Commonwealth Scientific and Industrial Research Organisation v Urrbrae Foods Pty Ltd

Federal Court of Australia|2023-05-15|Before: Moshinsky J

THE COURT NOTES THAT: "Urrbrae Wheat Products" refers to the Prospective Respondent's wheat grain product with an increased fibre content.

Within 3 days of receipt of the confidentiality undertakings provided under paragraphs 5 and 6 below, the Prospective Respondent provide to the Prospective Applicant's solicitors a randomly selected and representative 50g sample of viable seeds of the Urrbrae Wheat Products of the most recent harvest that is intended to be commercialised in Australia, together with details of the date and place of harvest.
Subject to paragraphs 3 to 6 below, until further order of the Court, the use, disclosure or provision of the samples produced by the Prospective Respondent in accordance with paragraph 1 above (the Confidential Samples) is prohibited on the ground that it is necessary to prevent prejudice to the proper administration of justice.
The Confidential Samples may be used by the Prospective Applicant to perform the testing (Testing) in accordance with the protocol annexed as Annexure A to these orders (Protocol).
The Confidential Samples and the results of Testing of the Confidential Samples (Urrbrae Confidential Results) may be used: (a) to decide whether to start a proceeding in the Court in relation to the Urrbrae Wheat Products; and (b) in the conduct of any such proceeding, any related proceedings or any appeals.

Introduction 1 By the present proceeding, the prospective applicant (CSIRO) sought from the prospective respondent (Urrbrae) preliminary discovery of documents and production of samples of wheat products for testing for the purpose of deciding whether to commence a proceeding for patent infringement against Urrbrae. 2 The proceeding was commenced by originating application in July 2022. Subsequently, on 20 October 2022, CSIRO filed an amended originating application. By paragraph 1 of that document, CSIRO sought preliminary discovery of certain documents. By paragraph 2, it sought production of samples of Urrbrae's wheat products. 3 The application was originally set down for hearing on 9 December 2022. Shortly before the hearing, Urrbrae consented to an order for preliminary discovery of documents in substance as sought in paragraph 1 of the amended originating application. A consent order was made to that effect on 9 December 2022, with the balance of the proceeding adjourned by consent to a date to be fixed. This was a sensible approach for the parties to adopt because it was possible that, following production of the documents, CSIRO would have sufficient information to decide whether to commence a proceeding for patent infringement, and the balance of the present proceeding would not need to be dealt with. 4 On 10 February 2023, Urrbrae provided discovery in accordance with the order made on 9 December 2022. CSIRO reviewed the documents produced and formed the view that it still did not have sufficient information to decide whether to commence a proceeding. The balance of CSIRO's application, namely the application for production of samples, was listed for hearing, and timetabling orders were made for the filing of any further evidence and submissions. 5 The balance of CSIRO's application came on for hearing today. CSIRO relies on three affidavits of Robert de Feyter, dated 28 June 2022, 14 October 2022 and 22 March 2023. 6 Urrbrae does not rely on any evidence in opposition to the application. (An affidavit of Timothy Atkin dated 15 November 2022, which was referred to in Urrbrae's outline of submissions, was not relied on at the hearing). 7 At the outset of the hearing, counsel for CSIRO handed up a minute of proposed orders. The orders sought (omitting annexures) are as follows: 1. Within 3 days of receipt of the confidentiality undertakings provided under paragraphs 5 and 6 below, the Prospective Respondent provide to the Prospective Applicant's solicitors a randomly selected and representative 50g sample of viable seeds of the Urrbrae Wheat Products of the most recent harvest that is intended to be commercialised in Australia, together with details of the date and place of harvest. 2. Subject to paragraphs 3 to 6 below, until further order of the Court, the use, disclosure or provision of the samples produced by the Prospective Respondent in accordance with paragraph 1 above (the Confidential Samples) is prohibited on the ground that it is necessary to prevent prejudice to the proper administration of justice. 3. The Confidential Samples may be used by the Prospective Applicant to perform the testing (Testing) in accordance with the protocol annexed as Annexure A to these orders (Protocol). 4. The Confidential Samples and the results of Testing of the Confidential Samples (Urrbrae Confidential Results) may be used: (a) to decide whether to start a proceeding in the Court in relation to the Urrbrae Wheat Products; and (b) in the conduct of any such proceeding, any related proceedings or any appeals. 5. Provision of the Confidential Samples and provision of the Urrbrae Confidential Results may be relevantly made to the following persons who have signed a confidentiality undertaking in the form annexed as Annexure B to these orders: (a) Suzhi Li, Hong Wang, Malcolm Blundell and Jean-Philippe Ral, being the in-house scientists of the Prospective Applicant engaged to perform testing on the Confidential Samples, or review the Urrbrae Confidential Results; and (b) any other person provided the prior written consent to such disclosure has been obtained from the Prospective Respondent. 6. Provision of the Urrbrae Confidential Results may be relevantly made to the persons identified in paragraph 4 of the orders made on 9 December 2022 who have signed a confidentiality undertaking in the form annexed as Annexure A to those orders and the Urrbrae Confidential Results are to be treated as Urrbrae Confidential Information pursuant to that undertaking. 8 The parties filed outlines of submissions in advance of the hearing today. The main issue between the parties is whether the Court has power to make an order of the kind sought by CSIRO in this proceeding, namely an order for the production of samples for testing for the purpose of assisting CSIRO to decide whether to commence a proceeding for patent infringement against Urrbrae. 9 There are also a number of minor issues to be determined.

