BlueScope Steel Limited v Dongkuk Steel Mill Co., Ltd

The Patents 13 The 257 patent describes the invention in the following terms: The present invention is an Al-Zn-Si-Mg alloy coated strip that has Mg2Si particles in the coating with the distribution of Mg2Si particles being such that a surface of the coating has only a small proportion of Mg2Si particles or is at least substantially free of any Mg2Si particles. The applicant has found that the above-described distribution of Mg2Si particles in the coating microstructure provides significant advantages and can be achieved by any one or more of: (a) strontium additions in the coating alloy, (b) selection of the cooling rate during solidification of coated strip for a given coating mass (i.e. coating thickness) exiting a coating bath; and (c) minimising variations in coating thickness. 14 The 257 patent also states: The applicant found two factors that affected the coating microstructure, particularly the distribution of Mg2Si particles in the coatings, in the trials. The first factor is the effect of the cooling rate of the strip exiting the coating bath before completing the coating solidification. The applicant found that controlling the cooling rate makes it possible to avoid mottling. … The second important factor found by the applicant is the uniformness of coating thickness across the strip surface. … However, the applicant found that short range coating thickness variations could be very high, and special operational measures had to be applied to keep the variations under control. It was not uncommon in the experimental work for the coating thickness to change by a factor of two or more over a distance as short as 5 mm, even when the product perfectly met the minimum coating mass requirements as defined in relevant national standards. This short range coating thickness variation had a pronounced impact on the Mg2Si particles in the surface of coatings. 15 There are principally method claims but some product claims. It is sufficient to set out claims 1 and 14 that are expressed in terms: 1. A hot-dip coating method for forming a coating of a corrosion-resistant Al-Zn-Si-Mg alloy on a steel strip comprising passing the steel strip through a hot dip coating bath that contains Al, Zn, Si and Mg and optionally other elements and forming an alloy coating on the strip with a variation in thickness of the coating of no more than 40% in any given 5 mm diameter section so that the distribution of Mg2Si particles in the coating microstructure is such that there is only a small proportion of Mg2Si particles or substantially no Mg2Si particles in the surface of the coating. … 14. A steel strip having a coating of a corrosion-resistant Al-Zn-Si-Mg alloy formed by the method defined in any one of the preceding claims. 16 The 258 patent has principally product claims but some method claims. It is only necessary to set out claim 1 that is expressed in terms: 1. An Al-Zn-Si-Mg alloy coated steel strip that comprises a coating of an Al-Zn-Si-Mg alloy on a steel strip with the alloy comprising in % by weight 40 to 60% Al, 40 to 60% Zn, 0.3 to 3% Si, and 0.3 to 10% Mg and unavoidable impurities, with the microstructure of this coating comprising Mg2Si particles, and with the distribution of the Mg2Si particles being such that there is no more than 10% by weight of Mg2Si particles in a surface region of the coating that has a thickness that is less than 30% of the total thickness of the coating.

Category 1 17 Dongkuk contends that the first category relates to documents concerning the development of the methods and products claimed in the patents. It says that discovery of such documents is "habitually allowed" in Australia. Dongkuk notes that under rule 20.14 of the Federal Court Rules 2011 (Cth), where standard discovery is ordered a party must give discovery of documents that are directly relevant (rule 20.14(1)(a)) to the issues raised by the pleadings; I have stressed the stipulation of directly to contrast this Court's rule with the UK analogue that I will discuss in a moment although it must be said that rule 20.14(2) is comparable to the UK rule 31.6. In order to satisfy direct relevance the documents must be, inter-alia, documents that adversely affect the party's own case or documents that support another party's case. Dongkuk says that the category 1 documents have those features because they are likely to show that the steps in the development of the alleged invention taken by the alleged inventors were steps which the ordinary skilled person would take, and were no more than steps which would or should have been obvious to any skilled person in the art. 18 Dongkuk asserts that such documents are "usually" required to be discovered in Australia on the basis of the exposition by Aickin J in Wellcome Foundation Limited v V.R. Laboratories (Aust) Pty Ltd (1981) 148 CLR 262. But it accepts that occasionally such discovery is refused because the drafting of the categories is too broad; see e.g. Schutz DSL (Aust) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 14) [2011] FCA 1159. It also says that the current Federal Court Rules reflect "almost exactly" the UK High Court rules (being the Civil Procedure Rules). It submits that the issue of the discovery of inventor's notes was considered by the Court of Appeal in Nichia Corporation v Argos Limited [2007] EWCA Civ 741 in which the majority of the Court (Pill and Rix LJJ, Jacob LJ dissenting) confirmed that such documents were discoverable. Reference