Embertec Pty Limited v Energy Efficient Technologies Pty Limited [2013] FCA 347 | Case summary

The Relevant Principles 4 A judge should not sit to hear a case if, in all the circumstances, a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question which he or she is required to decide (Johnson v Johnson (2000) 201 CLR 488 at 492-493 [11]-[12] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-294 per Mason, Murphy, Brennan, Deane and Dawson JJ; and Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344-345 [6]-[8] per Gleeson CJ, McHugh, Gummow and Hayne JJ). 5 The test for apprehension of bias involves a consideration of possibilities, not probabilities, although the possibilities must be real and not remote (Ebner at 345 [7]; Cadbury Schweppes Pty Ltd v Darrel-Lea Chocolate Shops Pty Ltd (No 2) (2009) 174 FCR 175 at 199 [71] per Greenwood J and at 211-212 [121] per Besanko J). 6 The application of the test requires two things. First, it requires the identification of what it is said might lead the judge to decide a case other than on its legal and factual merits. Second, there must be an articulation of the logical connection between that matter and the feared deviation from the course of deciding the case on its merits (Ebner at 345 [8]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 445 [63] per Gummow ACJ, Hayne, Crennan and Bell JJ; Cadbury Schweppes Pty Ltd v Darrel-Lea Chocolate Shops Pty Ltd (No 2) 199 [71] per Greenwood J and at 211-212 [121] per Besanko J). 7 The reasonable or fair-minded observer is not taken to have a knowledge of the law nor should there be attributed to her or him an awareness of the judicial process that ordinary experience suggests not to be the case (Vakauta v Kelly (1989) 167 CLR 568 at 585 per Toohey J). The reasonable hypothetical observer understands that a judge is professional but is not presumed to reject the possibility of pre-judgment. Were it otherwise, apprehension of bias would never arise in the case of the professional judge (British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 at 333 [144] per Heydon, Kiefel and Bell JJ). 8 The lay observer is not informed by a detailed knowledge of the law nor is he or she invested with "undue knowledge and sophistication" or "highly specialised knowledge" (Johnson v Johnson at 502-503 [42] and 506 [49] per Kirby J; and Cadbury Schweppes Pty Ltd v Darrel-Lea Chocolate Shops Pty Ltd (No 2) at 200-201 [74] per Greenwood J). Nevertheless, the fictitious bystander is not "wholly uninformed and uninstructed about the law in general or the issues to be decided" (Johnson v Johnson at 508-509 [53] per Kirby J). The hypothetical observer is assumed to know the issues to be decided and the circumstances in which they came to be decided. 9 Exceptions to the apprehension of bias rule include necessity, waiver and special circumstances (British American Tobacco Australia Services Ltd v Laurie at 333 [146]). 10 The pre-judgment principle is one basis upon which a reasonable apprehension of bias may be found to exist. If a fair-minded person reasonably apprehends or suspects that the Tribunal has pre-judged the case, that observer cannot have confidence in the decision (Re Watson; Ex parte Armstrong (1976) 136 CLR 248 at 263). This notion is based upon the fundamental principle that justice must be seen to be done as well as be done. 11 The relevant test is whether a reasonable observer might conclude that the decision-maker might not bring to his or her task an impartial mind by reason of pre-judgment, in the sense that the decision-maker might be so committed to a conclusion as to be incapable of persuasion to a different view (Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111 at [25] per Kenny, Tracey and Middleton JJ). Reasonable apprehension of bias by reason of pre-judgment must be firmly established (Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352 per Mason J). A conclusion of reasonable apprehension of bias is not to be drawn lightly (Vakauta v Kelly at 584-585). 12 The applicant submitted that one instance in which a fair-minded observer might entertain a reasonable apprehension of bias by reason of pre-judgment is if the judge hearing the matter has previously expressed clear views about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question of fact (Livesey v New South Wales Bar Association at 300). 13 In the present case, the applicant relied upon certain remarks which I made about the evidence of a witness called in support of the applicant's claim for interlocutory injunctive relief (Mr Georgevits). Mr Georgevits is a consulting electrical engineer. The applicant also relied upon the circumstance that I expressed some views, albeit provisionally, in respect of the respondents' claim that the patent was invalid because it was not fairly based upon the broadest form of the invention as expressed in the specification for the patent. 14 At [76]-[85] of Embertec No 1, I said: Lack of Fair Basis 76 This ground relies upon s 40(3) of the Patents Act. EETECH submitted that the lack of a role for the sensor to play in the switching of (ii) in claim 1 is inconsistent with the disclosure of the broadest form of the invention on p 2 of the Specification. At ll 19-20 on p 2, the sensor means is adapted to wirelessly sense activity of a user operated remote control device and thereby control the switch means. Senior Counsel for EETECH went on to submit that the lack of such a limitation in claim 1 means that it and all dependent claims also lack fair basis. 