Bramco Electronics Pty Ltd v ATF Mining Electrics Pty Ltd

Present application 63Bramco seeks leave to appeal from his Honour's decision on various grounds, including what it contends is the incorrect application by his Honour of the principles of construction applicable to patents (ground 3) as well as the contention that his Honour erred in finding that the MRD satisfied the requirements of the Patent (ground 8). 64Leave is required pursuant to s 103 of the Supreme Court Act 1970 (NSW) since the judgment of Sackar J was in respect of questions the subject of an order for separate determination in advance of other issues in the proceedings (that order being made on 23 March 2012 by McDougall J) (National Employers Mutual General Insurance Association Ltd v Manufacturers Mutual Insurance Ltd (1988) 17 NSWLR 223). Questions of quantum of damages, equitable compensation or account of profits remained to be heard, if they arose, after the determination of liability. Nevertheless, it is clear that the orders made by Sackar J, though not finally determining the proceedings in the Equity Division, did finally determine the issue of Bramco's liability for breach of the Settlement Agreements and therefore his Honour's decision is one that clearly affects the substantive rights of Bramco. There was no demur from ATF to the proposition by Bramco that, on ATF's case, the damages claim will exceed $3.2 million. 65ATF makes no submission against the grant of leave to appeal. 66There is, however, a preliminary question as to this Court's jurisdiction to hear the appeal. The presiding judge drew the parties' attention to the potential application of s 158 of the Patents Act 1990 (Cth) at the outset of the hearing of the appeal. Leave was given for the parties to serve submissions going to the question of jurisdiction after the concurrent hearing of the leave application and appeal. The parties filed those submissions after judgment on the application was reserved. 67I will return to the jurisdictional issue after setting out the proposed grounds of appeal, the relevant provisions of the Settlement Agreements and a brief description of the claims made in the Patent. In summary, however, leaving aside that question, I would have been satisfied that this was an appropriate case for leave to appeal to be granted. As it is, I agree with the conclusion reached by Barrett JA and with the orders proposed by his Honour.

Grounds of Appeal 68The grounds of appeal articulated in the draft notice of appeal are as follows: 1. The primary judge erred in deciding at [156]-[157] that the appellant's device known as an MRD was a device which can be used in accordance with the invention described in Australian Patent no. 704930 (Patent) and is thereby a device within the definition of "Sensor" in the Deed of Settlement and Release dated 17 January between the respondent and the appellant (Deed) and Patent Licence Agreement dated 17 January 2008 between the respondent and the appellant (Agreement). 2. The primary judge erred at [138] and [139] in holding that the word "sensor" need not be construed as requiring the same meaning in each of claims 1, 2 and 3 of the Patent and that the term "sensor" does not include sensing functions when used in claims 1 and 2. 3. The primary judge ought to have held, applying the principles of construction applicable to patents (summarised inter alia in the authorities referred to at [22]-[29]), and accepting as he did the evidence of the expert witnesses that the term "sensor" in the Patent did not have any special technical meaning (at [68], [72] and [76]), that the term "sensor" as used in claim 1 of the Patent had its ordinary meaning of a device that detects a change in a physical stimulus and turns it into a signal which can be measured or recorded (as stated at [76]), namely, a sensing device, and that the meaning of the term did not change when used in claim 1, 2 or 3 of the Patent. 4. The primary judge, having properly accepted that the MRD was not a sensor within the ordinary meaning of the word (at [113]-[114]), ought to have held that the MRD was not a sensor or sensor unit within the meaning of the Patent, was not a device that can be used in accordance with the invention described in the Patent and was not a device within the definition of "Sensor" in the Deed and Agreement. 5. The primary judge erred in holding at [155] that "load protection data" in the Patent, in particular claim 1, means any information directly or indirectly associated with load protection including any single value which determines the requirements for a module to operate including the initiation of the second signal. 6. The primary judge failed to take into account a material consideration, namely the use of the phrase "said load protection data" in claim 1 of the Patent, at [155] when construing the meaning of "load protection data" in the claim. 7. The primary judge ought to have held that by the use of the phrase "said load protection data" claim 1 of the Patent requires that the load protection data transmitted by the sensor unit to the controller is the same load protection data that is then compared by the controller to the load operating data to determine whether to provide the second signal to isolate the load from the power source. 8. The primary judge erred in finding at [154] and [155] that the method of communication of data by the MRD satisfies the requirements of the Patent and the term "load protection data" and that the MRD clearly stores and transmits "load protection data" to the controller as described in claim 1 of the Patent, whereas he ought to have found, on the evidence, that the data transmitted by the MRD to the controller was not the same data that was compared to the load operating data by the controller to determine whether to provide the second signal to isolate the load from the power source and that therefore the MRD did not satisfy the requirements of the Patent and did not store and transmit load protection data as described in claim 1 of the Patent. 69Pausing there, the grounds of appeal (as did Bramco's submissions on the present application) focus largely on how it is said that the Patent should be construed; Bramco contending that his Honour erred in finding that the MRD is a "Sensor" within the definition of that term in the Patent and in the respective Settlement Agreements.

