FEDERAL COURT OF AUSTRALIA Aristocrat Technologies Australia Ltd v IGT (Australia) Pty Ltd [2007] FCA 1540 ARISTOCRAT TECHNOLOGIES AUSTRALIA LTD v IGT (AUSTRALIA) PTY LTD AND ACRES GAMING INC NSD 1345 OF 2004 ALLSOP J 9 OCTOBER 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1345 OF 2004 BETWEEN: ARISTOCRAT TECHNOLOGIES AUSTRALIA LTD Applicant AND: IGT (AUSTRALIA) PTY LTD First Respondent ACRES GAMING INC Second Respondent JUDGE: ALLSOP J DATE OF ORDER: 9 OCTOBER 2007 WHERE MADE: SYDNEY THE COURT: 1. Orders that the decision of the Delegate of the Commissioner of Patents in respect of Australian Patent Application No 748263 made on 25 August 2004 be set aside except insofar as the Delegate found that the invention defined by claims 17 and 18 lacked novelty and did not involve an inventive step. 2. Orders that Australian Patent Application No 748263 not proceed to grant unless the specification is amended by: (a) deleting claims 1 to 7 (inclusive), 9 to 15 (inclusive), 17 and 18; (b) re-writing dependent claims 8, 16 and 19 as independent claims according to their terms (without any change in the scope of those claims); (c) correcting the misspelling of "herein" in claim 21; and (d) renumbering the claims as appropriate. 3. Directs that the Respondents make any request to the Commissioner of Patents for leave to amend the specification of Australian Patent Application No 748263 pursuant to s 104 of the Patents Act 1990 (Cth) in the form referred to in paragraph 2 above within 60 days after the conclusion of the stay referred to in paragraph 6 below. 4. Orders that Respondents pay the Applicant's costs of the proceedings in this Court, other than the Applicant's costs of and associated with: (a) grounds and particulars of opposition contained in the Applicant's Statement of Grounds and Particulars of Opposition (as filed or as subsequently amended) which were not pressed at the final hearing of the proceedings. (b) The subpoena served by the Applicant on the Proper Officer, Bellamy, Miller and Monypenny Pty Ltd on 19 June 2006. 5. Orders that the Applicant pay the Respondents' costs of and associated with the Grounds and Particulars of Opposition referred to in order 4(a) above. 6. Orders that the operation of orders 1, 2, 3, 4 and 5 be stayed: (a) initially, for a period of 21 days after the making of these orders; (b) if an application for leave to appeal against these orders if filed by any party within the period referred to in sub-paragraph (a), until 21 days after the final determination of that application or, if leave is granted and an appeal is instituted in accordance with that leave, 21 days after the final determination of that appeal. 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 NSD 1345 OF 2004 BETWEEN: ARISTOCRAT TECHNOLOGIES AUSTRALIA LTD Applicant AND: IGT (AUSTRALIA) PTY LTD First Respondent ACRES GAMING INC Second Respondent JUDGE: ALLSOP J DATE: 9 OCTOBER 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 7 February 2007, I delivered reasons in this matter ([2007] FCA 37) and ordered that the parties bring in short minutes to give effect to those reasons. Unfortunately, as my extempore judgment of 2 July 2007 ([2007] FCA 1529) reveals, this process led to considerable further argument. 2 Part of that argument, as will be clear in a moment, flowed as a consequence of a mistake on my part. However, on 2 July 2007, considerable argument took place with detailed written submissions having been earlier filed as to the proper form of orders. Most of that argument was not caused by my mistake. The proper form of orders which I should make depends on a number of matters. The first is the fate of claims 8 and 16. In [94] of my February judgment I said the following: These claims deal with a continued accumulation in the excess pool. Bennett Patent did not teach this. However, claims 8 and 16 are only valid if some earlier claim, such as claim 3 can survive, for the reasons I have expressed earlier I do not think that is the case. 3 The parties were diplomatic on this application about the paragraph. They need not have been. The lack of teaching in the Bennett Patent in the continued accumulation meant that claims 8 and 16 did not fail for lack of novelty. Mr Catterns in particular (partly as a foundation for his application to lead further evidence) accepted some of the blame for the error from his terseness of submission. The parties were brief about claims 8 and 16 and the parties certainly did not address those claims to the extent, and with the vigour, that they did on 2 July 2007. Nevertheless, the conclusions which I reached in my February judgment did not lead to, and should not have lead to, an expression of the invalidity of claims 8 and 16. This led to the desire of the applicant to support my conclusion of invalidity of the claims on other grounds and more fully to deal with the excess accumulation integer in claim 8 of "using the excess pool as at least a portion of an initial value during the second prize accumulation phase" and in claim 16 "and use the excess pool as at least a portion of an initial value during the second prize accumulation phase". 