FEDERAL COURT OF AUSTRALIA Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [No 2] [2012] FCA 1018 Citation: Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [No 2] [2012] FCA 1018 Parties: BRITAX CHILDCARE PTY LTD (ACN 006 773 600) v INFA-SECURE PTY LTD (ACN 092 222 994) File number: VID 109 of 2009 Judge: MIDDLETON J Determined on the papers: 17 September 2012 Date of last submissions: 7 September 2012 Catchwords: INTELLECTUAL PROPERTY – patents – infringement – Markman hearing – whether assessor should be appointed pursuant to s 217 Patents Act 1990 (Cth) – whether proceeding should be referred to a referee pursuant to s 54A Federal Court of Australia Act 1976 (Cth) Legislation: Federal Court of Australia Act 1976 (Cth) Federal Court Rules 2011 (Cth) Patents Act 1990 (Cth) Cases cited: Genetics Institute Inc v Kirin-Amgen Inc (1999) 92 FCR 106 F Hoffmann-La Roche AG v New England Biolabs Inc [1999] FCA 1424 Genetics Institute Inc v Kirin-Amgen Inc (No 2) (1997) 78 FCR 368 Markman v Westview Instruments, Inc 517 US 370 (1996) Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 31 Counsel for the Applicant: Mr B J Hess SC with Dr L J Duncan Solicitor for the Applicant: Norman Waterhouse Lawyers Counsel for the Respondent: Ms J Baird SC Solicitor for the Respondent: Chrysiliou Lawyers IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 109 of 2009 BETWEEN: BRITAX CHILDCARE PTY LTD (ACN 006 773 600) Applicant/Cross-Respondent AND: INFA-SECURE PTY LTD (ACN 092 222 994) Respondent/Cross-Claimant JUDGE: MIDDLETON J DATE OF ORDER: 17 SEPTEMBER 2012 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Before 23 November 2012, on a day or days to be agreed between the parties, the applicant's expert witness (Mr Hunter) and the respondent's expert witness (Mr Newman) are to confer in the presence of a Registrar of the Court and a single solicitor for each party for the purpose of providing a further joint expert report. 2. The further joint expert report is to be directed to the presence or absence in the respondent's products of the integers of the relevant claims of the patents in suit. For the purpose of providing this further joint expert report, the expert witnesses are to have regard to and apply the Court's reasons for judgment on construction dated 9 May 2012. 3. In preparing the further joint expert report referred to in order 2, the expert witnesses, Messrs Hunter and Newman, shall have reference only to the following documents and materials: (a) the Court's reasons for judgment on construction dated 9 May 2012, and any other reasons that are delivered or may be delivered by the Court prior to the delivery of the further joint expert report; (b) any written or oral evidence of Mr Hunter and Mr Newman; (c) the Joint Report of Expert Witnesses dated 11 January 2011; (d) any Exhibit tendered by either party in the proceeding, including Exhibits A7, A8 and A9; (e) physical examples of the respondent's products in suit (where existing); (f) a copy of each of the patents in suit; and (g) a series of tables setting out the integers of each relevant claim of the patents in suit against each of the respondent's products in suit, with blank spaces for the two expert witnesses to write their comments for assistance in preparing their further joint expert report. 4. In preparing the further joint expert report referred to in order 2, the expert witnesses, Messrs Hunter and Newman, are not to have regard to any written or oral submissions of either of the parties. 5. In preparing the further joint expert report referred to in order 2, the expert witnesses, Messrs Hunter and Newman, are to identify the respects in which they agree and the respects in which they disagree. Each expert witness should prepare a short statement of his position for each matter or issue in respect of which there is disagreement between the expert witnesses. 6. The further joint expert report is to be finalised by the expert witnesses, Messrs Hunter and Newman, and provided to the Court no later than 30 November 2012. 7. If either expert witness considers that he requires additional time, materials, information or advice for the completion of the further joint expert report, they are to communicate this fact (and details thereof) to either the applicant's or the respondent's legal representatives, as the case may be. The legal representatives in question will then communicate this to the Court and the other party's legal representatives. If deemed to be appropriate in the circumstances, the Court may then order that the time for provision of the further joint expert report specified in order 6 be extended, or that further materials, information or advice be provided to the expert witnesses for the purpose of preparing this report. 