Settlement Deed 70Clause 2.1 of the Settlement Deed provided for payment of a Settlement Sum in full and final settlement of the Federal Court proceedings and of all claims which AFT had against Bramco in relation to "the Sensor". 71"Sensor" was defined in clause 1 of the Settlement Deed as follows: Sensor means any sensor that: (a) stores or is capable of storing data; or (b) stores or is capable of storing data and uploading or transmitting the data to a controller or relay; including a Smarty branded sensor for use in accordance with the invention described in the Patent. (my emphasis) 72It is the proper construction of this definition that is critical to the determination of whether Bramco breached its contractual obligations under the Settlement Agreements in selling and manufacturing the MRD. Significantly, the definition in its terms requires reference to the manner in which the invention described in the Patent is used. 73"Controller" was defined in clause 1 of the Settlement Deed as meaning "equipment to control electrical switchgear". The definition of "controller" went on to provide that "module" and "relay" had the same meaning. 74"Patent" was defined by reference to the Load Control Module patent that had been the subject of the patent infringement proceedings in the Federal Court. 75Clause 4 of the Settlement Deed, headed "Bramco's rights and obligations", relevantly provided: 4.1 Bramco agrees: (a) it will enter into the Licence Agreement on or about the same time as this Deed; (b) it will not sell, repair, maintain, improve or otherwise use or apply the Patent or the Sensor except as expressly permitted in accordance with the Licence Agreement; (c) [it will] not make any representation, allegation or assertion that ATF is not entitled as a matter of fact to the proprietary interest in the Patent; (d) not to disparage or otherwise criticise ATF of an incidental to, or in relation to, the Patent or the subject matter of the Proceedings; (e) [it will] not assist or support any other person or entity in relation to its defence of any allegation of infringement by ATF or support any entity in attempts to have the Patent revoked unless compelled to by force of law on and from the date of entry into this Deed; (f) [it will] not sell any controller, relay or module enabled to receive transmissions stored in a Sensor except as provided by clause 4.1(a) of the Licence Agreement; (g) [it will] not make any reference to the Smarty Sensor in any promotional literature or marketing it undertakes and make no representation, orally or in writing, that it offers a Smarty Sensor for sale. (h) that it will not enter into any agreement, understanding or arrangement with a third party to manufacture, distribute, use or otherwise exploit the Sensor or the technology in the Sensor. 76Pursuant to clause 6 of the Settlement Deed, ATF provided a release in favour of Bramco from, inter alia, all liability or claims in relation to the Patent and the sale by Bramco of "the Smarty Sensor". The release in its terms was thus broader than one in respect only of patent infringement claims relating to the Smarty Sensor, though there might be an argument as to whether it should be construed as relating to future breaches of the Patent by the sale of some other machine recognition device (such as, as ATF contends has occurred, a device that in essence is simply a "re-branded" Smarty Sensor). 77Neither the term "Smarty branded sensor", as used in the definition of "Sensor" in the Settlement Agreements, nor the term "Smarty Sensor" as used in clauses 4 and clause 6 of the Settlement Deed, was defined.

