FEDERAL COURT OF AUSTRALIA Ansell Healthcare Products LLC v Reckitt Benckiser (Australia) Pty Limited [2016] FCA 506 File number: NSD 1180 of 2014 Judge: RARES J Date of judgment: 7 April 2016 Catchwords: EVIDENCE – legal professional privilege – where party who claimed prejudice if opponent granted leave to withdraw admissions in pleading had waived privilege in earlier results of tests it had performed on subject matter of litigation – where prior to litigation party had written to party now seeking to withdraw admissions asserting belief in its right to sue the other that suggested that asserting party had evidence to support its belief – whether such assertion waived legal professional privilege in any communications or documents relied on to make pre-litigation assertions Cases cited: Attorney-General (NT) v Maurice (1986) 161 CLR 475 Mann v Carnell (1999) 201 CLR 1 Date of hearing: 7 April 2016 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Category: Catchwords Number of paragraphs: 20 Counsel for the Applicants: Mr C Dimitriadis SC with Mr C Burgess Solicitor for the Applicants: Spruson and Ferguson Counsel for the Respondents: Ms K Howard SC with Mr J Cooke Solicitor for the Respondents: Corrs Chambers Westgarth ORDERS NSD 1180 of 2014 BETWEEN: ANSELL HEALTHCARE PRODUCTS LLC First Applicant ANSELL LIMITED (ACN 004 085 330) Second Applicant AND: RECKITT BENCKISER (AUSTRALIA) PTY LIMITED (ACN 003 274 655) First Respondent RECKITT BENCKISER HEALTHCARE (UK) LIMITED Second Respondent RECKITT BENCKISER HEALTHCARE AUSTRALIA PTY LIMITED Third Respondent JUDGE: RARES J DATE OF ORDER: 7 APRIL 2016 THE COURT ORDERS THAT: 1. The interlocutory application filed on 5 April 2016 be dismissed. 2. The respondents pay the applicants' costs of the interlocutory application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) RARES J: 1 On 8 March 2016, Reckitt Benckiser (Australia) Pty Limited, Reckitt Benckiser Healthcare (UK) Limited and Reckitt Benckiser Healthcare Australia Pty Ltd (collectively Reckitt), who are the respondents/cross-claimants in these proceedings, applied by an interlocutory application to withdraw admissions made in their defence. The proceedings concern claims by the applicants, Ansell Healthcare Products LLC and Ansell Ltd (collectively Ansell), that Reckitt is infringing its patent in respect of "dip-formed synthetic polyisoprene latex articles with improved intra-particle and inter-particle crosslinks", or in simple terms, condoms. 2 The patent is a somewhat complex document, but, relevantly, claims 1 and 7 provided: 1. A synthetic polyisoprene elastomeric article comprising: synthetic polyisoprene particles that are pre-vulcanized and cured; said synthetic polyisoprene particles bonded to each other through intra-polyisoprene particle crosslinks and inter-polyisoprene particle crosslinks; wherein the intra-polyisoprene particle crosslinks and the inter-polyisoprene particle crosslinks are substantially uniform in said synthetic polyisoprene latex article. … 7. The synthetic polyisoprene elastomeric article of claim 1, wherein TEM of an osmium tetroxide treated article shows uniformity of isoprene double bonds. 3 In its defence to the further amended statement of claim, Reckitt made admissions, that it now wishes to withdraw, about its accused product, the Durex synthetic condom (the Durex product). Relevantly, Reckitt admitted that the Durex product comprised synthetic polyisoprene particles, that are cured, and synthetic polyisoprene particles, that are bonded to each other through intra-polyisoprene particle crosslinks and inter-polyisoprene particle crosslinks, wherein the intra-polyisoprene particle crosslinks and the inter-polyisoprene particle crosslinks are substantially uniform in the synthetic polyisoprene latex article. In other words, Reckitt admitted that the Durex product had all but one of the integers or features of claim 1 in the patent. The exception was the integer, the presence of which Reckitt denied, namely that the synthetic polyisoprene particles were pre-vulcanised. 4 The basis on which Reckitt seeks to withdraw the admissions is that it now perceives that it was under a misunderstanding as to the nature of what it was admitting. It is not necessary for the present purpose to explain that assertion, which I am to hear on Monday 11 April 2016. The notice produce issue 5 On 4 April 2016, Reckitt filed another interlocutory application seeking an order that by 5.00 pm today Ansell produce documents showing all details and results of transmission electron microscopy (TEM) tests (also known as network visualisation) performed on the Durex product. In my opinion, that order should be refused for the reasons below. Background 6 Reckitt argued that in a letter dated 12 May 2014 from Ansell's solicitors, Spruson & Ferguson, to Reckitt, Ansell waived legal professional privilege in TEM test results that Ansell had commissioned for the purpose of enabling it to consider whether to bring infringement proceedings in respect of the Durex product. There are two such test reports dated 8 November 2013 and 20 March 2014 that the Tun Abdul Razak Research Centre, in the United Kingdom, provided to Ansell's United States attorneys for the purpose of lawyers advising Ansell in relation to whether it could bring infringement proceedings against Reckitt in Australia. For the purposes of this application Reckitt accepted that those two reports were subject to legal professional privilege until Ansell allegedly waived that privilege. 