was made to where Rix LJ noted that the parties might try to limit the search in a number ways (see [73] and [74]). Reference was also made to where Pill LJ identified a number of matters in support of such discovery, saying at [86] to [88]: Further, an expert's opinion may well be influenced, and sometimes rightly influenced, by disclosures in the particular case which may, on Jacob LJ's view, be withheld even from him by the party preparing to litigate. That gives a party an opportunity to manipulate disclosure to further its own interests in the particular case. Oliver LJ gave another example in [sic] JKM v Wagner Spraytech [1982] RPC 497, cited by Jacob LJ at paragraph 34; knowledge of the inventor's experiments may assist the other party. I accept that there is ambiguity in the second of Oliver LJ's reasons because he used the expression "skilled man", which is a technical meaning in this field, when he referred or intended to refer, to the "inventor". The reason is, with respect, a sound one if the word "inventor" is used. The principles stated must, of course, be applied in the context of the now established principles of standard disclosure. I obviously express views on the practice of experts in this field with diffidence, in the face of Jacob LJ's experience, but the need to scrutinise their evidence in the interests of justice, and to have the appropriate tools with which to do so, appears to me to be no different in this field from that in many other fields, with which most members of this court have wide experience, in which expert evidence is called. 19 Dongkuk also propounded that the example of Oliver LJ in SKM SA v Wagner Spraytech (UK) Limited [1982] RPC 497 at 508, modified as suggested by Pill LJ (i.e. substituting "the inventor" in place of "an admittedly skilled man"), was as follows: Knowledge of the inventor's experiments will assist the defendant in two respects. He can obtain his own expert's opinion upon whether the steps taken by the inventor were the steps which the ordinary skilled man would or could take and whether such steps were no more than steps which would or should have been obvious to any skilled man; and he can, as was suggested in the Australian case, utilise any knowledge which he acquires regarding the inventor's experiments or researches in cross-examination of the plaintiff's technical witnesses by reference to what [the inventor] did. 20 Dongkuk also submits that it has not sought "every single document" held by the inventor somehow relating to the subject matter of the alleged inventions. Rather, it says that it has sought to limit those documents in accordance with the suggestion of Rix LJ to the matters identified in the patents themselves as crucial to achieving a metal alloy coating that has substantially no or minimal Mg2Si particles in the surface, which is the object of the alleged inventions. 21 Dongkuk accepts that contrary to the English practice, it here seeks such documents beyond the period 2 years before and 2 years after the priority date because of the best method context. As I have indicated, I have rejected that argument (see at [10] above). I will return to the English time frame as a suitable analogue later in my reasons. 22 Contrastingly, BlueScope submits that Wellcome does not reflect the current law on discovery. BlueScope emphasises that in Wellcome, Aickin J explained (at 288): The cases to which I have referred appear to show that some discovery in respect of the work done by a patentee in arriving at his invention has been given as a matter of course and that the disputes have been as to the extent of discovery. Since evidence of such work may in some cases be relevant to the issue of obviousness it must follow that discovery should generally be given, even if only on the basis that the documents discovered may suggest a line of enquiry worth investigation. 23 BlueScope says that Aickin J's formulation of relevance was predicated on the now obsolete test articulated in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55. 24 It also points out that in Schutz, McKerracher J dealt with a similar request for discovery of inventor's documents. The category sought (at [5]) was: all documents recording, referring or relating to the development of the pallet container disclosed in the Patent, including without limitation all documents recording, evidencing or referring to any trial, working or experimentation of the pallet container and all documents constituting or referring to any prior publically available material (including prior art products) that were referred to in the development of the pallet container. In essence, while the original categories 48 and 49 contained particular limitations as to date, versions and the like, this category seeks the whole of the research and development documents not just a subsection 25 His Honour made (at [10]) the following observations regarding Wellcome: In the last passage cited above, his Honour makes the point that "some" discovery of this character would be appropriate. His Honour then ultimately makes the point that this would be so even if only the documents may suggest a line of inquiry worth investigation. This reasoning was consistent with the Peruvian Guano test (Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 52 LJQB 181). That position has significantly changed. The Rules of this Court, consistent with those changes, reflect a significantly less broad ranging ambit of discovery. 