Background 10 The following summary of the background to the proceeding is based on CSIRO's outline of submissions, which in turn is based on Mr de Feyter's evidence. These matters were not challenged on the present application. 11 CSIRO is the registered co-owner of: (a) Australian Patent No. 2005321754 entitled "Methods and means for improving bowel health" (754 Patent); and (b) Australian Patent No. 2004252186 entitled "Wheat with alternated branching enzyme activity and starch and starch containing products derived therefrom" (186 Patent). 12 Starch is the primary carbohydrate in wheat grain (and most plants). Starch is primarily made up of amylose and amylopectin. Wheat with a high amylose content may have important health benefits, such as improved bowel health. 13 The synthesis of starch is carried out by a suite of enzymes, including starch synthase II (SSII) and starch branching enzymes (SBEs), classified into two classes, SBEI and SBEII, with the latter classified into two isoforms: SBEIIa and SBEIIb. 14 SBEs are distributed inside and outside starch granules in the grain endosperm. SBEs distributed inside starch granules are described as starch granule-bound proteins. SBEs distributed outside starch granules are described as soluble proteins. 15 The amylose content of wheat grain is altered by modifying the SSII and/or SBEII activity (whether by reference to the enzyme activity or the protein level itself). 16 SBE proteins are only functional (active) in the starch granules during starch synthesis in the developing endosperm. Accordingly, the distribution of the total amount of SBEII between starch granule-bound protein and soluble protein can change the functional level of SBEII (i.e. the level of starch granule-bound protein) and, therefore, the SBEII enzyme activity in the starch granules. That is, even if the SBEII level in the whole of the grain is normal, the SBEII enzyme activity will be reduced if there is a reduction in the level of starch granule-bound SBEII. 17 Further, in addition to the direct effect of SSII on starch synthesis, SSII gene mutations in wheat grain have pleiotropic effects that can change the distribution of SBEs between the soluble fraction of the endosperm and the starch granules, thereby reducing the level of starch granule-bound SBEs and, therefore, SBEII enzyme activity. 18 Claim 1 of the 754 Patent claims a method of improving one or more indicators of bowel health or metabolic health, wherein, in so far as is relevant to this application, grain from a wheat plant: comprises a reduced level of SBEIIa enzyme activity and/or SBEIIa protein relative to wild type grain. (Emphasis added.) 19 Claim 1 of the 186 Patent claims grain obtained from a wheat plant, wherein, in so far as is relevant to this application, grain from a wheat plant: comprising a reduced level of SBEIIa protein, SBEIIa enzyme activity or both in the endosperm relative to wild type grain. (Emphasis added.) 20 Dependent claims 3 and 5 of the 754 and 186 Patents claim grain which also comprises a reduced level of SBEIIb protein, enzyme activity or both relative to wild-type grain.

