does have an opportunity at the outset of re-examination arising under s 97(2), to make submissions to the Commissioner. Thereafter that person (unless the applicant is the patentee) does not have a further opportunity to make submissions to the Commissioner or comment under the Regulations or the Act. 7 In the present case, the re-examination will result from an order of this Court made under s 97(3). The Act and Regulations make no provision for an applicant for an order (and thus, in a sense, the applicant for the re-examination), the opportunity to identify what material founds any allegation of lack of novelty or inventive step. However the patentee, Capral, will be given an opportunity to comment on the report in the event that the Commissioner reports adversely. Capral can, under s 99(1), file a statement disputing the whole or any part of the Commissioner's report. I should note, parenthetically, that the expression "the applicant or patentee" in s 99(1) is almost certainly a reference to the applicant for a patent (in relation to a pre-grant re-examination) and the patentee (in relation to a post-grant re-examination). 8 The process of re-examination by direction of the Court creates an opportunity for what may be an economic and speedy pre-trial evaluation of issues concerning the validity of a patent arising in proceedings in this Court. But there must be a context in which the re-examination takes place. In those circumstances, it is appropriate to give a successful applicant for an order for re-examination, the same opportunity as would exist in relation to an application under s 97(2). That is, to provide the Commissioner with documents on which any assertion is based that the invention, so far as claimed and when compared with the prior art base as it existed before the priority date of that claim, is not novel and does not involve an inventive step and, in addition, a statement of the relevance of those documents. If the applicant for the order is not the patentee, the patentee will later have the opportunity to make a statement under s 99 disputing any adverse report. 9 However, in the present case, the order proposed by Koutsoukos goes further in the sense that Koutsoukos seeks an order giving it the opportunity to provide (and requiring the Commissioner to consider) more than documents of the type comprehended by reg 9.2(2) and a statement of the type comprehended by reg 9.2(2A). For example, material concerning the "file wrapper" of the US application No. 09/253060 (which would be provided by Koutsoukos under its proposed order) fits neither of those descriptions. I see no reason to extend, by order, the opportunity Koutsoukos would have had under reg 9.2(2) and (2A). In any event, the Commissioner should consider issues of validity by reference to primary material and not additional material which might indicate views others took in broadly analogous circumstances. 10 I will make orders to give effect to these reasons. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. Associate: Dated: 14 September 2004 Counsel for the Applicant: D K Catterns QC Solicitor for the Applicant: Piper Alderman Counsel for the Respondent: R J L McCormack Solicitor for the Respondent: Allens Arthur Robinson Solicitor for the Second Cross-Respondent to the Cross-Claim: Australian Government Solicitor Date of Hearing: 30 August 2004 Date of Judgment: 14 September 2004