British American Tobacco (Investments) Ltd v Philip Morris Ltd

Federal Court of Australia|1999-09-01|Before: Lehane J

REASONS FOR JUDGMENT 1 This is a further motion in an appeal and cross-appeal from a decision of a delegate of the Commissioner of Patents in opposition proceedings. The alleged invention relates to "ultra‑slim" cigarettes. It involves a combination of three integers: circumference, packing density and "static burn rate". It is common ground that the applicable legislation is the Patents Act 1952 (Cth) (the 1952 Act). Some of the background is set out in two earlier judgments: British American Tobacco Co Ltd v Philip Morris Ltd (1996) 36 IPR 36; British American Tobacco Co Ltd v Philip Morris Ltd (1996) 36 IPR 323 and I shall not repeat it. 2 By the motion now before me the applicant and cross‑respondent (BAT) seeks an order striking out certain paragraphs of the amended grounds and particulars of invalidity filed by the respondent and cross-applicant (Philip Morris) pursuant to leave granted on 8 October 1998. 3 Each of the paragraphs which BAT seeks to have struck out relates to cigarettes which were sold in Africa under the brand name "Ten Cent Cigarettes". I assume, for the purposes of the motion, that the use in Australia before the priority date, or the publication in Australia before the priority date of the characteristics, of Ten Cent Cigarettes would have anticipated the claimed invention so as to deprive it of novelty; I assume also that if it were established that the Ten Cent Cigarettes, or their characteristics, had before the priority date formed part of the common general knowledge, in Australia, of persons skilled in the relevant art, that would be relevant for the purpose of ascertaining whether the claimed invention was obvious or did not involve an inventive step. 4 The first of the paragraphs in question is par 1(a)(xvii) of the amended grounds and particulars of invalidity. In context, it reads: "1. The invention, so far as claimed in any claim, was published in Australia before the priority date of that claim. PARTICULARS (a) If the priority date is 24 May 1995, the Respondent/Cross-Applicant relies on each of the following publications; … (xvii) the manufacture and sale, by East African Tobacco Company Limited in Africa, of large quantities of cigarettes, under the brand name 'Ten Cent Cigarettes', between approximately 1955 and approximately 1974, by reason of which the cigarettes were known in Australia on or before the priority date."

That relates to the ground of opposition allowed under s 59(1)(e) of the 1952 Act. The other three impugned paragraphs are sought to be struck out only to the extent that they incorporate the particulars in paragraph 1(a)(xvii). They are paragraphs 2, 3 and 6, relying on s 59(1)(g), (f) and (h) respectively. Paragraph 2 reads:

"The invention, so far as claimed in any claim, is obvious and does not involve an inventive step, having regard to what was known or used in Australia on or before the priority date of that claim. PARTICULARS Hereunder the Respondent/Cross‑Applicant will rely on the state of the common general knowledge in Australia on or before the priority date of each claim and also upon each and all of the documents and other matters set out in the Particulars under paragraph 1 hereof." 5 The relevant part of par 3 reads: "The invention, so far as claimed in any claim, is not a manner of manufacture within the meaning of Section 6 of the Statute of Monopolies. PARTICULARS (i) Hereunder the Respondent/Cross‑Applicant will rely on the state of the common general knowledge in Australia as at and before the priority date of each claim and also upon each and all of the documents and other matters set out in the Particulars under paragraphs 1 and 2 hereof. …" 6 Finally, par 6 reads: "The invention, so far as claimed in any claim was, before the priority date of that claim, otherwise not novel in Australia. PARTICULARS Hereunder the Respondent/Cross‑Applicant relies upon each and all of the instances of prior art information set out in the Particulars under paragraphs 1‑5, inclusive, hereof." 7 In essence, the present motion is a re‑run of the motion dealt with in the second of the earlier judgments (reported at 36 IPR 323), but in circumstances where discovery is complete and Philip Morris has filed its affidavit evidence. The essence of my decision on the earlier motion appears in the following passage at 329: "This is by no means an easy question, given that at least both on the issues of want of novelty and obviousness there are substantial gaps to be filled: the case is close to the borderline. In the end, however, my view is that the particulars which the respondent is able now to give concerning the substantial period during which the Ten Cent Cigarettes were manufactured and sold, the large (if contained) geographical area within which that happened and the widespread promotion and use within that area provide a sufficient foundation for a conclusion that discovery as to matters relevant to other elements of the ground of objection is not to be regarded as mere fishing … so that the present motion should not succeed and the respondent should have the later opportunity, which it seeks, to supplement its particulars." 8 Philip Morris has not supplemented its particulars (the paragraphs I have quoted are in the same terms as those with which the earlier judgment dealt) but it relies on certain of the evidence it has filed, which can be briefly described as follows. First, there is some evidence, and this at least does not appear to be controversial, that Ten Cent Cigarettes were manufactured and widely sold in Africa between 1955 and 1974; the manufacturer was a company within the BAT group. Secondly, there is evidence that a substantial number of people travelled from relevant parts of Africa to Australia during and after the period when the Ten Cent Cigarettes were widely sold. Thirdly, there is evidence of deponents who migrated to Australia from East Africa and who knew of (or smoked) the Ten Cent Cigarettes when in Africa, but do not claim to have seen or used one in Australia or (with the exception of one deponent) to have discussed Ten Cent Cigarettes or disclosed their qualities in Australia before the priority date. The exception is Mr Charles Hugh Cole, who migrated from Kenya to New Zealand in 1966 and, in 1967, to Australia. He gives this evidence: "In the years 1969 to 1991 I worked in the mineral exploration and development industry at Ok Tedi and in other parts of Papua New Guinea. I periodically worked with other ex‑East‑African employees. At the Ok Tedi site, the employees ran a club which sold, among other things, cheap cigarettes. I recall that these cheap cigarettes caused ex‑East‑Africans to reminisce and discuss similar cigarettes (including the Ten Cent brand) that we had seen or smoked in Africa. These conversations would typically take place in the club or the dining area. Although I can not recall the actual words, I recall that the Ten Cent cigarette was discussed during at least one of these conversations."