The issue of power 21 CSIRO contends that the Court has power to make the order sought for production of samples. CSIRO relies in particular on s 23 of the Federal Court of Australia Act 1976 (Cth) and r 14.01 of the Federal Court Rules 2011. (Although r 14.01 is not referred to in the amended originating application, CSIRO made clear in its outline of submissions that it relied on this rule.) 22 Section 23 provides as follows: The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. 23 Rule 14.01 of the Rules provides: 14.01 Order for inspection etc of property (1) A party may apply to the Court for an order: (a) for any of the following: (i) inspection of any property; (ii) taking a sample of any property; (iii) making an observation of any property; (iv) trying an experiment on or with any property; (v) observation of a process; (vi) copying, transcription or production of a document or other material, data or information (however stored or recorded); or (b) authorising a person to enter land, or do any other act or thing, for the purpose of gaining access to the property. (2) An application under subrule (1) must be accompanied by an affidavit stating the following: (a) the property to be inspected, sampled, observed or subject to experiment; (b) the process to be observed; (c) the document, material, data or information to be copied or transcribed; (d) why the order is necessary; (e) the access required for entry on to the land or for doing any other act or thing. (3) In this rule: property includes land, a document or any other thing, whether or not the land, document or other thing is in the possession, custody or power of a party to the proceeding. 24 The word "party" is defined in the Dictionary to the Rules as meaning a party to a proceeding. The word "proceeding" is defined for the purposes of the Rules in s 4 of the Federal Court of Australia Act. That section defines "proceeding" as follows: proceeding means a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding, and also includes an appeal. Example: Discovery is an example of an incidental proceeding. 25 Urrbrae's position, in summary, is that the practical effect of the orders made on 9 December 2022 is that CSIRO's application for preliminary discovery is already at an end, subject to resolving the question of costs. Urrbrae submits that: preliminary discovery has been given; CSIRO no longer seeks relief in the nature of preliminary discovery; the relief sought by CSIRO is not in aid of resolving the issues arising in the preliminary discovery proceeding. 26 Urrbrae places emphasis on the text of r 7.23 (the rule relating to preliminary discovery), and notes that this rule is limited to production of documents. 27 Urrbrae accepts that the Court has power to make orders under r 14.01 in a preliminary discovery proceeding. However, it submits that those powers can only be exercised for the purpose of resolving the issues in the preliminary discovery proceeding. Accordingly, it submits, CSIRO cannot rely on r 14.01 to seek orders for the production of documents to assist it in deciding whether to commence a proceeding for patent infringement. Urrbrae submits that an order for production of samples would not contribute in any way to resolving the issues in the present matter, which are limited to whether the requirements of r 7.23(1) have been met. 28 In support of its submissions, Urrbrae relies heavily on the judgment of the Full Court of this Court in Tyco Australia Pty Limited v Leighton Contractors Pty Limited [2005] FCAFC 115; 142 FCR 428 (Tyco) (Hill, Hely and Conti JJ), which related to the previous Rules, namely, the Federal Court Rules 1979 (the 1979 Rules). 29 In order to evaluate these submissions, and CSIRO's submissions in response, it is necessary to identify or set out certain key provisions of the 1979 Rules and the current Rules. 30 In the 1979 Rules, the topic of preliminary discovery and discovery from a non-party was dealt with in Order 15A. Rule 3 dealt with discovery to identify a respondent. Rule 6 dealt with discovery from a prospective respondent. Rule 12 was as follows: 12 Power to order inspection, preservation etc of property The Court may also make an order providing for any one or more of the following matters: (a) the inspection, measurement, photocopying, preservation, custody and detention of property: (i) which relates to the subject matter of the proceedings; or (ii) as to which any question arises in the proceedings; (b) any of the following: (i) taking of samples; (ii) observation; (iii) carrying out of any experiment; (iv) making, playing or screening of tape recordings and films and other means of recording sight or sound; (v) making and reproducing or displaying other instrumental recordings and tracings; with respect to any such property mentioned in paragraph (a). 31 Order 17 of the 1979 Rules dealt with inspection of property. Rule 1 of that Order was in the following terms: 1 Inspection of property (1) The Court may, for the purpose of enabling the proper determination of any matter in question in any proceeding, make orders for: (a) the inspection of any property; (b) the taking of samples of any property; (c) the making of any observation of any property; (d) the trying of any experiment on or with any property; (e) the observation of any process; or (f) the copying of any document or the copying, transcribing or production of any material, data or information stored or recorded by mechanical or electronic means. (2) Any order under subrule (1) may authorize any person to enter any land or to do any other thing for the purpose of getting access to the property. (3) In this rule property includes any land and any document or other chattel, whether in the ownership, possession, custody or power of a party or not. 32 Turning to the current Rules, Div 7.3 of Pt 7 deals with the topic of preliminary discovery. Rule 7.22 deals with discovery to ascertain the description of a respondent (corresponding to former O 15A r 3). Rule 7.23 deals with discovery from a prospective respondent (corresponding to former O 15A r 6). Div 7.3 does not contain a corresponding provision to former O 15A r 12. 33 Division 14.1 of Pt 14 of the current Rules deals with inspection of property. Rule 14.01, which has been set out above, is located at the start of that Division. While r 14.01 corresponds to former O 17 r 1, the wording is slightly different, in that the words "for the purpose of enabling the proper determination of any matter in question in any proceeding" do not appear. 34 The explanatory memorandum issued by the authority of the Judges of the Court in connection with the introduction of the Federal Court Rules 2011 contained the following statements. In relation to Pt 7, it was stated (at p 10): The provisions in Divisions 7.1 (Injunctions, Preservation of Property and Receivers), 7.2 (Approval of Agreement for Persons under a Legal Incapacity) and 7.3 (Preliminary Discovery) adopt, simplify and streamline the process and procedures which operated under the former Rules and do not substantially alter existing practice. 35 In relation to Pt 14, it was stated (at p 13): Part 14 adopts, simplifies and streamlines the process and procedures which operated under the former Rules and does not substantially alter existing practice. 