FEDERAL COURT OF AUSTRALIA Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 875 DELNORTH PTY LTD ACN 051 954 977 v DURA-POST (AUST) PTY LTD ACN 101 287 512; DURA-POST (AUST) PTY LTD ACN 101 287 512 v DELNORTH PTY LTD ACN 051 954 977 NSD 378 of 2006 GYLES J 5 JUNE 2008 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 378 of 2006 BETWEEN: DELNORTH PTY LTD ACN 051 954 977 Applicant AND: DURA-POST (AUST) PTY LTD ACN 101 287 512 Respondent AND BETWEEN: DURA-POST (AUST) PTY LTD ACN 101 287 512 Cross-Claimant AND: DELNORTH PTY LTD ACN 051 954 977 Cross-Respondent JUDGE: GYLES J DATE OF ORDER: 5 JUNE 2008 WHERE MADE: SYDNEY THE COURT: 1. ORDERS that the respondent/cross-claimant, Dura-Post (Aust) Pty Ltd, be granted leave to amend its Particulars of Invalidity in relation to the lack of innovative step of Australian Innovation Patent No 2005100978 and the lack of novelty and lack of innovative step of Australian Innovation Patents No 2006100297 and 2006100696 by filing and serving a Fourth Further Amended Particulars of Invalidity in the form of annexure "A" to the Notice of Motion filed 20 May 2008. 2. ORDERS that the respondent/cross-claimant be granted leave to re-open its case in respect of the validity of Australian Innovation Patents No 2005100978, 2006100297 and 2006100696 by tendering United States Patent No US 3312156 (Pellowski). 3. ORDERS that the respondent/cross-claimant pay the costs of this application and the costs thrown away by the reopening. 4. ORDERS that the applicant/cross-respondent file and serve any evidence on or before 27 June next. 5. ORDERS that any evidence in reply be filed and served on or before 11 July next. 6. ORDERS that the matter stand over to 22 July 2008 at 10.15 am for further hearing. 7. GRANTS liberty to apply on two days' notice in the meantime. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 378 of 2006 BETWEEN: DELNORTH PTY LTD ACN 051 954 977 Applicant AND: DURA-POST (AUST) PTY LTD ACN 101 287 512 Respondent AND BETWEEN: DURA-POST (AUST) PTY LTD ACN 101 287 512 Cross-Claimant AND: DELNORTH PTY LTD ACN 051 954 977 Cross-Respondent JUDGE: GYLES J DATE: 5 JUNE 2008 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application to re-open a case, which is presently reserved for delivery of judgment, in order to amend particulars of invalidity by referring to a further piece of prior art, namely, a United States patent, and to tender that patent. The further piece of prior art is to be utilised in an attack upon novelty and innovative step. There are, in fact, three patents in suit and the particulars slightly vary one to the other, but they are the broad grounds which will be relied upon. I have come to the conclusion that the application must be acceded to, on terms to be discussed. I will briefly explain why. 2 First, I should say something about the case. It commenced in February 2006 as an action for infringement of innovation patents. The fact they are innovation patents is of some significance because, although an innovation patent is, of course, an effective monopoly, it is a slightly different creature from a standard patent. The particulars of the defence and counter-claim, and the particulars of invalidity, were filed in May 2006, and a second further amended set of particulars of invalidity were filed in early July 2007. The case was heard between 10 and 20 March 2008 so far as evidence was concerned. After addresses from counsel, judgment was reserved on 15 April last. The basis of the application is that after 15 April 2008, the US patent in question, number 3312156, came to the attention of the patent attorneys acting for the respondent/cross-claimant. I have been taken by the parties to the authorities which bear upon re-opening of a case at this stage and, having considered those authorities, it seems to me that there are several issues which need to be addressed. 3 The first issue to be looked at is the explanation for the delay in raising the new point. I am satisfied that this is not a case where the party in question was aware, either actually or constructively, of the document and chose to sit by and either not raise it or not properly inquire into it. I am satisfied that it came to light in the way that has been described in evidence, through the examination process in relation to the standard patent. The cross-respondent submits, based upon its evidence and based upon an analysis of the evidence filed on behalf of the cross-claimant, that there is really no satisfactory explanation for not having adequately searched for this patent previously. With the benefit of hindsight that can be said but, in my view, it cannot be said that the steps which were taken prior to the case were inadequate in a sense sufficient to count against the cross-claimant in that respect. Fairly obviously, in a case such as this, it behoves the party to put their best foot forward, but putting the best foot forward is in the interests of the party itself. I think that there is a satisfactory explanation for the delay. 