FEDERAL COURT OF AUSTRALIA Siemens Water Technologies Corp v GE Betz Pty Ltd [2011] FCA 641 Citation: Siemens Water Technologies Corp v GE Betz Pty Ltd [2011] FCA 641 Parties: SIEMENS WATER TECHNOLOGIES CORP and MEMCOR AUSTRALIA PTY LTD ACN 003 581 566 v GE BETZ PTY LTD ACN 001 221 941, ZENON AUSTRALIA PTY LTD ACN 111 935 114 and GE BETZDEARBORN CANADA COMPANY File number(s): NSD 601 of 2010 Judge: JAGOT J Date of judgment: 2 June 2011 Catchwords: PRACTICE AND PROCEDURE – application for discovery – whether disputed categories of documents relevant to issues between parties – whether applicants should be required to put forward competing interpretation of claims of patent before discovery ordered – whether compliance with discovery obligation would be unduly onerous Legislation: Patents Act 1990 (Cth) Date of hearing: 2 June 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 16 Counsel for the First and Second Applicants: Ms C Cochrane Solicitor for the First and Second Applicants: Shelston IP Lawyers Counsel for the First, Second and Third Respondents: Mr C Dimitriadis Solicitor for the First, Second and Third Respondents: Corrs Chambers Westgarth IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 601 of 2010 BETWEEN: SIEMENS WATER TECHNOLOGIES CORP First Applicant MEMCOR AUSTRALIA PTY LTD ACN 003 581 566 Second Applicant AND: GE BETZ PTY LTD ACN 001 221 941 First Respondent ZENON AUSTRALIA PTY LTD ACN 111 935 114 Second Respondent GE BETZDEARBORN CANADA COMPANY Third Respondent JUDGE: JAGOT J DATE OF ORDER: 2 JUNE 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The respondents give discovery in accordance with Categories 9 to 14 of the categories of documents for discovery by the respondents identified in Annexure A on or before 11 July 2011. 2. There be liberty to restore on 3 days' notice. 3. 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 601 of 2010 BETWEEN: SIEMENS WATER TECHNOLOGIES CORP First Applicant MEMCOR AUSTRALIA PTY LTD ACN 003 581 566 Second Applicant AND: GE BETZ PTY LTD ACN 001 221 941 First Respondent ZENON AUSTRALIA PTY LTD ACN 111 935 114 Second Respondent GE BETZDEARBORN CANADA COMPANY Third Respondent JUDGE: JAGOT J DATE: 2 JUNE 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This proceeding relates to the alleged infringement and invalidity of a patent. The patent concerns an invention which is described as relating to the concentration of solids in a suspension using a hollow fibre membrane and, in particular forms, to methods and apparatus for periodically cleaning by backwashing the hollow fibre membranes. The applicants have filed and served a notice of motion seeking that the respondents give discovery in accordance with certain categories. The evidence shows that the parties have been attempting to agree these categories but, despite extensive correspondence, parts of proposed Category 9 as well as the whole of Categories 12, 13 and 14 remain in dispute. 2 Category 9 seeks documents relating to (relevantly) the operational parameters of any backwash process used in the respondents' systems, described as "Zeeweed 500" and "Zeeweed 1000" (the Zeeweed systems). The respondents have agreed to and are about to give discovery of documents within that category, excluding, however, three disputed subcategories. These are identified as documents relating to: the velocity and direction of permeate flow throughout the backwash process; the direction and magnitude of any transmembrane pressure gradient throughout the backwash process; and the presence and magnitude of any pressure wave(s) generated during the backwash process. 3 Category 12 relates to a representative sample of documents in the nature of instructions for use of or inducements to use the Zeeweed systems. 4 Category 13 concerns a representative sample of documents in the nature of advertisements dealing with the operational parameters of the backwash process. 5 Category 14 refers to a representative sample of documents which tend to establish the use or uses to which the Zeeweed systems have been put by customers. 6 The respondents' objection to discovering the documents in these categories is based upon their position that analysis of the patent shows that the novel aspect of the claimed invention is limited to the integer of the "rapid reversal of liquid flow", sufficient to cause what is described as "water hammer". For this reason, the respondents take the view that the issues between the parties are effectively limited to those relating to rapidity of flow. The aspects of Category 9 which are in dispute are said by the respondents not to be relevant to rapidity of flow, but rather to other aspects of the operation of the backwash process. 7 According to the respondents, the applicants have rejected this interpretation of what the patent in suit claims – but, despite repeated requests on the part of the respondents, have refused to proffer their own competing interpretation. For this reason, it is the respondents' view that it is not reasonable or appropriate for the applicants to seek discovery of the disputed documents, which they characterise as a "fishing expedition" (particularly in relation to Categories 12, 13 and 14). The respondents also submit that the fact that Categories 12, 13 and 14 seek a representative sample of documents does not reduce the onerousness of the request, because the categories relate – at least insofar as Category 12 and, particularly, Category 14 are concerned – to customer-specific matters, and so would require the respondents to carry out a comprehensive overview of all dealings with customers in order to ascertain what might constitute a representative sample of the relevant documents. 