Patent Licence Agreement 78The Patent Licence Agreement was expressed to be "interdependent, related to and conditional upon the parties entering into the Deed of Settlement" (clause 3.1). Clause 16.7 was a standard form "entire agreement" clause, providing that the Settlement Deed and Patent Licence Agreement recorded the entire agreement between the parties in relation to their subject matter and superseded all previous communication, understandings or agreements between them in respect to such subject matter. 79Pursuant to clause 4.1 of the Patent Licence Agreement, Bramco was granted a non-transferable and non-exclusive right (subject to the provisos therein set out) "to use and apply the Patent" to do the following things: (a) sell Sensors to the Licensee's Existing Customers, in the period from the Commencement Date until midnight on 31 December 2008, provided that: (i) such sales do not during that period exceed a total of 50 Sensors; and (ii) only Sensors sold prior to 30 June 2008 may be sold in conjunction with a Controller enabled to operate with that Sensor; (b) repair or maintain any Sensors previously sold to Existing Customers, in the period from the Commencement Date until 31 December 2010; (c) repair or maintain in the period after 31 December 2010 a maximum of two Sensors previously sold by Existing Customers per year; and (d) repair or maintain in the period after 31 December 2010 more than two Sensors previously sold to Existing Customers per year, provided that the Licensor has been notified prior to the repairs being carried out by the Licensee. 80Clause 4.2 then set out, expressly for the avoidance of doubt, certain limitations on the licence there being granted to Bramco, namely that Bramco: (a) must not sell any Sensor to any New Customer after the Commencement Date; (b) must not sell any Sensor after 31 December 2008; (c) must not, after 30 June 2008, sell any enabled controllers, modules or relays intended to receive transmissions sent by a Sensor; and (d) must not, after 31 December 2010, repair or maintain more than two Sensors previously sold to Existing Customers per year without notifying the Licensor prior to the repairs being carried out by the Licensee. 81Accordingly, the claim before the primary judge of breach of clause 4.1 of the Patent Licence Agreement involved a claim of infringement of the limited licence to use and apply the Patent that was granted under that agreement. To the extent that the definition of "Sensor" in the Settlement Agreements is construed as having been objectively intended to include a device that would, but for the licence, infringe the Patent, the claims before his Honour alleged in essence an infringement of the Patent (though framed as a breach of contract claim). 82Clause 14.1 imposed restraints on Bramco during the term of the licence granted under the Patent Licence Agreement, namely that it must not in any manner whatsoever without ATF's prior written consent: (a) develop, produce, market or sell any product that utilises the Patent or technology that is materially similar to the Patent; or (b) be interested in or advise or provide any consulting services regarding the Sensors, the Patent or technology that is materially equivalent to the Patent to any person or entity that develops, produces, markets, sells or otherwise deals in products or services similar to the Sensors or the Patent. 83The definition of "Sensor" in the Patent Licence Agreement was identical to that in the Settlement Deed and, again, there was no definition in this agreement of the term "Smarty branded sensor".

Load Control Module Patent 84The invention described in the Patent (WF Tab 1) is for a load control module comprising a controller and a "sensor unit" with the attributes set out in the Patent claims, which are: 1. A load control module for controlling switch gear which, in use, connects a power source to a remotely located electrical load, the module including: a sensor unit associated with the load for providing a first signal which transmits load protection data; a controller for receiving said first signal and for selectively providing a second signal to the switch gear to isolate the load from the power source when said load during operation does not comply with said load protection data; 2. A load control module according to claim 1 wherein the switch gear and the controller are located within a protective housing and the sensor unit and load are disposed outside the housing; 3. A load control module accoding [sic] to claim 1 or 2 wherein the sensor unit associated with the load periodically provides a third signal which transmits load operating data; 4. A load control module according to claim 3 wherein the sensor unit provides the third signal when requested by the controller; 5. A load control module according to any one of the preceding claims wherein the controller and sensor unit communicates through a single wire communication link which also supplies power to the sensor unit; 6. A load control module according to any one of the preceding claims wherein the switch gear selectively connects the power source to the load via a power cable, the cable including the communication link; 7. A load control module according to any one of the preceding claims wherein the controller includes means for detecting earth leakage faults; 8. A load control module substantially as herein described with reference to the accompanying drawing. 85Patent claims introduced by the phrase "a load control module according to" are claims that are dependent on the previous claim or claims there identified. Hence, claim 3 is not independent of claim 1 but, rather, adds an additional feature to that encompassed in claim 1 (namely the periodic provision of a third signal by the "sensor unit"). 86Bramco maintains that the meaning to be attributed to features of the invention the subject of claim 3 (relevantly, the fact that it included a "sensor unit associated with the load") must, as a matter of construction, be the same as that in respect of the corresponding features in claim 1 (whether or not those features are required for use in accordance with claim 1). 87Senior Counsel appearing for Bramco, Ms Baird SC, identified nine integers of claim 1 of the Patent: 1. A load control module for controlling switch gear 2. which, in use, connects a power source to a remotely located electrical load, 3. the module including: 4. a sensor unit associated with the load 5. for providing a first signal which transmits load protection data; 6. a controller 7. for receiving said first signal 8 and for selectively providing a second signal to the switch gear to isolate the load from the power source 9. when said load during operation does not comply with said load protection data. (my emphasis) 88The gravamen of the dispute before the primary judge and in the present proceedings, was as to whether the MRD comprised a "sensor unit" (as required by integer 4) and whether the "load protection data" referred to in integer 9 (against which compliance of "said load during operation" is to be tested) must be the same data as that transmitted by the first signal referred to in integer 5. The latter issue arises because, again in lay terms, what is compared by use of the MRD is apparently not the actual signal transmitted to the controller but other information to which the transmission signal directs the controller to take into account.