8. For the purpose of preparing the further joint expert report, the requirements contained in paragraphs 2.1(c)-(g) (inclusive), 2.2, 2.4 and 2.8 of Federal Court Practice Note CM 7, and in the same manner, the corresponding aspects of Rule 23.13 of the Federal Court Rules 2011 (Cth), are to be dispensed with. 9. The matter is to be set down for further hearing on 10 December 2012 at 10:15 am, on an estimate of three days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 109 of 2009 BETWEEN: BRITAX CHILDCARE PTY LTD (ACN 006 773 600) Applicant/Cross-Respondent AND: INFA-SECURE PTY LTD (ACN 092 222 994) Respondent/Cross-Claimant JUDGE: MIDDLETON J DATE: 17 SEPTEMBER 2012 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 Following delivery of the Court's judgment on 9 May 2012 on the construction of the patent claims in suit in this proceeding (the Construction Judgment), the Court directed the parties to make submissions and propose draft orders on the further conduct of the proceeding. This was intended to facilitate the Court's determination of the outstanding issue of infringement. 2 A number of issues have arisen in relation to the determination of the issue of infringement, including the provision of a further joint expert report, and the possibility that the Court may order that an assessor be appointed pursuant to s 217 of the Patents Act 1990 (Cth) (the Patents Act), or that a referral be made pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act). 3 The respondent, Infa Products Pty Ltd (formerly known as Infa-Secure Pty Ltd) (Infa), has submitted that the Court should refer the issue of infringement of the ten patents in suit either to a referee pursuant to s 54A of the Federal Court Act or to an assessor pursuant to s 217 of the Patents Act. This is resisted by the applicant, Britax Childcare Pty Ltd (Britax). The role of an assessor under s 217 of the Patents Act has been referred to in such cases as Genetics Institute Inc v Kirin-Amgen Inc (No 2) (1997) 78 FCR 368; Genetics Institute Inc v Kirin-Amgen Inc (1999) 92 FCR 106; and F Hoffmann-La Roche AG v New England Biolabs Inc [1999] FCA 1424. Section 54A of the Federal Court Act was employed by Justice Rares in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558. 4 Infa submitted that such a referral would be the better course for the Court having regard to the present status of the proceeding, including the judgment delivered and the material since filed; the future steps likely to be required depending on which course is ordered (including additional Court time and hearing days); the likelihood of cross-examination and further submissions; the objectives of the overarching purpose set out in s 37M of the Federal Court Act; the evident and likely continuing disagreements between the parties; and the availability and further expense of expert witnesses, referees or assessors. 5 On the basis of these factors, Infa submitted that as compared to a further joint expert report prepared by the parties' expert witnesses (Messrs Hunter and Newman), a referral or direction made pursuant to either s 54A of the Federal Court Act or s 217 of the Patents Act (as appropriate) was more likely to lead to an outcome that would be of utility to the Court, would be less open to further dispute between the parties, and would accordingly be more economical, efficient and expeditious. 6 It is important to recall where we are in this proceeding. Following delivery of the Construction Judgment, the Court must now determine in light of that judgment which, if any, of the Infa products have each and every integer of the relevant claims in the patents in suit. 7 As I noted at [14] and following in my Construction Judgment, it became apparent during the course of the trial (and has become even more apparent in the course of preparing these reasons) that the complete disposal of this proceeding will involve a number of staged enquiries and determinations even as to liability. 8 For instance, one issue that the parties initially agreed should remain for later determination (if necessary) was when various sales of infringing products occurred, and the relevant date from which infringement could be assessed. This question will be addressed in a forthcoming judgment. 9 Messrs Hunter and Newman previously prepared and provided to the Court a joint expert report, in which they identified points of agreement and difference as to the meaning and interpretation of the principal terms within the patents in suit. The joint expert report also identified points of agreement and difference between the expert witnesses as to the presence or absence of integers of the claims in suit in various models and versions of the Infa products. The expert witnesses agreed that many of the differences of opinion between them on this issue were (directly or indirectly) a consequence of differences of opinion between them as to the meaning of the principal terms within and the interpretation and understanding of the patents in suit. 10 Prior to delivery of the Construction Judgment, the parties had approached the issues of infringement and revocation on the basis that the views of one or other of the expert witnesses on claim construction would be accepted by the Court. From that approach, certain consequences as to infringement and revocation followed (and on this basis, the parties reached a certain consensus as between themselves on infringement). However, as I have not completely accepted the views of either expert witness on construction, the approach adopted by the parties causes its own difficulties in the circumstances of this proceeding, having regard to the different combinations and permutations that in fact resulted from my findings on construction. 