FEDERAL COURT OF AUSTRALIA Zetco Pty Ltd v Austworld Commodities Pty Ltd [2010] FCA 235 Citation: Zetco Pty Ltd v Austworld Commodities Pty Ltd [2010] FCA 235 Parties: ZETCO PTY LIMITED v AUSTWORLD COMMODITIES PTY LIMITED File number: NSD 194 of 2009 Judge: BENNETT J Date of judgment: 17 March 2010 Corrigendum: 12 April 2010 Catchwords: PATENTS – application to amend patent under s 105 of the Patents Act 1990 – whether amendments comply with s 102 – correcting typographical and grammatical errors– deletion of claims – clarity – reduction in members of a class from which integer of claim is selected – narrowing of class – discretion to allow amendments Legislation: Patents Act 1990 (Cth) ss 40, 102 Cases cited: Apotex Pty Ltd v Les Laboratoires Servier (No 2) (2009) 83 IPR 42 applied Date of hearing: 9 March 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 30 Counsel for the Applicant: Mr D K Catterns QC, Mr N R Murray Solicitor for the Applicant: Mallesons Stephen Jaques Counsel for the Respondent: Mr A Fox Solicitor for the Respondent: Watermark Intellectual Property Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 194 of 2009 BETWEEN: ZETCO PTY LIMITED Applicant AND: AUSTWORLD COMMODITIES PTY LIMITED Respondent JUDGE: BENNETT J DATE OF corrigendum: 12 april 2010 CORRIGENDUM 1 On page 1 of the judgment at the end of paragraph 1, insert the words "The respondent does not oppose the proposed amendments and makes no submissions as to the proposed orders." I certify that the preceding paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 12 April 2010 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 194 of 2009 BETWEEN: ZETCO PTY LIMITED Applicant AND: AUSTWORLD COMMODITIES PTY LIMITED Respondent JUDGE: BENNETT J DATE OF ORDER: 17 MARCH 2010 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. That, pursuant to s 105 of the Patents Act 1990 (Cth), Australian Patent No. 2006200845 entitled "Plumbing Arrangements & Fittings" be amended in accordance with the amended patent specification annexed to the applicant's amended notice of motion filed 20 November 2010 and marked "A". 2. The applicant pay its own costs of the motion. 3. The respondent's costs of the motion be reserved. 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 Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 194 of 2009 BETWEEN: ZETCO PTY LIMITED Applicant AND: AUSTWORLD COMMODITIES PTY LIMITED Respondent JUDGE: BENNETT J DATE: 17 MARCH 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By amended notice of motion filed on 20 November 2009, the applicant (Zetco) applies for an order directing the amendment of Australian Letters Patent No. 2006200845 (the Patent) in the manner indicated in the motion. The Patent is for plumbing arrangements and fittings. 2 The Commissioner of Patents was given notice of the application to amend in accordance with s 105(3) of the Patents Act 1990 (Cth) (the Act). A notice of intention to apply to amend the Patent was advertised in the Official Journal of Patents Supplement dated 7 January 2010. The Commissioner has advised that she has received no notice of opposition and considers the proposed amendments prima facie to comply with s 102 of the Act. The Commissioner has indicated that for these reasons, she does not intend to appear at the hearing of the application. 3 In order to amend the specification, Zetco must satisfy the Court that amendment is appropriate and establish that the amendments are allowable under the Act and that the Court should exercise its discretion under s 105 of the Act to direct the amendments. Zetco does not suggest that the Commissioner's prima facie view of s 102 relieves it of the burden of satisfying the Court of these matters. The nature of the proposed amendments 4 The proposed amendments are to the body of the specification and the claims. Some are clearly to correct grammatical or typographical errors. They do not affect the subject matter of the body of the specification or of the claims. Others are to delete claims and to narrow claims and some are said by Zetco to be for the purposes of clarity. Where claims are to be amended, there are corresponding amendments to the body of the specification. A table submitted by Zetco of the proposed amendments and the reason advanced by Zetco for each amendment is schedule A to these reasons. 5 Zetco says, and has filed evidence to establish, that the amendments are for the following purposes: (a) to correct typographical errors; (b) to delete claims 10 and 11 and make corresponding deletions in the body of the specification in light of the Examiner's objections to these claims and these objections were not contested; (c) to clarify the nature of the pipe coupling referred to in the specification to assist in distinguishing the Patent from the prior art (although Zetco maintains that the Patent is valid as filed); (d) to remove references to "tube connector" following correspondence with the respondent on this issue; and (e) to provide further clarity with respect to cone type compression fittings by providing an alternative (trade) name for them and to align claim 3 with the body of the specification by including cone type compression fittings in the class of pipe couplings. 