26 His Honour then said (at [13]): "In my view, a stand must be taken against insistence of production of every last note of possible tangential relevance." 27 BlueScope also points out that his Honour refused the discovery sought on the basis that it was too broad (at [15]). Amongst other factors, his Honour noted the patentee's contention that it would need to conduct searches for and discover potentially thousands of documents in a very wide category (at [14]). Similarly, BlueScope contends in the present context that to provide discovery in the categories sought, it would need to collect documents from 9 or 10 people. It estimates that it would be necessary to conduct individual reviews of approximately 40,000 documents, which it is said would likely take two months and cost at least $150,000. 28 In relation to the question of whether BlueScope has already given discovery relevant to inventive step that is sufficient for present purposes, Mr Swinn in his affidavit of 8 December 2017 deposed to the following (at paragraphs 4 to 14): In paragraph 10 of my previous affidavit, I deposed to my belief that all documents that are likely to be directly relevant (as that term is defined in FCR 20.14(2)) to the question of the best method known to the applicant as at 13 March 2009 (the Filing Date) of performing the invention the subject of the 257 Patent had been disclosed to the solicitors for the Respondent. I did not address the issue of whether documents directly relevant to the question of inventive step had likewise been disclosed. The purpose of this affidavit is to identify, at the request of the Court, whether I consider that all documents falling within category 1 of the Discovery Application that are directly relevant (as that term is defined in FCR 20.14(2)) to the question of inventive step have been disclosed to the solicitors for the Respondent - whether as annexures to the affidavit of Wayne Renshaw affirmed 13 April 2017 or otherwise by discovery given on 20 November 2017. Although category 1 refers to a time period that extends to 8 January 2015, for the purpose of this affidavit, I have limited my enquiries to the period ending on 13 March 2008 (the Priority Date) and to documents dated no more than one year after the Priority Date insofar as they record work leading to the invention undertaken before the Priority Date. I oversaw the process of collection of documents from the personnel referred to in paragraph 5 of my previous affidavit. From my oversight of that process, I am satisfied that all documents falling within category 1 of the Discovery Application that are directly relevant to the question of inventive step were collected as part of KWM's collection process and uploaded to KWM's E-discovery platform. Accordingly, the further enquires described below have been limited to further interrogating the documents already available in KWM's E-discovery platform. Category 1(a) - strontium Category 1 (a) seeks certain types of documents that record or report on experiments undertaken by the Applicant and the results of the experiments in relation to the addition of strontium to an alloy coating. Although documents that refer to the addition of strontium to an alloy coating have already been disclosed to the Respondent, strontium additions were not the primary focus of previous searches undertaken under my supervision described in paragraphs 7 to 10 of my previous affidavit for the purpose of identifying documents relevant to the best method known to the Applicant of performing the invention. Accordingly, I have caused further searches to be undertaken of the documents previously collected and uploaded into KWM's E-discovery platform that refer to strontium additions. A keyword search for "strontium OR Sr" limited to documents in the period from 1 July 2006 to 13 March 2009 (i.e. one year after the Priority Date) was conducted and the documents identified by that search that had not already been disclosed to the Respondent's solicitors were reviewed by solicitors working under my supervision. I have myself reviewed a number of the documents found by the search in order to satisfy myself of the following point. Following the review described above, I consider that there are 7 documents falling within category 1(a) that are of some relevance and that have not previously been disclosed to the solicitors for the Respondent. I do not consider any of these documents to be directly relevant (as that term is defined in FCR 20.14(2)) to the question of inventive step. Categories 1(b) to 1(e) I oversaw the process by which KWM searched the database to identify the documents likely to be relevant to the question of best method (as referred to in paragraph 7 of my previous affidavit). I am satisfied that all documents falling within the scope of categories 1(b) to 1(e) of the Discovery Application (date-limited as described in paragraph 7) were identified and have been reviewed and that all documents that are directly relevant to the question of inventive step have been disclosed to the solicitors for the Respondent - in part as annexures to the affidavit of Wayne Renshaw affirmed 13 April 2017 and otherwise by discovery given on 20 November 2017. Accordingly, I believe that an order to give standard discovery of documents falling within the scope of categories 1(b) to 1(e) and limited by date as described in paragraph 7 above would be futile since it would not yield any documents that have not already been disclosed voluntarily. 