Primary judgment 89In reaching the conclusion (at [157]) that Bramco was in breach of both Settlement Agreements, his Honour considered it necessary (as Bramco had there contended and still contends) to construe not only the Settlement Agreements but also the Patent ([112]). His Honour considered this to be necessary since the patent infringement suit was the context in which the Settlement Agreements were entered. The terms of the definition of "Sensor" incorporate by reference provisions in relation to the Patent. ATF maintained that this was not necessary and that the relevant question was solely as to the construction of the Settlement Agreements themselves. 90It was common ground in the proceedings below that neither the MRD nor the SP Node that had been the subject of the Federal Court proceedings was a "sensor" ([96]). His Honour noted in this regard the expert evidence to the effect that the device described in the Patent only required a sensing function if used in accordance with claim 3 (since it was only the periodic provision of the third signal in claim 3 that required the use of a sensor) (see judgment at [74], [78], [81]). 91ATF's submission in the proceedings below was that the reference to "sensor" in the definition of "Sensor" was to be understood as a reference to the very "thing" or "device" which was the subject of the Federal Court proceedings (i.e., the SP Node) and that any device that could be used as part of the system described in the Patent was caught by the definition (by reason of the words "for use in accordance with the invention described in the Patent"), whether or not it was a sensor in the ordinary sense of the word (see [97]-[98]). 92Bramco's position, to the contrary, was that while the inclusion of the words "Smarty branded sensor" brought the SP Node within the definition used the Settlement Agreements, those words did not otherwise expand the definition [101]. On Bramco's construction, to fall within the definition what was required was something that comprised a sensor unit and that as to be "for use in accordance with the invention described in the Patent", and that the inclusion of the reference to a Smarty branded Sensor simply meant that, for the purpose of the Settlement Agreements, reference to a "sensor unit" comprised something that the parties agreed was not a sensor per se, namely the Smarty or SP Node (but which the parties were content to treat as one for the purpose of their settlement). 93In effect, Bramco's construction involves reading the words "including a Smarty branded sensor" as being a parenthetical aside and reading the words "for use in accordance with the invention described as the Patent" as qualifying the description of the sensor unit referred to in the opening words of the definition (rather than being words that only qualified "Smarty branded Sensor"). Hence, if the MRD was not a sensor unit (because it had no sensing functions) and did not, when used, involve the comparison of the same load operation data as that transmitted to the control module, it was not a "Sensor" for the purposes of the definition. 94His Honour ultimately accepted ATF's arguments on the construction of the Settlement Agreements. At [112], his Honour said: ... However, apart from the particular device which triggered the litigation, the whole point of the settlement was not to concern any sensor that should or was capable of storing data, or that stored or was capable of storing and uploading or transmitting data to a controller or relay, [paras (a) and (b) of the definition of "Sensor"] but only a sensor which in effect infringed the Patent. 95Thus his Honour seems to have accepted that what the parties objectively intended by their settlement was to bring within the definition of "Sensor" the particular device that ATF contended had infringed the Patent (doing so by the inclusion of the reference to the "Smarty branded sensor" in the definition) but that apart from that particular device all that was encompassed in the definition was something that would, in effect, infringe the Patent. At [115] his Honour thus concluded that the parties understood and should be taken objectively to have intended that the SP Node "come within the monopoly of the Patent when connected to the controller". 96In other words, as I understand it, his Honour's construction of the definition of "Sensor" in the Settlement Agreements would encompass the particular Smarty branded sensor, the subject of the patent infringement proceedings (which Bramco did not concede had infringed the Patent but which, as part of the settlement, it was prepared to treat as if it did) and any other device which included a sensor unit (capable of storing and/or uploading or transmitting data) and which could be used in accordance with the Patent (i.e., that would infringe the Patent on its ordinary construction). That construction, as applied by his Honour, included within the definition something that, although not branded as a Smarty sensor, could be found to do the same thing in the same way. On that construction the definition would not extend to something that was not a "Smarty branded sensor" (other than, perhaps, a modification thereof that did the same thing in the same way) unless it would in fact infringe the Patent. 