6 I am satisfied that the amendments to correct typographical and grammatical errors are allowable under the Act. I am satisfied that amendments to delete claims 10 and 11 and the corresponding consistory clauses in the specification are allowable under the Act. I will now deal with the remaining amendments. Are the amendments allowable under the Act? 7 Section 105 of the Act relevantly provides: (1) In any relevant proceedings in relation to a patent, the court may, on the application of the patentee, by order direct the amendment of the patent, the patent request or the complete specification in the manner specified in the order. (2) An order may be made subject to such terms (if any) as to costs, advertisements or otherwise, as the court thinks fit. (3) The patentee must give notice of an application for an order to the Commissioner, who is entitled to appear and be heard, and must appear if the court directs. (4) A court is not to direct an amendment that is not allowable under section 102. 8 Section 102 relevantly provides: (1) An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim matter not in substance disclosed in the specification as filed. (2) An amendment of a complete specification is not allowable after the relevant time if, as a result of the amendment: (a) a claim of the specification would not in substance fall within the scope of the claims of the specification before amendment; or (b) the specification would not comply with subsection 40(2) or (3). 9 The "relevant time" for a standard patent is defined in s 102(2A)(a) of the Act as 'after the specification has been accepted'. 10 Sections 40(2) and (3) of the Act relevantly provide: (2) A complete specification must: (a) describe the invention fully, including the best method known to the applicant of performing the invention; and (b) where it relates to an application for a standard patent – end with a claim or claims defining the invention; and ... (3) The claim or claims must be clear and succinct and fairly based on the matter described in the specification. Principles 11 Some of the principles relevant to amendment were discussed in Apotex Pty Ltd v Les Laboratoires Servier (No 2) (2009) 83 IPR 42 at [29]–[37]. Relevantly, and in summary, the amendments need to be examined to determine: · whether, by reason of the amendments, the proposed specification read as a whole claims matter not in substance disclosed in the specification (including the claims) as filed (s 102(1)); · whether the proposed claim in substance falls within the claims before amendment (s 102(2)(a)). That is, if the amended claims are of broader scope than the claims before amendment, the amendments are not allowable; · whether as a result of the amendment, the specification as a whole would not comply with s 40(2) or (3) of the Act (s 102(2)(b)). A specification as amended fails to comply with s 40(3) for lack of fair basis if any claim as proposed to be amended "travels beyond" the specification as amended. The amendments to the claims: s 102(1) and 102(2)(a) 12 Claim 1 is: A valve for controlling gas or liquid flow, said valve having a valve housing, a quasi-sphere having a through hole therein and being rotatably mounted within the housing and connected via a spindle with a handle means to permit said quasi-sphere to be rotated, wherein said valve housing has a through passage at one end thereof which terminates in a nut and tail fitting and the other end of which terminates in a pipe coupling, said nut and tail fitting and said pipe coupling being the same size. 13 Claim 3 as proposed to be amended is: The valve as claimed in claim 1 or 2 wherein said pipe coupling is selected from the class consisting of: a flared compression fitting, an olive compression fitting, and a cone type compression fitting and a tube connector. 14 In claim 3, which is dependent on claim 1, the pipe coupling is selected from a fixed class of, after amendment, 3 members. The amendment adds a particular type of pipe coupling to the class. However, it can be seen that the pipe coupling of claim 1 is not restricted or characterised other than the restriction that it be the same size as the nut and tail fitting; it can be of any kind. The amendment does not take claim 3 beyond the bounds of claim 1. Section 102(2)(a) is satisfied. 15 Page 4 line 28 of the specification as filed discloses a cone type compression fitting as a member of the class of pipe couplings of the invention. The amendment to add such a pipe coupling was therefore disclosed in the specification as filed. Section 102(1) is satisfied. 