Mr Cole does not say precisely when the Ten Cent Cigarettes were discussed and, given the nature of his evidence, it would be somewhat surprising if with any confidence he could do so. The point is that the 1952 Act until 16 September 1975 included Papua New Guinea in "Australia" as one of the "Territories to which this Act extends".

9 Fourthly, though Philip Morris in its written submissions accepts that "there is no evidence of knowledge of the Ten Cent Cigarette by [the named inventor] and others involved in the invention within BAT", there is evidence of a former employee of BAT (and its East African subsidiary) as to the provision of information by subsidiaries to BAT in London - information, particularly, about brands and types of cigarettes manufactured and sold, and sample cigarettes for testing - and the availability of BAT information to its subsidiaries. 10 I accept that an order striking out the impugned paragraphs (or cross‑references) should not be made except in a clear case and that the tests are those stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.

Prior publication; novelty 11 In R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1989) 25 FCR 565, at 590, 591, Gummow J discussed the relationship between s 59(1)(g), s 59(1)(e) and s 59(1)(d) and between those grounds and the ground of revocation dealt with in s 100(g) of the 1952 Act. Prior publication is a species of the genus, want of novelty. And (at 590) "[lack] of novelty is the result of the invention having been made available to the public in Australia, by written or oral description, by use, or in any other way".

Jenkinson J at 586, agreed with the judgment of Gummow J. The somewhat different approach of Lockhart J, at 584, would not, if accepted, affect the outcome of this motion. In Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 Gummow J, again with the agreement of Jenkinson J, drew attention (at 527) to the well established proposition that a prior publication does not amount to an anticipation of an invention claimed as a combination if it discloses some but not all of the integers of that combination and, at 529, to the "drift in the authorities as to the degree of rigour with which [an] alleged anticipation is to be tested" where the question is whether it gives the skilled reader information sufficient to enable the reader, without the exercise of any inventive ingenuity, to produce the claimed combination. But his Honour pointed out, at 532:

"Where, in a case such as the present, the question is whether one or more integers of a claimed combination is not disclosed in an alleged anticipation, and it is said that what is disclosed does sufficiently reveal that integer … it will not be helpful to ask whether variations between the anticipation and the claimed combination answer the description 'workshop improvement'." 12 That reflects, in the context of opposition proceedings, the statutory grounds of opposition. If the ground in par (e) of s 59(1) of the 1952 Act is to be made out, what must have been published in Australia before the priority date is "the invention, so far as claimed in any claim"; if the ground in par (h) is to be made out, it must be established that "the invention, so far as claimed in any claim" was not novel. Paragraph (1)(a)(xvii) of the amended grounds and particulars of invalidity merely says that the Ten Cent Cigarettes were "known" in Australia on or before the priority date. It does not allege that any such cigarettes were brought to Australia or used or disposed of here. Nor is there any evidence to that effect. The only evidence of disclosure in Australia is that of Mr Cole. Given the uncertainty of his evidence as to date, it is not clear that the conversation which he recounts occurred in Australia for the purposes of the 1952 Act. But if it did, it was, so far as the evidence goes, nothing more than casual reminiscence. Philip Morris submitted that, as somewhat different principles apply to anticipation by prior use than to disclosure in a document (Flour Oxidising Co Ltd v Carr & Co Ltd (1908) 25 RPC 428), equally a "less stringent" test should apply to oral than to written disclosures. That suggestion, however, is unsupported by authority and, in my view, unjustifiable in principle. The conversation deposed to is not directly evidence of disclosure of all the integers of any claim nor, in my view, could it be legitimate to infer from that evidence that there was any such disclosure. 13 It was suggested also that it would be legitimate to infer, simply from the circumstances that the Ten Cent Cigarettes were well known in East Africa and that significant numbers of people travelled from East Africa to Australia, that there was an anticipation. I do not accept that submission. If those circumstances comprise the total universe of relevant knowledge, a number of possibilities are open: someone may have brought Ten Cent Cigarettes to Australia and may have done something with them here which amounted to an anticipation; or no one may have done so. Someone may have written a careful description of all the characteristics of a Ten Cent Cigarette and may have published it in Australia; or no one may have done so. Someone in Australia who knew about Ten Cent Cigarettes may have mentioned them orally, and may have described them in great or little detail and may have mentioned all, some or none of their characteristics; or, again, no one may have done so. How, by a process of inference (as opposed to guesswork), is a court to select among those various possibilities for the purpose of making a finding of fact on the balance of probability? In my view it is not possible; and it follows that if the facts alleged in par 1(a)(xvii) were established by evidence, and if the other evidence to which I have referred were accepted as well, neither prior publication nor other want of novelty would be established.