97To illustrate, using the analogy of apples and oranges (where apples are devices with a true sensing function that can be used in accordance with the invention in the Patent and oranges are devices, such as the Smarty branded sensor, without a true sensing function, but which are capable of being used in accordance with the invention described in at least some claims in the Patent), the fact that the Smarty branded sensor was expressly to be treated as an apple would not bring all other oranges within the definition simply because they might do the same thing in the same way as the Smarty based sensor. However, if the orange in question was in substance a Smarty branded sensor, though not branded as such, it would fall within the definition on his Honour's reasoning. 98His Honour considered (from [116]) whether the MRD in fact infringed the Patent even though it did not have a sensing function. His Honour concluded at [139] that it was not necessary to construe "sensor" in claims 1, 2 and 3 as having the same meaning as each (a conclusion challenged by Bramco having regard to the dependency, as a matter of patent construction, of claim 3 on claims 1 or 2). His Honour placed weight on the experts' evidence that the use of the word "sensor" was probably a misnomer in this regard. 99As to the meaning of "said load protection data" in integer 9 of the Patent, at [155] his Honour construed the Patent as meaning that all that was to be transmitted by the device to the relay was a message that allowed load protection data to be communicated from one to the other (by whatever means might be devised) and that it was not necessary that the load protection data transmitted to the controller in claim 1 be the "full" or "whole" set of data (or be transmitted in the same format - be it analogue or digital for example). 100His Honour in effect treated the inclusion of the reference to "a Smarty branded Sensor for use in accordance with the invention described in the Patent" as a reference to any machine recognition device that carried on the same function in the same way as the SP Node or Smarty Node that had been in issue in the patent infringement proceedings. (One difficulty with this construction may be the use of the word "branded"; which focuses on the branding of the device rather than its features as such. However, it is not necessary to consider this on the present application.) 101His Honour's ultimate conclusion that the MRD infringed the Settlement Agreements was thus predicated on his finding at [170] that the MRD infringed the Patent itself. 102His Honour made declarations as to breach of the Patent Licence Agreement and the Settlement Deed and made orders restraining Bramco until 23 August 2014 (the date on which both the Patent and the Settlement Agreements made with reference expires from engaging in specified conduct in relation to any Sensor or Controller (defining Sensor as meaning, inter alia, the Smart Pilot Node and the MRD exhibited in the proceedings and as defined in the Licence Agreement and Deed). Orders were also made for Bramco to deliver up, among other things, all Sensors and Controllers and all products that utilise the Patent or any technology materially similar to the Patent, in Bramco's control and to which it had title; as well as for the delivery up (in escrow until 23 August 2014) all drawings, designs, models and confidential information of ATF.

Jurisdiction 103Section 155(1) and the relevant parts of s 158 of the Patents Act 1990 (Cth) have been set out in Barrett JA's reasons and I will not repeat them here. 104The Supreme Court is a "prescribed court (other than the Federal Court)" within the meaning of s 155 of the Act and "another prescribed court" within the meaning of s 158(1)(a) of the Act. The relevant question is whether, in the proceedings in the Equity Division, Sackar J was exercising jurisdiction under the Patents Act, i.e., jurisdiction conferred by s 155 (namely, jurisdiction with respect to a matter arising under the Patents Act in respect of which proceedings may under the Act be started in a prescribed court). 105There is no doubt that proceedings for patent infringement are proceedings that may be brought in a prescribed court other than the Federal Court (see s 120(1) of the Act). However, Ms Baird emphasises that the proceeding before Sackar J was not a proceeding for patent infringement and submits that as a consequence the relief granted was not made in the exercise of jurisdiction with respect to a matter arising "under" the Patents Act. Senior Counsel for ATF, Mr Newlinds SC, contends that the proceedings in question did not involve the exercise by primary judge of jurisdiction under the Patents Act on the basis that the claim was for breach of contractual obligations, not a claim or proceeding for infringement of a patent. 106Certainly, the claims made by ATF in the proceedings concerned allegations of breach of express contractual restraints ([11A] and [12] - [14] of the Further Amended Commercial List Statement - WF Tab 5) but it is relevant to note that those contractual restraints related to the use of a device that, on at least part of the definition of "Sensor" required reference to a property right brought into existence under the Patents Act. 107Ms Baird accepts that on Bramco's own case it was necessary for his Honour to construe the Patent claims but submits that this was because the Patent was incorporated by reference into the definition of the term "Sensor" in both the Settlement Agreements and that this does not mean that his Honour was concerned with hearing and determining proceedings for infringement of the Patent or any matter arising in respect of such a proceeding. 