77 Embertec answered this contention by extensively relying upon the affidavit evidence of Mr Georgevits. In substance, Mr Georgevits opined that the term "active standby" in the 197 patent refers to the capability of electrical equipment to be placed either in an on state or in a standby state. He concluded that the energy saving device of the patent discloses to him that the invention has the capability to monitor the passage of time and to perform actions on the controlled outputs, including to turn off appliances which are in the standby state, based on the elapsed time in the standby state. This is the essence of feature 7 in claim 1. Mr Georgevits testified that he understands claim 1 of the 197 patent to require that the energy saving device be capable of performing both functions, that is to say, the function of disconnecting the appliance from the ON state if there is no detected remote control activity within a certain predetermined time and the function of disconnecting the appliance from the STANDBY state, if the appliance is in the standby state and remains so for a predetermined time. Mr Georgevits concluded that the device must be capable of performing both functions, although the function that is carried out by the device is determined by the sensed state of the controlled appliance. 78 Unaided by the evidence of Mr Georgevits, I see considerable force in the submissions made on behalf of EETECH in relation to this aspect of its fair basis complaints. At the present time, I do not know what the final landscape of the evidence directed to this point will be. However, although the evidence of Mr Georgevits endeavours to make sense of claim 1, I think that it is strongly arguable that claim 1 lacks a fair basis for the reason submitted by Senior Counsel for EETECH. It should be noted that this particular point affects all dependent claims. 79 EETECH advanced a second point in support of its lack of fair basis ground. It was submitted on behalf of EETECH that the absence of monitoring means in claim 1 produces disconformity between the claims made in claim 1 and the description of the invention in the Specification. The only alert means described in the body of the Specification (that is, other than in the newly introduced statement of the "broad form" of the invention on p 2) is part of the data output means related to the monitored power consumption. For this reason, so it was submitted, claims 2 and 3 are not fairly based. Lack of Novelty 80 It was submitted on behalf of EETECH that the 197 patent was anticipated by US patent 2002/0135474. 81 This allegation gives rise to a contest between the evidence of Mr Georgevits and the evidence of Mr Freund, an expert called on behalf of EETECH. That contest cannot be resolved at the present time, notwithstanding that Senior Counsel for EETECH urged that I should accept the opinions of Mr Freund over those of Mr Georgevits. 82 It was also submitted that the claims were anticipated by US patent 7,520,783. There was also a very lively dispute as to the correct interpretation of the evidence given by Mr Georgevits in relation to this point. 83 There is enough material in the submissions made by Senior Counsel for EETECH, supported as they were by the evidence of Mr Freund, for me to conclude that EETECH has an arguable case for invalidity on the ground of lack of novelty. However, as matters presently stand, I do not think that I can assess the strength of that case and expressly decline to do so. Conclusions (Prima Facie Case) 84 As presently advised, I do not think that I should accord any weight to EETECH's argument based upon s 163 of the Patents Act. For that reason, subject to my views as to its case for invalidity, Embertec has established a prima facie case, or serious question to be tried of infringement of the 197 patent by EETECH. However, EETECH has reasonably strong arguments that the 197 patent is invalid based upon the lack of fair basis grounds. It has an arguable case in respect of its other grounds for invalidity. EETECH's case for invalidity is presently of insufficient weight to overcome altogether the impact of Embertec's prima facie case of infringement. 85 For these reasons, Embertec has established a prima facie case of infringement but, nonetheless, EETECH has established a prima facie case of invalidity of the 197 patent, that case being reasonably strong insofar as some of the grounds relied upon are concerned. 15 The assessment which I made in the paragraphs which I have extracted at [14] above was made in circumstances where I was obliged to look quite closely at the competing claims of infringement and invalidity because, at the hearing of the applicant's interlocutory application, it was common ground that the grant or refusal of interlocutory relief in the present case was going to have the practical effect of bringing to an end the parties' claims for non-pecuniary relief. At [18]-[20] of Embertec No 1, I said: 18. In Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257 at 271-279 [44]-[74], the Full Court explained the source of the power of this Court to grant injunctive relief in patent cases and the principles upon which it would consider doing so on an interlocutory basis. A particular feature of that case was the fact that the grant or refusal of interlocutory relief would have had the practical effect of putting an end to the proceeding. That feature is also present in the instant case. The High Court refused special leave in Apple Inc v Samsung Electronics Co Ltd [2011] HCATrans 341, stating that it saw insufficient prospects of success on the part of Apple demonstrating error on the part of the Full Court. The High Court also remarked that the Full Court's detailed consideration of Apple's case weighed against the grant of special leave. 