36 The issue that divides the parties on the present application can now be restated or expanded having regard to the provisions of both the 1979 Rules and the current Rules. CSIRO's position is that an order of the kind that it seeks could have been made under O 15A r 12. It submits that, as the explanatory memorandum makes clear, the relevant provisions of the current Rules were intended to simplify and streamline the procedures; they were not intended to effect a substantial change. Given the absence in the current Rules of a rule corresponding to former O 15A r 12, and the non-replication in current r 14.01 of the words of limitation in former O 17 r 1 ("for the purpose of enabling the proper determination of any matter in question in any proceeding") (as to which, see Tyco at [28] and [31]), CSIRO submits that it can be inferred that it was intended that r 14.01 would be available in the circumstances previously covered by O 15A r 12. 37 Urrbrae's position is that former O 15A r 12 was only available for the purpose of assisting to resolve issues arising in the preliminary discovery proceeding. In other words, it makes the same argument as set out above (in relation to the current Rules) in relation to the 1979 Rules. In support of the proposition that O 15A r 12 was limited to orders to assist in resolving issues arising in the preliminary discovery proceeding, Urrbrae relies in particular on Tyco at [26], [28]-[37] per Hill J and at [57]-[58] per Conti J. I note that Urrbrae's position is not in tension with the statements in the explanatory memorandum set out above, because its argument applies equally to former O 15A r 12. 38 In my view, the better view is that there was power under the 1979 Rules (specifically, O 15A r 12) to make an order of the kind sought by CSIRO in this proceeding, and there is power under the current Rules (specifically, r 14.01) to make such an order. 39 I note that orders of the kind sought by CSIRO, namely for the production of samples for testing to assist a prospective applicant to decide whether to commence a proceeding, have been made in two cases. The first is SmithKline Beecham plc v Alphapharm Pty Ltd [2001] FCA 271, in which Finkelstein J made an order of the kind sought by CSIRO under O 15A r 12 of the 1979 Rules: see at [13], [18], [25]-[27]. The second case is GlaxoSmithKline Australia Pty Ltd v Pharmacor Pty Ltd [2014] FCA 1202, in which Beach J made an order of the kind sought by CSIRO under the current Rules: see [2], [5], [42], [127]. However, it does not appear that the contention now advanced by Urrbrae was raised in those cases, therefore they do not stand as precedents on the issue. Nevertheless, it is a fact that orders of the kind sought by CSIRO have been made before. 40 The text of former O 15A r 12 suggests to me that it was available to make an order for the production of samples to assist a prospective applicant to determine whether to commence a proceeding. This is supported by the following passage in the judgment of Heerey J in Pacific Dunlop Ltd v Australian Rubber Gloves Pty Ltd (1992) 23 IPR 456 (Pacific) at 467: I would with respect not agree with the view of O'Loughlin J in CCA Beverages (Adelaide) Ltd v Hansford (Fed C of A, O'Loughlin J, 15 November 1991, unreported, at 7) that the word "also" in the introductory words in r 12 mean that "an order under this rule can only be made if, first, an order has been made for 'pre-action' discovery". The ordinary meaning of these words is that they convey powers on the court to make an order for inspection whenever any application is made under O 15A, irrespective of whether any other order is made. Nevertheless, when inspection is sought against a prospective respondent the discretion under r 12 should doubtless be exercised keeping very much in mind the criteria of r 6(a) and (b). It would for example be contrary to the policy lying behind O 15A to order inspection where it had not been shown there was reasonable cause to believe that the applicant might have a right to obtain relief, the achieving of which might be assisted by the inspection sought. 41 I do not consider Tyco to be authority for a contrary position. The issue in Tyco was whether provisions of the Rules for the issuing of a notice to produce could be utilised in the course of a proceeding for preliminary discovery under O 15A of the 1979 Rules. All members of the Full Court held that the notice to produce rules could be utilised in the course of such a proceeding. In so doing, the Full Court overruled the judgment of O'Loughlin J in CCA Beverages (Adelaide) Ltd v Hansford [1991] FCA 925, which had held that O 15A was a "self-contained" set of rules. The Full Court in Tyco did not need to determine, and did not determine, any issue as to whether O 15A r 12 could be utilised only for the purpose of resolving issues arising in the preliminary discovery proceeding. While there are some observations about O 15A r 12 that are consistent with the submissions put by Urrbrae in the present case, there was no holding to the effect of the proposition advanced by Urrbrae. 42 If I am correct that an order of the kind now sought by CSIRO could have been made under O 15A r 12 of the 1979 Rules, it would be very surprising (having regard to the statements in the explanatory memorandum set out above) if such an order could not be made under the current Rules. While it is true that O 15A r 12 was not replicated in the current Rules, I infer that this was because r 14.01 was considered sufficient (having regard to the non-replication of the words of limitation that previously appeared in O 17 r 1). 43 The position of CSIRO on this issue is supported by the text of r 14.01. CSIRO is a "party" to a "proceeding" within the meanings of those expressions as set out above. The order sought by CSIRO falls within the terms of the rule. I do not consider there to be any disharmony - textual or structural - in interpreting r 14.01 as available where a prospective applicant seeks production of samples for testing to enable it to decide whether to commence a proceeding against the prospective respondent. Consistently with the approach outlined by Heerey J in Pacific, as set out above, whether such an order is appropriate will be informed by considerations of the kind set out in r 7.23. It will also be informed by general principles relating to r 14.01: see, eg, Orient Overseas Container Line Ltd v ANL Singapore Pte Ltd [2020] FCA 921 at [30]-[32], citing Norm Engineering Pty Ltd v Digga Australia Pty Ltd [2005] FCA 1378 at [21]. 44 In the context of potential patent proceedings, it may well be the case that the provision of documents under r 7.23 will not be sufficient to enable a prospective applicant to decide whether to commence a proceeding and that testing of samples may be required. This tends to support the view that it was intended that r 14.01 would cover the circumstances previously covered by O15A r 12. 45 In light of the above, it is unnecessary to consider an alternative argument advanced by CSIRO based on s 79 of the Judiciary Act 1903 (Cth) and the Supreme Court (General Civil Procedure) Rules 2015 (Vic). 46 For these reasons, I conclude that there is power to make an order of the kind sought by CSIRO.