Obviousness 14 Philip Morris relied, as it had in relation to the earlier motion, on the proposition, approved and applied in Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262, that evidence of the investigations or experiments undertaken by the inventor may (whether the invention was made in Australia or overseas) be relevant to obviousness. It is necessary, however, to remember exactly what it was that Wellcome Foundation decided. The principle was stated by Aickin J at 280, 281 as follows: "In the present case it was admitted by the respondent that the test of obviousness was an objective one, but it was argued that evidence of a subjective character was admissible. That is no doubt true in some cases because expert witnesses are often properly asked whether they found a particular invention 'surprising' to them. That however does not answer the question whether evidence of the steps which the patentee took is relevant and therefore admissible. Evidence of what was in the patentee's mind may be admissible as evidence of the state of the art, but could seldom be otherwise admissible. Evidence of what he did by way of experiment may be another matter. It might show that the experiments devised for the purpose were part of an inventive step. Alternatively it might show that the experiments were of a routine character which the uninventive worker in the field would try as a matter of course. The latter could be relevant though not decisive in every case. It may be that the perception of the true nature of the problem was the inventive step which, once taken, revealed that straightforward experiments would provide the solution. It will always be necessary to distinguish between experiments leading to an invention and subsequent experiments for checking and testing the product or process the subject of the invention. The latter would not be material to obviousness but might be material to the question of utility."

But the relevant "state of the art", which may have been in the inventor's mind, is common general knowledge in Australia: Aickin J said, at 284, 285:

"It is important, particularly in relation to convention patents, to bear in mind that the common general knowledge which is material to the question of obviousness is common general knowledge in Australia and not the common general knowledge in the country of origin. No doubt occasions may occur where there may be no difference or no significant difference in the common general knowledge of the ordinary skilled worker in one country from that of his counterpart in another. However that cannot be assumed and there is certainly no presumption that it is so. What must be proved is common general knowledge in Australia and the inventiveness or otherwise of the alleged invention must be judged against that background. Care must be taken to judge the foreign experiments and developments not against their own background but against the proved background of common general knowledge in Australia." 15 It follows, in my view, that the facts stated in par 1(a)(xvii) could, if established, and if supplemented by the evidence referred to, assist no more in relation to obviousness than in relation to novelty.

Manner of manufacture 16 Philip Morris made detailed and lengthy written submissions about threshold requirements of "newness" and "inventiveness" said to be established, as well under the 1952 Act as under the Patents Act 1990 (Cth), by the majority judgment in NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655. It was said that in the application of the threshold test of newness and inventiveness it was permissible to take into account more extensive evidence of what was "known" than might be relevant to the separate tests for want of novelty or an inventive step. Those submissions raise difficult questions which are not, I think, appropriately dealt with on the present motion. Undoubtedly, however, it is desirable that more specific particulars should be given as to the circumstances relating to the Ten Cent Cigarettes which are said to be relevant to the threshold tests for which Philip Morris contends. The consequence of the views I have already expressed is that BAT will succeed in relation to par 1(a)(xvii) of the amended grounds and particulars of invalidity. That will have an obvious consequence for the cross‑references in the other paragraphs in question. But Philip Morris should have the opportunity to file and serve amended particulars concerning the Ten Cent Cigarettes in relation to the "manner of manufacture" ground. Philip Morris sought, and should be granted, leave similarly in relation to obviousness.

Conclusion 17 Paragraph 1(a)(xvii) of the amended grounds and particulars of invalidity will, for the reasons given, be struck out. Philip Morris will have leave to file and serve, not later than 22 September 1999 further amended grounds and particulars of invalidity incorporating further particulars, in relation to Ten Cent Cigarettes, of grounds 2 and 3. The notice of motion did not specifically seek an order for costs and no submissions were made about costs. It may well be that the appropriate order is that the costs of the motion be reserved. The parties will have the opportunity, when the proceedings are next before the Court, to contend for some other order as to costs; otherwise the order will be that the costs of the motion are reserved. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane.

Solicitor for the Applicant: Allen Allen & Hemsley

Counsel for the Respondent: Mr J. J. Garnsey QC with Mr T. J. Hancock

Solicitor for the Respondent: Arthur Robinson & Hedderwicks

Patents Act 1952(Cth)ss 59(1)(d), 59(1)(e), 59(1)(f), 59(1)(g), 59(1)(h), 100(g)

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