29 I would commence my analysis by making the following general observations. 30 First, there is considerable force in McKerracher J's observations in Schutz DSL (Aust) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 14) [2011] FCA 1159 at [10] to [15] that Aickin J's approach in Wellcome more resonates with the Peruvian Guano test which the current Federal Court Rules do not enshrine. Further, as McKerracher J also noted, Wellcome and its ilk were decided at a time when one did not have to concern oneself with the consequences of electronic information and communication including its storage, reproduction and exchange, which has considerably magnified the burden of giving discovery as compared with the benefit. Such a burden has been compounded by the incidences of different electronic forms, locations, computers, servers, email accounts, metadata issues, and retrieval problems. More generally, the idea that one should order general discovery of material of only tangential or second order relevance is unpalatable in the electronic age, particularly where the Peruvian Guano paradigm has no relevance to contemporary case management theory or its practice. 31 Second, Jacob LJ's observations (albeit in dissent) in Nichia carry significant weight. As he expressed the matter, determining whether there was an inventive step "does not involve expressly what the inventor actually did or thought" (at [13]). As he said in relation to the UK analogue, "the test is not what he did or thought but whether the step would have been obvious to the man skilled in the art" (at [13]). And that "whether it actually was inventive depends on the expert evidence establishing the common general knowledge of the person skilled in the art and the teaching of the cited prior art" (at [15]); of course such observations need to be adapted to the Australian context. Ultimately though, Jacob LJ accepted that material as to what the inventor actually did or thought could not be said to be irrelevant to the question of obviousness, but that it only rose to the level of secondary significance, with questions of proportionality coming into play in determining whether the material should be required to be discovered (cf DSM Nutritional Products, LLC v Suntory Holdings Limited [2013] FCA 675 at [16] per Tracey J). 32 I must say that when one analyses Aickin J's observations in Wellcome, there is much to be said for the view that his observations are not that inconsistent with the view that Jacob LJ strongly expressed about the secondary relevance, in relation to the question of inventive step, of material as to what the inventor actually did or thought. So, at pp 280 and 281, Aickin J said that such evidence might show that the experiments devised for the purpose were part of an inventive step. And that it might show that the experiments were of a routine character. And that it may be that the perception of the true nature of the problem was the inventive step. But such statements are not directly inconsistent with the characterisation of such material as having secondary significance or relevance. Indeed, Aickin J's observations at 286 to 288 in some respects resonate with such a secondary characterisation. 33 So he said at 286: It is still correct to say that a valid patent may be obtained for something stumbled upon by accident, remembered from a dream or imported from abroad, if it otherwise satisfies the requirements of the legislation. What is important is that the patent itself should involve an inventive step, whether or not it was consciously taken by the patentee and whether or not it appeared obvious to the patentee himself. The test is whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not. The difference of opinion in the authorities appears only in the cases which deal with evidence of what the inventor did in arriving at his invention. Where obviousness is in issue admissibility must depend on relevance to that issue. Such evidence has in some cases been discussed as likely to be helpful, sometimes to the inventor and sometimes to his opponent. Notwithstanding that it has been suggested that such evidence may show that all that the inventor did was to take a series of routine steps, I find it difficult to see how resort by those attacking a patent to the research and experiments of the inventor can often be helpful on the issue of obviousness. If those equipped with the common general knowledge of the relevant art are unable to see from the specification and the claims how the invention was arrived at, that would tend to show that it was not obvious. (my emphasis) 34 And at 287 he said: Invention will depend on the nature of the result ultimately claimed, whether product or process, viewed against the background of common general knowledge … In the result therefore I have concluded that evidence of research and experiments (if any) of a patentee leading up to his claimed invention is generally admissible though not always likely to be helpful. The fact that in a particular case there may not have been any research or experiment involved in the making of an invention does not require the conclusion that evidence relating to research and experiments, where they took place, will not be admissible. (my emphasis) 35 Finally, at 288 he concluded: The cases to which I have referred appear to show that some discovery in respect of the work done by a patentee in arriving at his invention has been given as a matter of course and that the disputes have been as to the extent of discovery. Since evidence of such work may in some cases be relevant to the issue of obviousness it must follow that discovery should generally be given, even if only on the basis that the documents discovered may suggest a line of enquiry worth investigation. (my emphasis) 36 Now in the paradigm of the Peruvian Guano approach, one can appreciate the conclusion reached by Aickin J. But that conclusion is not now as readily transposed to the present approach to discovery. 