16 The amendment to claim 3 to delete "and a tube connector" is mirrored by an amendment to the specification at page 4 line 29. If a member of the class from which the pipe coupling can be selected is removed, the class is narrowed, not broadened. The range of possible infringements of the amended claim is thereby narrowed. An explanation of the amendment, as set out in the affidavit of Mr Old, Zetco's patent attorney, is that the class of pipe coupling as amended now only includes mechanical pipe couplings which do not require the external application of heat. The amended claim 3 does not, as a result of the amendment, claim matter not disclosed in the specification as filed or not within the scope of the unamended claims. This amendment is allowable under s 102. The amendments: s 102(2)(b) 17 The proposed amendments do not give rise to any lack of clarity of the claims, nor do they cause the patent to lack claims defining the invention. The addition of a "cone type compression fitting" to claim 3 is fairly based on the disclosure at page 4 line 27 of the specification, which is further clarified by an amendment in the specification to explain that this fitting is also known as a 'conetite (Trade Mark) compression fitting'. There is no failure to comply with s 40(2) or s 40(3) of the Act. Amendments to the embodiment by reference to figure 3 of the specification 18 A preferred embodiment of the invention is described at page 7 of the specification by reference to figure 3 of the specification. It is proposed to amend that description. The explanation given by Mr Old is that the amendment makes it clear that valve 31 illustrated in figure 3 had a pipe coupling as its inlet and in particular that the pipe coupling was a male flared compression fitting. The unamended description is of "a male compression inlet". There follow further amendments to substitute "pipe coupling" for "inlet" or "male flared compression inlet". 19 I am satisfied that the proposed amendments do not add new matter to the description but are fairly based on figure 3 and that they clarify the description of the components there depicted. Conclusion on the allowability of the amendments under s 102 of the Act 20 I am satisfied that the amendments are allowable under s 102 of the Act. Should the amendments be allowed as a matter of discretion? 21 As stated in Apotex at [86] – [88]: 86. Section 105 of the Act confers a discretion on the Court in relation to an application to amend a patent. That is, even if proposed amendments are otherwise allowable under s 102 of the Act, the Court may still refuse to direct the amendments on discretionary grounds. The Court should consider all relevant factors in deciding the exercise of that discretion. The considerations adverted to in other cases may be of assistance as guidelines but they are not to be elevated to principles or fixed rules to be applied inexorably to every case (Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (No 3) (1997) AIPC ¶91-366 ('Wimmera (No 3)') at 39,790 per Sundberg J). 87. Bodkin, Patent Law in Australia (Lawbook Co, 2008) at [13510] summarises the guidelines identified in Smith Kline & French Laboratories Limited v Evans Medical Limited [1989] 1 FSR 561 ('Smith Kline') and cited with approval by Sundberg J in Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (No 2) (1997) 40 IPR 110 ('Wimmera (No 2)') (and also in Wimmera (No 3)), as relevant to the exercise of discretion: * Whether there has been a full disclosure of all relevant matters; * Whether the patentee has sought to obtain an unfair advantage from the unamended patent; * Whether there has been any unreasonable delay in seeking amendment; and * Whether any circumstances arise that would lead the Court to refuse the amendment. 88. The Court does not approach the exercise of its discretion in a manner hostile or antipathetic to amendment. However, the onus is on the patentee to satisfy the Court that the amendments should be allowed. The Court is concerned with the conduct of the patentee and not with the merit of the invention (Smith Kline at 569). Bodkin at [13520]ff conveniently summarises some of the matters that have been considered relevant. They include: * Mere delay does not warrant refusal although the patentee must explain any delay, which should be reasonable; * If a patentee becomes aware of the undue breadth of its claims, it must act to amend them without undue delay. 22 Zetco has provided evidence of the reasons of the inventor, Mr Scott Michaels and of Mr Old, for the decision to seek each amendment and the chronology of that decision, which flowed in part from the process of examination of the patent in the Patent Office and the commencement of these proceedings. 23 By letter dated 30 July 2008, the respondent requested re-examination of the Patent. This prompted a report dated 1 October 2008 from the Patent Examiner at IP Australia to Mr Old noting lawful grounds of objection to the Patent. On 18 November 2008, Mr Old, Mr Scott Michaels and Mr Richard Michaels met with the Examiner and, with reference to a model, sought to distinguish the invention from the prior art. Mr Old responded to the first Examiner's Report by letter dated 27 November 2008 in which he sought to overcome the Examiner's objections. A first statement of proposed amendments was also provided (the first proposed amendments). The present application includes all of those amendments and some additional amendments. 24 On 12 December 2008, the Examiner issued a second report which indicated that the claims as amended were clear and fairly based on the specification as lodged but raised further pieces of prior art by way of objection. On 22 January 2009, Mr Old responded to distinguish this further prior art. On 4 February 2009, IP Australia notified Mr Old that the Delegate of the Commissioner considered that the request for leave to amend was valid and that leave to amend was granted. 