FEDERAL COURT OF AUSTRALIA Danisco A/S v Novozymes A/S [2010] FCA 995 Citation: Danisco A/S v Novozymes A/S [2010] FCA 995 Parties: DANISCO A/S and DANISCO AUSTRALIA PTY LTD (ACN 096 139 392) v NOVOZYMES A/S and NOVOZYMES AUSTRALIA PTY LTD (ACN 001 420 677) File number(s): NSD 1968 of 2008 Judge: BENNETT J Date of judgment: 2 September 2010 Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 considered Date of hearing: 2 September 2010 Place: Sydney Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 16 Counsel for the Applicants: Mr D Catterns QC with Mr C Dimitriadis and Mr C Burgess Solicitor for the Applicants: Wrays Lawyers Counsel for the Respondents/Cross-Claimants: Ms K Howard SC with Mr P Flynn Solicitor for the Respondents/Cross-Claimants: Shelston IP Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1968 of 2008 BETWEEN: DANISCO A/S First Applicant DANISCO AUSTRALIA PTY LTD (ACN 096 139 392) Second Applicant AND: NOVOZYMES A/S First Respondent NOVOZYMES AUSTRALIA PTY LTD (ACN 001 420 677) Second Respondent JUDGE: BENNETT J DATE OF ORDER: 2 SEPTEMBER 2010 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The respondents'/cross-claimants' application for an adjournment for leave to adduce further evidence be refused. 2. The respondents/cross-claimants be granted leave to file a third further amended particulars of invalidity in the form attached to the respondents'/cross-claimants' notice of motion dated 2 September 2010. 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 1968 of 2008 BETWEEN: DANISCO A/S First Applicant DANISCO AUSTRALIA PTY LTD (ACN 096 139 392) Second Applicant AND: NOVOZYMES A/S First Respondent NOVOZYMES AUSTRALIA PTY LTD (ACN 001 420 677) Second Respondent JUDGE: BENNETT J DATE: 2 SEPTEMBER 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Danisco is the patentee of Australian Patent No. 752215 (the Danisco patent), which relates to a process for preparing a foodstuff. Danisco is suing Novozymes for infringement of the Danisco patent. Novozymes is cross-claiming for revocation. 2 Novozymes states that it has always been the case that, as part of its claim of lack of novelty, it was relying on the inherent activity of its enzyme Lipopan F, which was part of the disclosure of its patent published a month before the priority date of the Danisco patent (the Novo patent). It points to its pleading, which does not specify such inherency but does rely on the Novo patent as novelty-defeating. It also points to repeated references to a "Gillette defence" (Gillette Safety Razor Company v Anglo-American Trading Company Ltd (1913) 30 RPC 465) during case management hearings. 3 When Novozymes' case was explained in opening, Danisco stated that it was not aware that such a case was being advanced, that it was not covered by the pleading and that, in its view, such an assertion needed to be supported by experimental evidence. Further, Danisco asserted that the relevant activity for the purposes of the Danisco patent was phospholipase and glycolipase activity and not simply inherent lipase activity, the activity of Lipopan F. 4 Novozymes now seeks not only to amend its pleading but also an adjournment to adduce further evidence, including experimental evidence. It says that it had assumed that the fact that the use of Lipopan F in the baking of bread resulted in lipase activity was not in issue. It points to evidence that had been filed and served by Danisco, documents in Danisco's proposed tender bundle, statements made by Danisco in opening and correspondence between the parties. 5 Novozymes relies on an indication by Danisco in correspondence of evidence it intended to adduce on infringement, together with the fact that Danisco required confirmation by Novozymes that matters of fact in an affidavit of Mr Baczynski and documentation attached to that affidavit in relation to the activity of Lipopan were not in dispute. Novozymes says that it relied on that proposed evidence to conclude that none of the matters of facts therein were in dispute. 6 However, Novozymes itself can seek to rely on that evidence as an admission. Secondly, the letter relied on by Novozymes made it clear that Danisco was questioning Novozymes' position on infringement, not setting out the evidence it intended to adduce. Novozymes' assumptions did not relieve it of the obligation to consider proving its own case on inherency. 7 As to reliance on Danisco's proposed case, I discount what was said in opening by Danisco to the extent that it may have constituted some representation upon which Novozymes relied. The opening was obviously well after Novozymes had prepared its case. Further, I do not consider the affidavits and documents Novozymes thought would be relied on by Danisco relevant to the question of evidence necessary for Novozymes to prove its case. That evidence can be tendered by Novozymes in its own case. Novozymes can also seek to tender other documentary material, including documents that it has identified. This includes two Danisco patents which, Novozymes says, it wishes to tender as admissions. 