108What his Honour was determining (at least in relation to the claim for breach of the Patent Licence Agreement) was whether there had been a breach of contractual covenants relating to a limited licence there granted for the application or use of the Patent itself. The impugned conduct after 31 December 2008 was conduct that on ATF's case amounted to an infringement of its Patent (because it was outside the limited licence that had been granted). The proceedings were for breach of a covenant not to do something that ATF had, in the earlier patent infringement proceedings, contended amounted to a breach of its Patent. Indeed, his Honour in determining the breach of contract claims made a clear finding of patent infringement (as set out earlier). 109The distinction sought to be drawn by Counsel is between the question whether the primary judge was exercising jurisdiction under the Patents Act for the purposes of s 158(1)(a) when his Honour determined the allegation of breach of contract and the question whether the proceedings being heard constituted a matter arising under any laws made by the Commonwealth Parliament, such as would have been relevant to determine whether the Federal Court would have had jurisdiction to hear a purely contractual dispute arising out of the Settlement Agreements. 110Mr Newlinds submits that the words "a court exercising jurisdiction under this Act" in s 158 mean that the jurisdiction being invoked by a party seeking relief in the relevant proceedings must be under that Act and the Court must be invited to exercise a power granted, or to vindicate a right created, by the Act (referring in this regard to Masterwood Pty Ltd v Far North Queensland Electricity Board [1999] 1 Qd R 345 at 352, where the words "under this Act" were understood to mean "by virtue of this Act"). 111In Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367, the High Court considered what was necessary for a matter to arise "under" a Federal law. At p 387, Windeyer J said: ... It is enough to say - and I quote Latham C.J. in R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett ((1945) 70 CLR 141 at p 154) - that: " ... a matter may properly be said to arise under a federal law if the right or duty in question in the matter owes its existence to federal law or depends upon federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law." contrasting the position where, "[t]he most one can say is that a question of federal law is lurking in the background". His Honour concluded at p 38 that: In my view a matter does not arise for adjudication under a law made by the Commonwealth Parliament unless a statute is relied upon as giving a right claimed or as the direct source of a defence asserted. It is not easy to formulate with precision criteria which will suffice in every case. 112Menzies J, at 382, said: A matter arises under a law when it is necessary in litigation to determine whether that law confers a right or affords a defence which is an issue in the litigation. A matter arises under a law of the Parliament when in a proceeding it is necessary that there should be a decision upon a claim made by one of the parties to the litigation which is based upon that law. 113In the present case, the argument put by the respective parties in essence is that the right claimed in the proceedings below is one that was created by contract not conferred by the operation of the Patents. 114In LNC Industries Ltd v BMW (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575, the High Court considered the question whether a decision made at first instance in the Supreme Court of New South Wales was made in the exercise of federal jurisdiction. That question turned on whether the proceeding before the primary judge was a matter "arising under any laws made by the Parliament" within s 76(ii) of the Constitution. At p 581, the High Court said: When it is said that a matter will arise under a law of the Parliament only if the right or duty in question in the matter owes its existence to a law of the Parliament that does not mean that the question depends on the form of the relief sought and on whether that relief depends on federal law. A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law. (my emphasis) 115There, the relevant contracts were concerned with entitlements under federal import quota regulations. The High Court said: The subject matter of the contracts and of the action arose under and existed only by reason of the provisions of the Regulations and the Act in pursuance of which the Regulations were made. The Act was of course a law of the Parliament and the Regulations were made under it. The present case is not, to use the words of Windeyer J. in Felton v. Mulligan ((1971) 124 CLR at p 391), one in which the Regulations are merely "lurking in the background". The very subject of the issue between the parties is an entitlement under the Regulations. In substance the plaintiff's primary claim is to the benefit of rights and privileges under the Regulations. In these circumstances the matter involved in the action arose under laws made by the Parliament. The Supreme Court was therefore exercising federal jurisdiction in dealing with it and it follows that s. 39(2)(a) of the Judiciary Act precludes an appeal to Her Majesty in Council. 116In the present case, it is said that where there was no allegation of infringement of the Patent (and it was not put directly in issue by a defence or cross claim of invalidity) the claim by ATF was not one that sought to enforce a property right created by federal law (cf the position in Australian Solar Mesh Sales Pty Ltd v Anderson [2000] FCA 864; (2000) 101 FCR 1; 175 ALR 566, where relief was sought to secure a right to a patent for an invention and a defence had been raised as to whether there was any entitlement under the patents legislation). 