37 Third, s 7 of the Patents Act 1990 (Cth) deems an invention to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art. Such a test is not assessed by direct reference to what the inventor actually thought or did. Nothing in the plurality's reasons in AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at [200] to [217] (per Besanko, Foster, Nicholas and Yates JJ) supports the notion that what the inventor actually thought or did could have anything other than secondary significance or relevance to the question of inventive step. 38 Fourth, there are examples of trial judges having treated as relevant and admissible, on the question of inventive step, evidence of what the inventor actually did. I do not need to dwell on these examples as I am prepared to accept for present purposes that what an inventor did or thought may have secondary significance or relevance. And indeed when one analyses such examples, it seems that the inventor's evidence was used more to fortify the primary evidence and analysis on inventive step, consistent with the characterisation of secondary significance. 39 In summary, I am prepared to treat the category 1 documents as being relevant, but of secondary significance only. In the light of that conclusion and the fact that the Peruvian Guano test no longer applies, I will only permit discovery of such a category that is targeted, proportionate and over a relatively tight time frame (cf DSM at [16] per Tracey J). On that latter aspect, in my view the time frame should be limited to such documents before the priority date and within one year thereafter. The UK time frame of within plus or minus 2 years of the priority date is too generous on the post priority date period. Moreover, it should be noted that the UK time frame applies to "any ground on which the validity of a patent is put in issue" (see Practice Direction 5.1), so explaining its generosity that in my view is not appropriate if considering only inventive step. Further, the UK rules and Practice Direction do not enshrine the concept of "directly relevant" as appearing in rule 20.14(1)(a). And even accepting that there is an overlap in the language of rule 20.14(2) with the UK analogue, nevertheless rule 20.14(2) is to be read in the context of rule 20.14(1)(a). 40 Applying the above principles and having considered the affidavit material of BlueScope, including the most recent affidavit of Mr Swinn, I do not consider that I should make any discovery order concerning category 1. Discovery has already been made of documents relevant to this category in respect of the narrower time frame that I consider appropriate. To require any broader discovery would be disproportionate to the relevance and significance of such material as compared with the expense and burden of giving such discovery. But it may be that after the evidence is filed in the case, I may allow more targeted notices to produce or subpoenas relating to such documents. In all the circumstances I will not make a discovery order concerning category 1.

Category 2 41 For the reasons discussed with counsel at the hearing concerning relevance and legal professional privilege, I refused to order discovery of this category.

CATEGORIES 3 to 7 42 As to categories 3 to 7, it is apparent from the affidavit of Mr Swinn sworn on 8 December 2017, provided in response to my suggestion that the description of these categories should be narrowed, that the parties are now in agreement on a reformulation of categories 3 to 7 (category 8 being abandoned) in the following terms: 3. The final design specification drawings of the updated jet stripping equipment that was designed by Hatch Engineering to BlueScope specifications referred to in paragraphs 73 and 76 of the affidavit of Wayne Andrew Renshaw affirmed 12 April 2017 (Renshaw affidavit). 4. The final estimate of the scope of work (including time and cost) issued by Hatch Engineering to BlueScope, BlueScope's purchase order and invoices issued by Hatch Engineering in relation to the design and construction of the updated stripping equipment referred to in paragraph 73 of the Renshaw affidavit. 5. Drawings of the upleg cooling section as it existed prior to the modifications and the final design specification drawing of the modified upleg cooling section referred to in paragraph 74 of the Renshaw affidavit. 6. The final design specification drawings of the updated air flotation stabiliser referred to in paragraph 75 of the Renshaw affidavit. 7. Reports summarising the results of the line trial conducted on MCL4 referred to in paragraph 76 of the Renshaw affidavit. 43 I will order discovery of these categories as so limited by these reformulated descriptions.

Conclusion 44 The parties should submit minutes of orders to accord with these reasons and my ex tempore rulings given on 1 December 2017. As to the appropriate costs order, in all the circumstances it seems to me that the parties' costs of the present application should be their costs in the cause. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.