4 The fundamental argument of the applicant, developed in the application on 2 July 2007, was that this additional integer was no more than an aspect which the skilled addressee would at once perceive and understand the invention to be about without further experiment. That is, it was merely a workshop variation. Another way of putting it was that it was an inessential integer. Reliance was placed upon C Van der Lely NV v Bamfords Limited [1963] RPC 61 at 71-2; Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524 at 548; Re ICI Chemicals & Polymers Ltd and Lubrizol Corporation Inc (2000) 49 IPR 513 at [47]; Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 at 527-528; and R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1989) 25 FCR 565 at 569 and 602. 5 Mr Catterns, on behalf of the applicant, sought to show from the existing evidence that not only was an accumulation in an excess pool part of the common general knowledge (as was explicit in the fact that the MegaBucks system was part of the common general knowledge), but that the use of an excess pool was such that its employment was a mere workshop equivalent in the field. Mr Catterns referred to the existing evidence about this. I do not propose to list the aspects of Mr Culley's and Mr Daley's evidence to which he referred in detail. It is sufficient to note that neither gentlemen directed himself to this question and I am not persuaded from the existing evidence that the building up of prize money in an excess pool was of such routine matter in the design of these games that it can be seen not as a genuine integer in the claims, but as either a workshop equivalent or an inessential integer. In this regard I pay particular regard to the nature of the task before me discussed in my February reasons in [5]-[14] of those reasons. Whilst I can see the clear foundation for a powerful argument along the lines that Mr Catterns propounded, I am not persuaded on the evidence before me that the excess pool is merely a workshop equivalent or an inessential integer. This conclusion would arise from an understanding of the field and the industry against which and in which an inventor works or a skilled addressee reads an instrument. The expert witnesses did not direct themselves to this issue, I am not prepared to draw the conclusions that Mr Catterns asked me to draw. 6 No doubt because of these matters, Mr Catterns sought to adduce further evidence from Mr Culley about the matter. I rejected this application to reopen on 2 July 2007 for the reasons that I gave on that day. The salutary practice of not making orders upon the publication of reasons in patent matters should not be seen as an encouragement to the proposition that there is always a "second go" at the evidence. If I had allowed Mr Culley's evidence to be read, there would have been further evidence from Mr Daley, further cross-examination and further submission. In other words, a second hearing. As it was, considerable further submissions were placed before me which I have considered. 7 I am not prepared to conclude that the excess pool accumulation was something so straightforward and obvious that it can be either viewed as a workshop equivalent or as an inessential integer in the way propounded by Mr Catterns. 8 The second complaint was as to the omnibus claims. Once again, very little assistance was given to me about this at the hearing. If I had been of the view in accordance with Mr Catterns' submissions that claims 8 and 16 should fail, then there would have been no basis to permit the omnibus claims to exist. Given the view that I have come to about claims 8 and 16, the omnibus claims can be seen to encompass, as an essential feature, continued accumulation in an excess pool. This occurs in both the detailed description and the figures. To this extent, they are no narrower than claims 8 and 16, but the lack of narrowness is not a basis to deny their validity. The relevant limitation in the omnibus claims is the same as imposed in claims 8 and 16 and I am not prepared to come to the conclusion that they should be rejected. 9 The respondents have put forward short minutes of order which involve amendments to the application in order that the independent status of claims 8, 16 and 19 would be made clear and to correct a mis-spelling in claim 21. 10 The legitimacy of the rewriting for claims 8 and 16, given the views that I have expressed, can readily be accepted. There were submissions made by the applicant that the respondent should not have the entitlement to redraft claim 19 because of the failure to make an application for amendment after the delegate had rejected claims 17 and 18. I do not think this is a valid criticism. Claim 19 should be permitted to be rewritten according to its terms so as to give effect to the cross-references within it by which it presently incorporates the wording of claims 17 and 18. The delegate's finding of invalidity was limited to claims 17 and 18. No appeal was taken from this. Claim 19 was before the Court as part of the applicant's appeal. Claim 19 remained in the specification, though based on the wording of claims 17 and 18. I think the respondent should have the opportunity to redraft it. 11 Questions of costs were also argued. The applicants, after initially contesting the matter, are prepared to accept that they should pay the costs of the grounds thrown away. However, there is an issue about a subpoena issued by the applicant to the proper officer of Bellamy, Miller & Monypenny Pty Ltd