11 I had hoped that once the construction issues were decided, the parties could reach a fresh consensus regarding infringement on the basis of the findings of the Court, and that the issues concerning revocation would similarly crystallise. Unfortunately, that optimism has not been fulfilled. 12 As the Court did not fully accept the views of either expert witness in the Construction Judgment, to the extent that the joint expert report and the expert witnesses' oral evidence was directed to infringement, that material has now effectively been superseded. In going forward it is now the Construction Judgment that is the basis for consideration of the issue of infringement. 13 It is worthwhile to briefly say something of this approach of dealing with construction issues separately and prior to determining infringement. The holding of separate hearings and issuing of preliminary decisions on claim construction is commonplace in the United States: see Markman v Westview Instruments, Inc 517 US 370 (1996). 14 A 'Markman hearing' is a hearing at which all claim construction issues and disputes over meaning, scope and interpretation are decided prior to the commencement of the main trial, which is normally conducted before a jury. 15 It is helpful to all parties to have interpretation issues decided earlier rather than later. Due to a significant amount of patent litigation turning on the interpretation of the language used in patent claims, handing down a decision specifically in relation to claim construction will provide some insight for the parties regarding the likely outcome of the litigation. As a result, if adopted at the outset of a matter, this approach could (at least in some circumstances) encourage a cost-effective and timely process to promote settlement between parties in response to the Court's interpretation of the claims. This would reduce the time spent in litigation and therefore the costs incurred by the parties, as well as unburden the Court's resources from the demands of what are often highly technical and lengthy patent law trials. 16 Turning then to the way forward in this proceeding, in addition to the question of any referral, there has been disputation as to the material upon which infringement is to be determined. Britax has asserted that infringement is to be determined effectively by reference solely to the expert witnesses' joint report and Exhibit A9. The Court has already concluded that this is not correct. 17 I say this about that conclusion. Undoubtedly, when the provision of the joint expert report was initially ordered, there was to be a joint report on both construction and infringement. Further, the trial proceeded on the basis of the parties having the opportunity to comment upon, qualify and vary any of the matters raised by the expert witnesses. Nevertheless, the experts were to express their views on the principal terms in dispute, and context in this regard is important. With the benefit of the Construction Judgment, the experts can now apply the Court's construction of the principal terms in the context of the claims in suit. 18 Undoubtedly, whether there has been infringement is ultimately a question for the Court to determine. However, in the circumstances, the only sensible way forward is for the Court to be assisted in this endeavour by the expert witnesses, who have – by now – had a long association with this proceeding. The experts should look at the Construction Judgment (as well as whatever relevant documentation and exhibits may be required – a matter addressed further below), and provide their views on which, if any, of the Infa products have each and every integer of any of the claims of the patents in suit. 19 It does not seem to me to be to the point that, prior to the delivery of the Construction Judgment, one or other of the expert witnesses offered an opinion as to the existence of a particular integer in one or more Infa products. The Court has now made its decision on construction, and as noted above, it declined to wholly adopt the views of one expert over the other. I have no doubt that each of the expert witnesses can, with the Construction Judgment in hand, apply their mind to the task now to be undertaken, namely, to apply that decision to the Infa products. 20 If this is the logical and correct way to proceed in the normal course of events, the only other issue that may arise is whether or not there is any unfairness to either party having regard to the way in which the trial has been conducted to date. 21 Britax's primary contention is that, having had a full trial conducted on the issues of construction and infringement, the Court should have made a decision in relation to both of these issues without the receipt of further submissions or further evidence (as would occur in a usual trial). However, as long as the parties have the opportunity to deal with anything that arises in relation to infringement, I do not see that there is any unfairness involved in dealing with this issue in the way now proposed, namely, with the assistance of a further joint expert report now that the construction issues have been determined. It is to be recalled that the complexities have arisen because the Court did not accept the construction advanced by one expert and one expert only. It was because of the Court's decision on construction that a number of combinations and permutations have arisen in the application of the Construction Judgment to the issues of infringement. 