7 Spruson's letter stated that Ansell believed it was likely that the Durex product involved pre-vulcanisation to a degree that was not disclosed in Reckitt's patent, under which Reckitt manufactured the Durex product and that could not have occurred without infringing one or more of claims 1-9 of Ansell's patent in suit. Spruson asserted that, although Ansell believed it may have the right to obtain relief for infringement of its patent on the material currently available, it may not have sufficient information to decide whether to commence proceedings to obtain that relief. The letter sought information, including: The details of any process that explains the uniformity of osmium tetroxide vapour staining of the particles of the Durex Product or the reduced stickiness of the Durex Product (as compared to the Durex PI condom that you discontinued, we believe in about 2011 or 2012, prior to launching the current Durex Product) 8 For the purposes of it opposing Reckitt's application to withdraw its admissions, Ansell's solicitor, John Afaras, said in an affidavit that Ansell would be prejudiced if the admissions were withdrawn because, among other reasons, it would then be necessary for Ansell to perform TEM testing. 9 There is a dispute between the experts relied on by each party as to the potential utility of TEM testing. There is a possibility that the basis of the dispute involves the two experts speaking about different results that the TEM testing may be able to reveal. Dr William Potter, Reckitt's expert, suggested in his affidavit that TEM testing may be able to demonstrate evidence of cross-linking of rubber particles but he said that it cannot demonstrate evidence of cross-linking of sulphur particles. 10 Mr Afaras, on information and belief, described the view of Dr Stuart Cook, of the Centre, the expert Ansell engaged, to give expert opinion on this matter if need be. Dr Cook had not seen Dr Potter's affidavit. Dr Cook informed Mr Afaras that TEM testing was a routine experimental technique that could be used to determine whether or not a synthetic polyisoprene condom had intra- and inter-polyisoprene particle crosslinks that are substantially uniform, as claimed in claim 1 of Ansell's patent. Dr Cook said that his Centre had first produced the image that is figure 1 in the patent in suit in about late 2004 or early 2005, using TEM techniques and that the Centre had subsequently performed TEM testing on "other samples of synthetic polyisoprene condoms". Reckitt's argument 11 Reckitt argued that it is not clear what matters Dr Cook considered the TEM technique would be able to test for and whether he was at issue with Dr Potter in relation to the latter's asserted lack of efficacy for discerning sulphur cross-linking as opposed to rubber cross-linking. However, that is not a matter that is capable of being determined on the material at present. 12 Reckitt contended that the subsequent TEM tests, to which Dr Cook referred, should be inferred to be or include the TEM tests performed on the Durex product for the purposes of preparing the two privileged reports. Reckitt asserted that the 12 May 2014 letter waived privilege and yet thereafter, until it pleaded the admissions that it now seeks to withdraw, Ansell had consistently refused Reckitt's demands for production of any relevant TEM tests to support Ansell's assertions of infringement. Reckitt argued that the production, at least of the two privileged reports, would enable it to have material at the hearing next week of its interlocutory application to meet Ansell's assertion of prejudice in Mr Afaras' recent affidavit flowing from Ansell having to do TEM testing in the way Dr Cook outlined. Consideration 13 The parties agreed that Gleeson CJ, Gaudron, Gummow and Callinan JJ had explained the relevant principles as to waiver in Mann v Carnell (1999) 201 CLR 1 at 13-15 [28]-[34]. Their Honours said that a person, who would otherwise be entitled to the benefit of legal professional privilege, may waive the privilege by acting inconsistently with the maintenance of the confidentiality, which the privilege is intended to protect, so as to effect a waiver. They gave examples that included disclosure by the client of the client's version of a communication with a lawyer which entitled the lawyer to give his or her account of that communication, or the client suing the lawyer for professional negligence, so that the lawyer's evidence as to advice given to the client would be admissible. They noted that waiver could be expressed or implied. Implied waiver will occur when particular conduct is inconsistent with the maintenance