19. I shall endeavour to extract the important points of principle from the passages in Samsung Electronics Co Ltd v Apple Inc to which I have referred at [18] above. In doing so, I do not intend to alter or dilute in any way the judgment of the Full Court. Rather, I intend to apply it. The matters which I particularly wish to emphasise are: (a) Where the source of the Court's power to grant an injunction is a specific provision in a statute (as is the case here), the term "injunction" takes its context from the provisions of the particular statute in question (at 271-272 [46]-[47); (b) Section 122 of the Patents Act empowers the Court to restrain an infringement of an Australian registered patent subject to such terms, if any, as the Court thinks fit (at 272 [48]); (c) Where the merits and the question of convenience are fairly evenly balanced, there will be no injustice in requiring the party seeking relief to demonstrate good prospects of success before imposing almost certain prejudice on the other side (at 272-273 [49]-[51] esp at [51]); (d) Where an interlocutory injunction is sought in respect of private rights, it is necessary to identify the legal or equitable rights which are to be determined at the trial and in respect of which final relief is sought (at 272 [52]); (e) As Mason ACJ said in Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153: … In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction. (f) The Court's task of assessing the balance of convenience and justice requires the Court to determine whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted (at 273-274 [55] and the passages cited therein from Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 (Beecham)). (g) The question of whether or not the plaintiff must show that he will suffer irreparable harm if no injunction is granted is one of the matters which will ordinarily need to be addressed in the Court's consideration of the balance of convenience and justice (at 276 [61]). 20. At 276-279 [62]-[74], the Full Court discussed the balance of convenience and justice and the relationship between the basket of considerations relevant to the Court's assessment of that matter and the need for a plaintiff to establish a prima facie case or serious question to be tried… 16 In Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257 at 276-279 [62]-[74], the Full Court collected and explained the relevant principles governing the Court's assessment of the balance of convenience and justice in a case such as the present. There is no need to repeat those observations here. 17 In Embertec No 1, I made clear that I was applying Samsung Electronics Co Ltd v Apple Inc. In particular, I applied the principles articulated in that case to both the question of prima facie case or serious question to be tried and to my assessment of the balance of convenience and justice. 18 Having dealt with prima facie case, I moved to consider the balance of convenience and justice at [86]-[101]. At [101], I said: In my judgment, the balance of convenience, even without taking into account the relative strengths of the parties' cases, strongly favours the refusal of the claimed injunction. When consideration is also given to the fact that some of the grounds in support of invalidity have reasonably strong prospects, the conclusion that the injunction should be refused becomes even more obvious. This is so even though, in my judgment, Embertec's case for infringement, absent any consideration of EETECH's invalidity case, is quite strong. 19 The applicant submitted in support of its recusal applications that the principles which I applied in Embertec No 1 concerning the grant of interlocutory injunctive relief, being those explained and articulated by the Full Court in Samsung Electronics Co Ltd v Apple Inc, were the correct principles. Furthermore, the applicant does not presently complain that I applied those principles incorrectly in the present case. The applicant's current complaint is a simple one: The applicant argues that, given the language chosen by me in assessing the respondents' contention that the patent is invalid because it is not fairly based upon the broadest articulation of the invention in the specification for the patent, a reasonable fair-minded observer might think that I had pre-judged the issue of fair basis. In its Written Submission in support of the present application, at pars 24 and 25, the applicant submitted as follows: 24. The Applicant respectfully submits that this is so, in particular, because: (a) the question of fair basis is a textual one, to be determined by the Court's comparison of the claim and the body of the specification; (b) to the extent that evidence is admissible on the question, the Court took into account the evidence of Mr Georgevits. Implicitly the Court did not accept that evidence or afforded it little or no weight (or so the reasonable bystander unversed in the nuances of litigation might conclude). This was so notwithstanding the absence of any competing evidence on the question or any cross-examination of Mr Georgevits; (c) while it is possible that the Applicant could seek to adduce further evidence on the question at trial, Mr Georgevits' evidence dealt with the question at length and in detail and he was a witness with considerable relevant expertise. As a practical matter, therefore, Mr Georgevits' evidence, in its present form, is likely to remain an important feature of the Applicant's case at the final hearing; (d) the same issue of fair basis will arise at trial as that which the Court considered in the interlocutory judgment; (e) a lay observer might regard it as is unlikely that the Court, at trial, will reach any new or different conclusion regarding Mr Georgevits' evidence to the one it has already expressed. The lay observer might conclude there