25 On 5 February 2009, Mr Old had a telephone conversation with the Examiner who said that he had no outstanding objections to the Patent. The present proceedings were commenced on 10 March 2009. By letter dated 27 May 2009, IP Australia indicated that before allowing the amendment, the Commissioner needed to know whether any relevant proceedings were pending and on 17 June 2009 advised that by reason of the present proceedings, neither the amendments nor the proposed re-examination could proceed. 26 A Court-ordered mediation was held on 2 September 2009 at which the proceedings failed to settle. An application to amend the Patent was filed on 13 October 2009 and amended on 20 November 2009. 27 Mr Scott Michaels, who is also the Operations Manager for Zetco, deposes that he instructed Mr Old to seek the first proposed amendments in reliance on Mr Old's advice following the meeting with the Patent Examiner. Mr Scott Michaels and Mr Richard Michaels instructed Mallesons Stephen Jaques to commence the present proceedings for infringement following receipt of the 4 February 2009 letter from IP Australia and after advice from Mr Old that IP Australia had granted leave to amend the specification. Mr Scott Michaels says that he relied on Mr Old's and Mallesons' advice to make the present application. 28 Mr Old's evidence sets out in detail the reasons for each amendment in the first proposed amendments and in the application of 13 October, as amended on 20 November. He also explains that some amendments are to make changes that should have been made as part of the first proposed amendments but were overlooked. Conclusion on discretion 29 Zetco has waived its privilege in its communications with Mr Old in order to provide an account of the circumstances for the proposed amendments. The reasons for seeking the amendments have been explained in detail. The circumstances of the incomplete s 104 application, the commencement of proceedings and subsequent s 105 application are explained by the history of communications with the Patent Office as to the grant of leave to amend. There is no unreasonable or unexplained delay in the amendment application apparent. There is no suggestion that Zetco has sought to obtain an unfair advantage in respect of the Patent prior to amendment. 30 I see no reason to refuse to allow the amendments as annexed to the amended notice of motion. The parties agree that the appropriate order as to costs is that the applicant pays its own costs of the motion and that the respondent's costs of the motion be reserved. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 17 March 2010 Schedule A Amendment Reason Page 3, line 8: Delete "ascetically" and insert "aesthetically" To correct typographical error. Page 3, line 11: deletion of "the" and replacement with "be" To correct a typographical error Page 4, line 28: inclusion of the word "and" To correct typographical error Page 4, line 29: Inclusion of alternative name for a cone type compression fitting, deletion of reference to a "tube connector" To provide further clarity with respect to "cone type compression fittings" and to remove references to "tube connector". Page 5, lines 12-18: Deletion of consistory statement corresponding to claim 10 Deletion is a consequence of the deletion of claim 10 Page 7, line 2: Insert 's' after 'inlet' and 'pipe' The amendment was to refer to the two inlets and the two pipes (as illustrated in Figure 1) in the plural. Page 7, lines 4-5: deletion of "male compression inlet" and insertion of "a pipe coupling 32 at the inlet (and consisting of a male flared compression fitting)" To make it clear that the valve 31 illustrated in Figure 3 had a pipe coupling as its inlet and in particular the pipe coupling was a male flared compression fitting. Page 7, line 18: deletion of "inlet" and insertion of "pipe coupling" Amendment made to reiterate that the inlet 32 was a pipe coupling. Page 8, lines 2: Delete "inlet" This should have been deleted as part of the First Proposed Amendments, but due to an oversight it was not included as an amendment at that time. Amendment now is to correct that oversight. Page 8, lines 2 and 3: Delete "male flared compression inlet" Amendment made to reiterate that the inlet 32 was a pipe coupling. This should have been deleted as part of the First Proposed Amendments, but due to an oversight it was not included as an amendment at that time. Amendment now is to correct that oversight. Page 8, lines 2-4: removal of "inlet" and replacement with "pipe coupling" Amendment made to reiterate that the inlet 32 was a pipe coupling. Page 8, line 5: Deletion of reference to "tube connector" To remove references to "tube connector". Page 9, claim 3: Deletion of reference to "tube connector" To remove references to "tube connector". Page 9, claim 3: inclusion of reference to "cone type compression fitting" Inserted on the basis that it has always been disclosed in the Patent. Page 9: insertion of "a cone type compression fitting" into claim 3. Insertion was made to be consistent with the specification that there were four types of pipe couplings. Page 10: Deletion of claims 10 and 11 Deletion made in response to objection raised by the Examiner. Abstract, line 1: insertion of the word "an" To correct a typographical error