on 19 June 2006. The parties put in detailed chronologies and argument about this subpoena. It appears to me that it was the attempted extraction of documents from a third party in relation to issues that were later not pressed. I do not see why, conformably with the other aspects of costs on issues abandoned, which the applicant accepts, these costs should be payable by the respondents. The arguments before the Court ranged for a time over questions of principle in relation to costs. What I am about to say is not to be taken by way of criticism of any of the practitioners. However, the early preparation of this claim appeared to reflect a tendency to run every conceivable point that could be run. The subpoena appears to have been part of that. At a point in the preparation of the case it was made clear that certain points were not being run. Nevertheless they had been run and costs had been expended and incurred. In my view, the respondents should not pay the costs of and associated with the subpoena to which I have mentioned. 12 Intellectual property litigation, in particular patent litigation, often can be expensive. The issues are sometimes, perhaps often, complex and generally, if not always, requiring the attention of skilled and experienced practitioners knowledgeable in the field. Whilst every case must necessarily turn on its own circumstances, the above considerations of cost place a special responsibility on practitioners and parties to exercise considered restraint and judgment in the raising of issues. The propensity of patent litigation to become very expensive is made worse if practitioners and clients take the view that litigation is an opportunity to plead and then investigate every possible defect in the patent. That is not what court proceedings are for. Court proceedings are to litigate and resolve known disputes. Discovery and subpoenas are not vehicles for investigation. There is a fine line between proper and complete preparation and using the litigation process as a vehicle for detailed enquiry as to possible defects in the patent. 13 Further argument took place as to the form of orders dealing with amendment. In the end, much of this debate fell away. For the reasons propounded by Mr Dimitriadis in his submissions, I am prepared to make an order of the kind made by Lockhart J in Merck & Co v Sankyo Co Ltd (1992) 23 IPR 415 at 433 to which Heerey J referred in Genetics Institute Inc v Kirin-Amgen Inc (No 3) (1998) 41 IPR 325. 14 Mr Dimitriadis also sought an order of a declaration that a patent should be granted if the amendment was made in the generalised form which the orders contemplate. I am not prepared to make such a declaration in advance, certainly not in the absence of the precise wording to be put to the delegate. 15 The orders that I propose to make are as follows: 1. Orders that the decision of the Delegate of the Commissioner of Patents in respect of Australian Patent Application No 748263 made on 25 August 2004 be set aside except insofar as the Delegate found that the invention defined by claims 17 and 18 lacked novelty and did not involve an inventive step. 2. Orders that Australian Patent Application No 748263 not proceed to grant unless the specification is amended by: (a) deleting claims 1 to 7 (inclusive), 9 to 15 (inclusive), 17 and 18; (b) re-writing dependent claims 8, 16 and 19 as independent claims according to their terms (without any change in the scope of those claims); (c) correcting the misspelling of "herein" in claim 21; and (d) renumbering the claims as appropriate. 3. Directs that the Respondents make any request to the Commissioner of Patents for leave to amend the specification of Australian Patent Application No 748263 pursuant to s 104 of the Patents Act 1990 (Cth) in the form referred to in paragraph 2 above within 60 days after the conclusion of the stay referred to in paragraph 6 below. 4. Orders that Respondents pay the Applicant's costs of the proceedings in this Court, other than the Applicant's costs of and associated with: (a) grounds and particulars of opposition contained in the Applicant's Statement of Grounds and Particulars of Opposition (as filed or as subsequently amended) which were not pressed at the final hearing of the proceedings. (b) The subpoena served by the Applicant on the Proper Officer, Bellamy, Miller and Monypenny Pty Ltd on 19 June 2006. 5. Orders that the Applicant pay the Respondents' costs of and associated with the Grounds and Particulars of Opposition referred to in order 4(a) above. 6. Orders that the operation of orders 1, 2, 3, 4 and 5 be stayed: (a) initially, for a period of 21 days after the making of these orders; (b) if an application for leave to appeal against these orders if filed by any party within the period referred to in sub-paragraph (a), until 21 days after the final determination of that application or, if leave is granted and an appeal is instituted in accordance with that leave, 21 days after the final determination of that appeal. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 9 October 2007 Counsel for the Applicant: Mr D K Catterns QC with Ms S Goddard Solicitor for the Applicant: Freehills Counsel for the Respondent: Mr C Dimitriadis Solicitor for the Respondent: Spruson & Ferguson Date of Hearing: 2 July 2007 Date of Judgment: 9 October 2007