Whether an order for production should be made 47 If there is power to make an order of the kind sought, Urrbrae does not put in issue whether CSIRO: (a) reasonably believes that it may have a right to relief for patent infringement; or (b) has insufficient information to make a decision whether to commence a proceeding in the Court for relief for patent infringement. 48 On the basis of the affidavit material relied on by CSIRO, I consider that the matters referred to in r 7.23 are made out in relation to the order sought for production of samples for testing. In particular, I am satisfied that: (a) CSIRO reasonably believes that it may have the right to obtain relief for infringement of the 754 Patent and/or the 186 Patent by Urrbrae; (b) after making reasonable enquiries, CSIRO does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and (c) the production of samples of the Urrbrae's wheat products would assist CSIRO in making the decision whether to start a proceeding. 49 I accept paragraphs 44 to 52 of CSIRO's outline of submissions, which support the above propositions. 50 There is an issue between the parties as to the form of order. The particular issue is whether the tests should be conducted by certain named in-house persons at CSIRO (as CSIRO proposes) or by an independent third party (as Urrbrae proposes). On balance, and having regard to the limited nature of the testing and the terms of the confidentiality undertaking annexed to CSIRO's proposed order, I consider it acceptable for the tests to be carried out by the in-house persons put forward by CSIRO. It appears that their names have been provided to Urrbrae only very recently. I will reserve liberty to apply in case Urrbrae has concerns about any of the particular individuals, having had the opportunity to make further enquiries about them (including by asking questions of CSIRO). 51 Accordingly, I will make orders substantially in the terms sought by CSIRO.

Other issues 52 There is an issue regarding the costs of Urrbrae's interlocutory application seeking to set aside a notice to produce issued by CSIRO. The notice to produce was ultimately not called on, therefore the interlocutory application did not need to be determined. In my view, the costs of the interlocutory application should form part of the costs of the proceeding. 53 I will hear the parties on the costs of the proceeding. [Oral submissions were then made on costs, and the issue of costs was the subject of separate orders made the next day.] I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moshinsky.

Supreme Court (General Civil Procedure) Rules 2015(Vic)

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