8 For these reasons, the respondents say that the disputed categories should not be the subject of an order for discovery. Alternatively, they say that the disputed categories should not be the subject of an order for discovery at this stage, with the issue being deferred until after the applicants have reviewed the documents now ready to be produced; after the applicants have provided their own construction of the claims of the patent in issue; or after expert evidence has been filed by the applicants. 9 I have been assisted by comprehensive written and oral submissions on the part of both parties. In short, I am persuaded by the applicants' submissions in relation to all the issues to which this matter gives rise. 10 As the applicants say, the respondents' argument may well be that the issues between the parties are limited to the meaning of a "rapid reversal of liquid flow". Apparently this is not the applicants' position. Construction of the claims of a patent is ultimately a matter for the Court, and experience shows that there might be many competing constructions available. In these circumstances I cannot see any proper basis upon which the applicants should not obtain discovery in relation to the whole of the backwash process relevant to the Zeeweed systems. If only part of the backwash process is disclosed, there is a real risk that an incorrect impression of that process may be obtained, not only by the applicants but also by the Court. There is also a risk that the parts disclosed may make little sense without an understanding of the whole. 11 For these reasons, I have no doubt that the disputed aspects of Category 9 should be the subject of discovery without deferral of any of the types suggested by the respondents. 12 I do not have any particular concern about discovery of the documents in Category 13, as that category relates to documents in the nature of advertisements published by or on behalf of the respondents after a particular date. There is no evidence suggesting that locating these advertisements would be in any way onerous, and I did not understand the respondents' submissions in relation to the need to delve into customer relationships to extend to Category 13. To the extent that they did, I do not see how that could be possible. I also consider the documents to be relevant, given the nature of the case which the applicants seek to make against the respondents under s 117 of the Patents Act 1990 (Cth). 13 While Categories 12 and 14, on their face, do require consideration by the respondents of particular customer relationships, the difficulty for the respondents is that these categories are also prima facie relevant, and there is no evidence that would enable me to infer that the exercise which the respondents would be required to undertake in producing them would be unnecessarily onerous. Although the respondents have pointed to the fact that the six locations referred to in the applicants' particulars represent only a small proportion of the customers in Australia, I have no means of knowing on the evidence before me how many customers there are in total. Still more relevantly, I have no means of knowing whether the identification of a representative sample would or would not require an analysis of each and every instruction or inducement to use the Zeeweed systems, or of each and every use which customers make of them. Indeed, I consider it most unlikely that such an exercise would be necessary. It would be surprising if the respondents did not have in their employ – or at least have access to – persons who would be able to identify a representative sample at a much higher level of generality than has been put to me. 14 There is a further difficulty for the respondents in that, as noted above, the dispute regarding discovery has been on foot for some time. The applicants' notice of motion was filed on 28 March 2011 – some months ago – and I am left in the position of having no particular evidence of potential hardship to the respondents by reason of being required to give discovery in accordance with Categories 12 to 14. Given the numerous inferences which might potentially be drawn from the documents in those categories, I am not prepared, in the circumstances, to accept the respondents' submissions in the absence of any evidence that their production would require a considerable amount of further work. 15 Finally, I do not accept that the applicants' request for documents in any of the disputed categories constitutes a "fishing expedition" in the sense in which that phrase is used in the authorities. Each of the categories concerns, on its face, relevant issues on the pleadings. The mere fact that there may be no documents to produce in relation to any one or more categories does not turn the exercise into a fishing expedition. 16 For all these reasons, I am prepared to make the order sought in the applicants' notice of motion. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate: Dated: 7 June 2011