8 A notice to admit facts had been served on Danisco. In response, Danisco admitted, inter alia, that Lipopan F is a polypeptide having lipase activity. While a number of facts were the subject of the notice, Novozymes did not include the further facts relevant to this aspect of Novozymes' case. 9 Two key issues are relied upon by Novozymes as necessitating further evidence: the pH profile of Lipopan F activity and the results of following the experimental protocol as set out in the Novo patent. The question of the effect of pH on lipase activity is already an issue in the proceedings, in respect of the knowledge of the skilled reader of the Danisco patent as at the priority date. Novozymes has not adduced evidence about the pH profile as a fact, although one might have thought that it would have had some relevance to questions of the knowledge of the skilled reader, at least as a basis for cross-examination. 10 The following of the experimental protocol of example 20 of the Novo patent has not been the subject of any evidence, despite the case now being made that the following of that protocol would inevitably lead to a product within the claims of the Danisco patent. To the extent that Novozymes says that any baking of bread utilising Lipopan F is broadly described in the Novo patent and results in a product within the claims, that does not require experimental repetition of example 20. Danisco's proposed evidence and other statements by Danisco referred to by Novozymes do not extend to an admission on which Novozymes could rely, that is, that the baking of bread under any conditions would result in lipase activity, subject to anything in any documentary material sought to be adduced in the proceedings. There was, in fact, evidence to the contrary, including evidence of Professor Small, as to the actual or potential effect of pH on enzyme activity generally. 11 Novozymes says that it needs to establish that Lipopan F is the same as SP 972, the enzyme in the Danisco patent. Danisco is prepared to admit that its SP 972 is in the enzyme Lipopan F and that the amino acids sequence of SP 972 is ID 2, the sequence of the enzyme in the Novo patent. 12 I am prepared to permit Novozymes to amend its pleading to make its inherency case clear. I accept that Novozymes was of the view that the existing pleading extended to such a basis for want of novelty. I also accept that Novozymes was of the view that it had indicated such a case to Danisco and had adduced evidence going to that case. 13 I also accept that Danisco had not appreciated the nature of the inherency case on which Novozymes now seeks to rely. That lack of appreciation was reasonable in the circumstances. Danisco had understood a general case of inherency based on Novozymes' evidence and is prepared to meet that case without an adjournment. 14 It is most unfortunate that this has arisen three days into a hearing involving questions of scientific expertise and during the hearing of the concurrent evidence of experts, one of whom is from the United States. It is also unfortunate that the issue in dispute was not fully identified earlier in the proceedings. I do not cast any blame for that fact. I appreciate that Novozymes has offered to pay costs thrown away by reason of the adjournment but, as pointed out in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, costs do not always compensate for the detriment to the other party or to the Court. 15 Novozymes' proposed course is to adjourn the hearing, to conduct experiments and to adduce further evidence. This will necessitate further evidence from Danisco, including, it foreshadows, evidence from a microbiologist, thus introducing a new area of scientific expertise which would undoubtedly require a response. It would also necessitate a repeat of some of the expert evidence already given because of possible additional issues or, at least, refinements, as well as some repeat evidence to refresh memories some months away from evidence already given. 16 In the circumstances, taking into account the matters above, including that: · the hearing has commenced; · further expert evidence will need to be called if the case is adjourned to permit further evidence; · the parties would not be ready to reconvene the hearing for some time and there are difficulties in doing so, including court time and the availability of the legal representatives of the parties; · Danisco has made a number of admissions of facts on which Novozymes wishes to rely; · Novozymes can tender evidence as admissions; and · Novozymes is not precluded from advancing the case on inherency based on the evidence it had prepared to support that case and can amend its pleading to make that clear, I propose to grant leave to Novozymes to amend the particulars of invalidity and to refuse the application to adjourn the hearing to permit Novozymes to adduce further evidence in chief. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 9 September 2010