22 Britax also submits that if the matter is to proceed by the receipt of further evidence or further joint expert report, then there should be a confining of issues, so that no new issues of construction or infringement (as defined by reference to those issues that have previously been identified to the Court) can be allowed to arise. 23 However, I do not accept Britax's contention that new issues have been raised. The existing joint expert report identified 14 primary issues relating to specific terms used in the patents in issue, but as I explained at [280] in the Construction Judgment, the terms need to be read in context. Now that they are in receipt of the Construction Judgment, the expert witnesses are in a far better position to assist the Court in coming to the correct determination as to whether or not there has been infringement. I see nothing unfair in this approach, provided that the parties are given an opportunity to present their arguments in the next part of the hearing. 24 If the Court is to rely upon the expert witnesses as explained above, the question then is whether or not it is appropriate to also refer the matter to a referee pursuant to s 54A of the Federal Court Act, or appoint an assessor pursuant to s 217 of the Patents Act. 25 Realistically, it seems to me that – as noted above – the persons who could best assist the Court in the circumstances are Messrs Hunter and Newman, who have knowledge of the background of the trial, the matters which were initially agreed upon between the expert witnesses, and the reasons why the issues of disagreement arose between them. To appoint an independent third party now would involve that person expending considerable extra time even just to become familiar with the patents, the products in suit and the Construction Judgment. This is without any other documentation the parties want to put before him or her. Further, an assessor could not undertake the judicial function of deciding on competing submissions of the parties or the competing evidence if the expert witnesses were unable to reach agreement on everything. So on the basis the Court does require further assistance at this stage to bring the infringement proceedings to an efficient and effective conclusion, the assistance is best provided directly to the Court by Messrs Hunter and Newman. 26 I then turn to the form in which the expert assistance is to be provided to the Court. In my view, a further joint expert report should be provided. Undoubtedly, the role of the expert witnesses Messrs Hunter and Newman would be to give expert evidence directed to the presence or absence in the Infa products of the integers of the relevant claims of the patents in suit. Obviously, there would not be a 'report' on infringement as such, because the Court ultimately determines whether there has been infringement, having considered all the relevant evidence. 27 At this stage I would not envisage there to be further cross-examination of the expert witnesses following receipt of the further joint expert report. However, that position can be reserved. If there are no issues of disagreement then obviously no cross-examination would be necessary. If there are some areas of disagreement, depending on their nature, some cross-examination or further Court hearing may be necessary after the provision of the further joint expert report. I have already allocated a time for this to occur in December 2012. It seems to me that the process to be undertaken following the further joint expert report is one that can be determined after its receipt. To this end, I note that now Messrs Hunter and Newman have the benefit of the Construction Judgment, the remaining scope of any dispute between them is likely to be very limited. The extent of differences of opinion which may be raised is probably more imagined than real. If differences of opinion do in fact occur, they are likely to be very confined. 28 The issue then arises as to what material the expert witnesses should have to undertake their task. I do not think that they should be hampered by any further submissions by the parties. It seems to me that from the point of view of Messrs Hunter and Newman, the scope of the task is relatively straight-forward, although it may be time-consuming. They are to familiarise themselves with the Construction Judgment, to adopt in their own mind the position that has now been determined by the Court, and in relation to each of the Infa products in suit, give an opinion as to whether or not the relevant integers are present. In my view, I would not regard either Mr Hunter or Mr Newman as being unable to read and understand the Construction Judgment. In my view, having regard to their written evidence and to the way in which they gave their evidence in Court, neither expert witness would have difficulty comprehending the content and meaning of the Construction Judgment. If they do, then provision is made in the Orders accompanying these reasons for an approach to be made to the Court. 