of the privilege. That is, the waiver will be "imputed by operation of law", because the law recognises the inconsistency and determines its consequences, even though those consequences might not have reflected the subjective intention of the party who has lost the privilege. Their Honours said (201 CLR at 13 [29]): What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. (emphasis added) 14 The mere fact that a client discloses a privileged communication does not automatically effect a waiver of the privilege in the document at large, as Mann 201 CLR 1 showed. In that case, a member of the Legislative Assembly of the Australian Capital Territory raised a question as to the reasonableness of the conduct of the Territory in certain litigation involving Dr Mann. As a result, the Chief Minister gave the member access to the Territory's legal advice in relation to Dr Mann. Dr Mann claimed that a waiver had thereby occurred. Gleeson CJ, Gummow, Gaudron and Callinan JJ held there was no inconsistency between the maintenance of the privilege and the purpose for which the communication to the member was made, and that privilege had not been waived. They said (201 CLR at 15 [34]): Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client's actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency. (emphasis added) 15 In my opinion, the communication in Spruson's letter of 12 May 2014 did not waive privilege in any TEM test results. The request in the letter for information about the details of a process that would explain the uniformity of osmium tetroxide vapour staining did not disclose what was in any privileged communication. Among other things, it did not disclose what the author meant by "the uniformity". The letter did no more than occurs on many occasions in anticipation of litigation, namely to make assertions on behalf of a client about the nature of the client's case. Ordinarily, such assertions will not waive privilege in the legal advice or other material that has been obtained for the purposes of the lawyer giving advice as to whether the client might assert its rights. A mere assertion of rights or claims does not waive privilege in documents which have been brought into existence for the purposes of the client obtaining or seeking legal advice in respect of the subject matter of the underlying documents: cf Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 484 per Gibbs CJ, 490 per Mason and Brennan JJ, 493 per Deane J and 499 per Dawson J. 16 Ansell's conduct evinced in its solicitors' assertion in the letter, or subsequent conduct, is incapable of amounting to a waiver of legal professional privilege in the material on which the assertion was made. The quoted assertion did not refer to testing, although I would infer that the very words of the assertion carried with them the implication that some form of TEM testing had occurred. However, the generalised assertion of "uniformity" did not have the effect of waiver privilege in the detailed test results. Fairness does not suggest that by making a generalised assertion of an interpretation of a test, Ansell waived privilege in the detailed contents of any report or test that it may then have had. 17 Moreover, I am not satisfied that the documents are sufficiently relevant to the issue that needs to be decided on the interlocutory application to withdraw admissions. Assuming in favour of Reckitt's argument, that the two privileged reports could support Dr Potter's contention as to what a TEM test can show, that would not mean that what Dr Cook said would necessarily be right or wrong. There would simply be, as there apparently is, an issue between the two experts about that matter. 18 The fact that one set of tests taken before litigation produces a particular result does not mean that if issues are subsequently raised in litigation, other tests conducted by a different person or by the same person differently, may not produce other results. At this stage of the litigation, and in these circumstances, those are matters that would not be resolved by production of the two privileged reports. Nor does the existence of any such reports affect the fact that Ansell says that if Reckitt's admissions are withdrawn, it would wish to perform new TEM tests that would be admissible in evidence to support its case. It may be that having done the tests, Ansell discovers exactly what Dr Potter said, or it discovers something else. One does not know. 19 But, the fact that some tests have been done before, and, as Reckitt asserts, would demonstrate or negate what Dr Potter said as to what TEM tests could ascertain cannot be conclusive of the apparent difference of views between him and Dr Cook. I do not see that the documents are likely to have potential or sufficient relevance to require their immediate production for the purpose of determining that issue next week. Conclusion 20 For those reasons, the interlocutory application to compel production of the documents must be refused with costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate: Dated: 11 May 2016