117There is, in my opinion, force in the argument that if the only relevance of the Patent is that reference to it is necessary to determine the subject matter of the limited licence granted in and restraints imposed by the Settlement Agreements, then there is no matter arising "under" the Patents Act and this is merely a contractual dispute involving the construction of a clause that just happens to import a reference to the Patent (much as if the parties had chosen to define "Sensor" by reference to a description in a text book or other reference document). 118However, such a conclusion would in my view be inconsistent with the reasoning (albeit in obiter dicta) of Allsop J, as his Honour then was, in Macteldir v Dimovski (2005) 226 ALR 773. There, the question whether an action for enforcement of a settlement (including the proffering of undertakings to the Court) was within the jurisdiction of the Federal Court was considered in the context of an application for personal costs orders against Counsel who had been involved in the conduct of proceedings in which that question of jurisdiction had arisen. 119The parties had been embroiled in a copyright suit, which was settled by entry into Terms of Settlement and the giving of undertakings to the Court. In a not dissimilar fact situation to the present, there was then a claim that the terms of settlement had been breached and proceedings were brought to enforce the terms of settlement (and the Court undertakings). Allsop J held that the purported enforcement of the terms of settlement, including the undertakings to the Court, was not a separate and distinct controversy but was part of the original controversy, thereby remaining within federal jurisdiction (at [59]-[62]), applying Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd [1956] VLR 555; [1957] ALR 71; Darling Downs Investment Pty Ltd v Ellwood (1988) 18 FCR 510 and distinguishing Pallas v Finlay (1985) 61 ALR 220). 120Mr Newlinds submits that the present case is distinguishable in that in Macteldir the question of jurisdiction turned on the conclusion that there the claim for breach of the settlement agreement (and of undertakings given to the Federal Court) was a continuation of the same "matter" as the case that had been settled. However, Allsop J in Macteldir, in obiter, went on to conclude that even if the purported enforcement was a separate and distinct controversy, it remained within federal jurisdiction because it involved, in part, the enforcement of rights which owed their existence to Commonwealth legislation, (namely the Copyright Act 1968 (Cth)), pursuant to s 39B(1A)(c) of the Judiciary Act 1903 (Cth) (at [63], [76]) applying LNC Industries and distinguishing Webb v Repatriation Commission (2000) 105 FCR 415; 62 ALD 117; [2000] FCA 1635). His Honour noted (at [36]) that the notice of motion seeking to enforce the settlement was not limited to a claim for breach of contract but that there was an unpleaded, but extant, claim for relief under the Copyright Act. 121Allsop J dismissed as untenable, and a heresy, the broad proposition that the Federal Court did not have jurisdiction to entertain proceedings on a simple contract (for alleged breach of the terms of settlement). His Honour distinguished Pallas from Darling Downs (at [59]) on the basis that there the contract was between one of the persons to the controversy and strangers to the pleaded controversy and could be seen as extraneous and separate and distinct from the existing "matter" noting that in Darling Downs, the majority saw the enforcement of the settlement as part of the same matter. At [63] his Honour said: Even if it be the case, contrary to my view, that the contractual enforcement was not part of, or an outgrowth or extension of, the original justiciable controversy, and was a new matter, the subject matter of the contract being enforced in this new matter was a bundle of rights which owed their existence, and the entitlement to enforce them in court, to Commonwealth legislation. So it was a matter arising under a law of the parliament: LNC Industries. 122Relevantly, at [95], when summarising the position, his Honour said that: The enforcement of a contract to settle a case (at least between the parties to the suit) concerning rights owing their existence to Commonwealth law, and hitherto sought to be vindicated in the Federal Court under the FCA Act or the Judiciary Act or another Commonwealth Act will be a matter arising under a law of the parliament: LNC Industries, if it is not (as it may well be) part of the original matter. (my emphasis) 123In the present case, what was in issue before the primary judge was whether there had been a breach of contractual arrangements pursuant to which a licence had been granted to use the Patent. The Further Amended Commercial List Statement made it clear that the claim was for damages arising out of the Patent Licence Agreement and set out the contentions as to the Patent and the limited licence granted in relation thereto. By way of relief, one of the orders sought was to restrain Bramco from conduct in relation to the Patent (see [16(iii)(d) and (e)). 124To use Allsop J's words, ATF was seeking to enforce a contract to settle the earlier Federal Court proceedings concerning rights owing their existence to a Commonwealth law and hitherto sought to be vindicated in the Federal Court. That raised questions not only as to whether there had been breach of a contractual obligation not to sell or manufacture a "sensor" as defined but also as whether there had been a breach of a licence agreement granted in respect of the use and application of the Patent. Bramco maintained (and his Honour accepted) that in order to determine whether there was a breach of the Settlement Agreements it was necessary to construe not simply those Agreements but also the Patent itself. 