29 Therefore, each expert witness must now accept that their views were not accepted in their entirety by the Court in the Construction Judgment, and that their previous approaches to construction and infringement have been superseded. They must now consider the issues of infringement afresh, applying the Construction Judgment and not their previous views. I think this is a sufficient direction for the expert witnesses to carry out their task. 30 To burden this process with prescriptive directions – which seem only to give rise to arguments – would serve no useful purpose. A Registrar of the Court will oversee the process. Both expert witnesses have been involved in providing a joint expert report before. Armed with the information needed to make their further report to the Court (as described herein), the process should be relatively straight-forward. The more one hampers that process with documentation, legal submissions and prescriptive directions, the more complicated it becomes for the expert witnesses. 31 Therefore, the orders I propose to make are as follows – 1. Before 23 November 2012, on a day or days to be agreed between the parties, the applicant's expert witness (Mr Hunter) and the respondent's expert witness (Mr Newman) are to confer in the presence of a Registrar of the Court and a single solicitor for each party for the purpose of providing a further joint expert report. 2. The further joint expert report is to be directed to the presence or absence in the respondent's products of the integers of the relevant claims of the patents in suit. For the purpose of providing this further joint expert report, the expert witnesses are to have regard to and apply the Court's reasons for judgment on construction dated 9 May 2012. 3. In preparing the further joint expert report referred to in order 2, the expert witnesses, Messrs Hunter and Newman, shall have reference only to the following documents and materials:- (a) the Court's reasons for judgment on construction dated 9 May 2012, and any other reasons that are delivered or may be delivered by the Court prior to the delivery of the further joint expert report; (b) any written or oral evidence of Mr Hunter and Mr Newman; (c) the Joint Report of Expert Witnesses dated 11 January 2011; (d) any Exhibit tendered by either party in the proceeding, including Exhibits A7, A8 and A9; (e) physical examples of the respondent's products in suit (where existing); (f) a copy of each of the patents in suit; and (g) a series of tables setting out the integers of each relevant claim of the patents in suit against each of the respondent's products in suit, with blank spaces for the two expert witnesses to write their comments for assistance in preparing their further joint expert report. 4. In preparing the further joint expert report referred to in order 2, the expert witnesses, Messrs Hunter and Newman, are not to have regard to any written or oral submissions of either of the parties. 5. In preparing the further joint expert report referred to in order 2, the expert witnesses, Messrs Hunter and Newman, are to identify the respects in which they agree and the respects in which they disagree. Each expert witness should prepare a short statement of his position for each matter or issue in respect of which there is disagreement between the expert witnesses. 6. The further joint expert report is to be finalised by the expert witnesses, Messrs Hunter and Newman, and provided to the Court no later than 30 November 2012. 7. If either expert witness considers that he requires additional time, materials, information or advice for the completion of the further joint expert report, they are to communicate this fact (and details thereof) to either the applicant's or the respondent's legal representatives, as the case may be. The legal representatives in question will then communicate this to the Court and the other party's legal representatives. If deemed to be appropriate in the circumstances, the Court may then order that the time for provision of the further joint expert report specified in order 6 be extended, or that further materials, information or advice be provided to the expert witnesses for the purpose of preparing this report. 8. For the purpose of preparing the further joint expert report, the requirements contained in paragraphs 2.1(c)-(g) (inclusive), 2.2, 2.4 and 2.8 of Federal Court Practice Note CM 7, and in the same manner, the corresponding aspects of Rule 23.13 of the Federal Court Rules 2011 (Cth), are to be dispensed with. 9. The matter is to be set down for further hearing on 10 December 2012 at 10:15 am, on an estimate of three days. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. Associate: Dated: 17 September 2012