4 The second issue is the relevance of the new point. Having read the patent (although not with the care that will be necessary ultimately) and heard the brief submissions about it, it has apparent relevance to the issues in the case. Whilst no doubt it will be a matter of hot debate between the parties as to whether it does in the end have significance, it is certainly within that field of prior art which calls for close consideration. If this were an application made after judgment, then there would be a high test for the relevance. It would normally have to be sufficient to, in itself, be likely to lead to a new result. I do not think the test is as stringent at this stage, and I am satisfied that there is sufficient relevance not to reject the application on that ground. 5 The next question is the prejudice to the cross-respondent, leaving aside, of course, the possibility it may lose if the amendment is made. The basis upon which the amendment has been put forward is that no further evidence will be called by the cross-claimant. It will submit that the construction of the patent will be a matter for the Court in the light of the technical evidence that has already been led, which will largely determine novelty. So far as innovative step is concerned, the evidence of the experts to date has meant that they had to put their best foot forward as to the state of common general knowledge in Australia at the relevant time. Undoubtedly, re-opening at this stage will involve the cross-respondent in effort, time, and money. There is a particular complication in that their principal expert witness has health difficulties which may lead to either his evidence being unavailable or there being difficulties in obtaining it. 6 The questions of delay and costs are not critical because they can be, effectively, cured. I have had to give close attention, however, to the possible problem in relation to the cross-respondent's expert. At the end of the day, I do not think that, in itself, is sufficient to deny the application. That expert has given extensive evidence. He was cross-examined for some time and I have a good idea of what he says about the field of the relevant art. I am relatively confident that I can appreciate what would be said by him about the specification in question. I also take into account that he was not the only expert called on the part of the cross-respondent. 7 Next, I must consider the disruption to the Court. Delicate reference has been made to the fact that I am retiring shortly and reopening will inevitably cause some disruption to the smooth progress to that event. However, I will just have to put my best foot forward and cope with that as best I can. I am confident that I will be able to do so without any ultimate disruption to this case or any other case, although there may be some to my own leisure time. 8 So far as other matters are concerned, it is relevant to take into account that a patent revocation suit has some of the characteristics of an action in rem. It does affect the public and I must bear in mind that anybody else could come along and seek to revoke using this very piece of art. 9 In coming to this decision, I have not overlooked the procedural history of the matter which, as counsel for the cross-respondent rightly stresses, indicates considerable leeway being given to the cross-claimant to frame and present its case, and it is unfortunate, to say the least, that this event has occurred. However, bearing in mind that the ultimate task of the Court is to do justice between the parties, and that the prejudice to the other side can, I think, be met by appropriate terms, I am bound to allow the application. Obviously, costs thrown away by the amendment will have to be met, in any event. 10 I make orders 1 and 2 as asked, as well as the following orders: (3) The cross-claimant to pay the costs of this application and the costs thrown away by the reopening. (4) The cross-respondent to file and serve any evidence on or before 27 June next. (5) Any evidence in reply to be filed and served on or before 11 July next. (6) Stand over to 22 July 2008 for further hearing. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 17 June 2008 Counsel for the Applicant/ Cross-Respondent: Mr R Cobden SC, Mr C Dimitriadis Solicitor for the Applicant/ Cross-Respondent: Spruson & Ferguson Lawyers Counsel for the Respondent/ Cross-Claimant: Mr S Burley SC, Ms P Arcus Solicitor for the Respondent/ Cross-Claimant: Norman Waterhouse Date of Hearing: 5 June 2008 Date of Judgment: 5 June 2008