is no reason to think otherwise, particularly given that the substance of Mr Georgevits' evidence is unlikely to change between now and a final hearing, and that at trial his evidence will be subjected to the rigours of cross-examination whereas during the interlocutory application it was not. On the other hand the bystander might reasonably harbour a perception that the Judge, in the judgment actually deciding the case, might be concerned to vindicate the views earlier expressed or implied about Mr Georgevits' evidence; (f) the Court's findings as to the strength of the Respondents' prima facie case on invalidity in paragraphs [84], [85] and [101] of the Reasons were expressed without significant qualification or doubt. They were "clear views" about a live issue in the case, on which the evidence at the final hearing as a practical matter is unlikely to be any different. The reasonable observer might therefore possibly conclude that at the trial the Court might not move its mind from the position reached on the interlocutory application. 25. The Applicant respectfully submits that while a judge who determines an interlocutory injunction frequently continues to manage a proceeding in his or her docket and hears the final trial of the matter, that is not always appropriate and is not appropriate where, as the Applicant respectfully submits is the case here, the Judge has expressed relatively strong views on a matter which, if those views were maintained, would be fatal to the Applicant's case. 20 The respondents appeared at the hearing of the present application in order to remind me that judges should not accede too readily to suggestions of appearance of bias and that there was a strong public policy in favour of rejecting recusal applications unless the application is based upon a substantial ground. While leaving the decision to the Court, the respondents reminded me that I should not permit the applicant to "judge-shop" just because it feared that, in the end, I might not be favourably disposed to its case. 21 I do not consider that the observations which I made in respect of the evidence of Mr Georgevits, whether taken on their own or in conjunction with the other remarks which I made concerning the respondents' fair basis arguments, would or might indicate to the mind of the fair-minded lay observer any relevant pre-judgment about Mr Georgevits' evidence or the significance of that evidence to the fair basis argument. My views were preliminary. In particular, I noted that there had been no cross-examination of Mr Georgevits and that the evidentiary landscape might change for the final hearing. 22 However, I think that there is some force in the submission made on behalf of the applicant to the effect that, in the present case, the question of whether the relevant claims in the patent specification, as properly construed by the Court with the aid of such expert evidence as is admissible and probative, is fairly based on a real and reasonably clear disclosure in the body of the specification, is to some extent one of impression formed by the Court's reading of the text of the specification and by the Court's interpretation of the drawings forming part of the specification which are referred to and described in the text of the specification. The applicant submitted that the fair-minded lay observer might consider that the views which I have expressed (especially at [76]-[85] and at [101] in Embertec No 1) amounted to a fairly firm statement of my impression which the same fair-minded lay observer might think I would be unlikely to alter at the final hearing. 23 The proceeding is not yet ready to be allocated a hearing date although I expect that, within the next month or two, preparations will have reached the point where a hearing date ought to be allocated. It is likely that, should I stand aside, the date which will be allocated for the final hearing will be later than the date which I could have allocated to the hearing. However, the applicant submitted that its objection in the present case is a substantial one and the mere fact that some delay will be occasioned by my standing aside is not a sufficient reason for me to continue in the matter. The applicant also submitted that the fact that this Court operates under the docket system is not a sufficient reason for ignoring its objection to my sitting based, as it is, on a real point of substance. I accept these submissions. 24 On balance, I have come to the view that, in the special circumstances of this case, I should recuse myself from the trial because the fair-minded lay observer may well consider that I have made up my mind in relation to the fair basis contention being advanced by the respondents. Although, of course, that is not the case and although the evidentiary landscape may well alter when the matter is finally heard, applying the relevant principles which I have extracted at [4]-[12] above, I think that the appropriate course is for me to stand aside. 25 Accordingly, for all of the above reasons, I recuse myself from the trial of this proceeding. I will continue to case manage the matter if I am unable to have the matter allocated to another judge in the short term. However, if the matter can be reallocated relatively promptly, I think that it is desirable that the new Docket Judge take over the case management of the matter as soon as possible. 26 I think that costs should be costs in the proceeding. 27 There will be orders accordingly. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Embertec Pty Limited v Energy Efficient Technologies Pty Limited

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Judgment (14 paragraphs)

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