125Looked at narrowly, I accept that what ATF sought to enforce in the Equity Division proceedings, by resort to the Settlement Agreements, was a contractual right not to sell or manufacture a particular item other than pursuant to a licence that had been granted in respect of the Patent (albeit an item defined in part by reference to the existing Patent). From that perspective, it might be said that the subject matter of the contract was not a right owing its existence to a federal law, but a contractual covenant the content of which was one that required reference to the Patent (at least insofar as it required assessment of whether the device in question was capable of or for use in accordance with the invention described by the Patent). 126However, it is clear from the Settlement Agreements that the parties were agreeing (without admission as to the validity or otherwise of the Patent or as to whether it had been infringed by the SP Node or "Smarty" device), that Bramco would refrain from the sale or manufacture of particular products that could be used in accordance with the invention described in the Patent otherwise than in accordance with an express licence from ATF. Relief was expressly sought as to conduct in relation to the Patent. 127Thus, while the contractual regime was, in one sense, one that did not turn on whether there was a valid patent or whether non-compliance would give rise to a remedy for patent infringement, the determination of whether there was a breach of the Deed required construction of the Patent itself. Moreover, the claim for damages for breach of the Patent Licence Agreement cannot easily be seen as otherwise than referable to the Patent: being the enforcement of a contractual obligation not to use or apply the Patent otherwise than as provided in accordance with the limited licence under the agreement. 128It seems to me that enforcement of a settlement agreement which effects a compromise of earlier proceedings in which parties had sought to vindicate rights arising under federal law will not necessarily or in all cases have the consequence that the enforcement action is a matter arising under federal law (for example, where the settlement agreement dealt only with an obligation to pay a monetary amount it seems difficult to see why enforcement of that would necessarily involve exercise of federal jurisdiction). However, the present case involved a claim for damages for breach of a contract that gave limited rights to use and apply the Patent and a claim to restrain breaches that, on the arguments contended for in the previous Federal Court proceedings, would amount to an infringement of the Patent. 129In Australian Solar Mesh Sales, the appellant had sought relief for allegedly defective and negligent performance of a contract of retainer directed towards the attainment of a right that was the creation of federal law, namely a right to patent an invention. The fact that the retainer concerned the patent in that case was sufficient for it to be held by the Full Court of the Federal Court to be a matter arising under federal law. 130The centrality of the Patent to the determination of the issues in the appeal, at least on Bramco's case, is illustrated by the fact that in its submissions Bramco identifies two principal issues of construction on which its appeal rests: first, whether the term "sensor unit' has the same meaning when used in claim 1 of the Patent as when used in claims that are dependent on that principal claim (such as claim 3); and, second, whether the phrase "said load protection data" in claim 1 of the Patent requires that the "load protection data" transmitted by the "sensor unit" be the same as the "load protection data" compared by the controller in order to determine whether to provide a second signal. The position of ATF, while being that it is not necessary for the Patent to be construed at all; rather, that it is a simple question of construction of the Settlement Agreements, was that, if recourse to the Patent is required, his Honour was correct in his interpretation of the Patent. 131Applying LNC and the obiter dicta in Macteldir, the claim made for damages in breach of the Patent Licence Agreement was in my opinion a claim in relation to a matter arising "under" a federal law. However, that does not necessarily mean that the matter determined by the primary judge was one in respect of which proceedings might under that Act be started in a prescribed court for the purposes of s 155(1) of the Patents Act. That requires consideration of the precise nature of the proceedings. 132I have had the benefit of reading in draft the reasons of Barrett JA. I agree that, having regard to the relevant provisions of the cross-vesting legislation to which his Honour has referred, this Court must transfer the proceeding to the Full Court of the Federal Court of Australia unless the interests of justice require that this Court proceed to determine the matter. I agree that the parties should be directed to show cause why in the interests of justice this Court should proceed to determine the matter. I therefore agree with the orders proposed by his Honour.

Amendments 10 December 2013 - [49] Third line - The word "ATF" has been replaced with the word "Bramco"[53] Third line - The word "ATF" has been replaced with the word "Bramco" Amended paragraphs: [49], [53] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 November 2013