Expo-Net Danmark A/S v Buono-Net Australia Pty Ltd

Federal Court of Australia|2010-09-07|Before: Bennett J

REASONS FOR JUDGMENT 1 By Notice of Motion filed on 11 December 2009 (the motion), the applicant (Expo-Net) seeks leave to amend the two patents in suit, being Australian Standard Patent No. 2006226731 (Standard Patent) and Australian Innovation Patent No. 2007100339 (Innovation Patent), pursuant to s 105(1) of the Patents Act 1990 (Cth) (the Act). 2 On 18 February 2010, the Court made orders (February Orders) granting Expo-Net leave to rely on the motion as its application for leave to amend the patents. 3 In compliance with Order 5 of the February Orders and O 58 r 10(1) of the Federal Court Rules, Expo-Net gave notice to the Commissioner of Patents on 23 February 2010 of its intention to seek leave to amend the patents. Notice of the proposed amendments was advertised in the Official Journal of Patents on 23 March 2010. The Commissioner has advised (by letter dated 10 May 2010) that she has received no notice of opposition to the proposed amendments and considers them prima facie to comply with s 102 of the Act. She also advised that she did not propose to appear at the hearing of the motion and did not do so. 4 The respondents do not oppose the motion. The delay in hearing of the motion was due to the joint approach by the parties to prepare for a hearing based on the patents as proposed to be amended.

Brief outline of nature of amendments sought to be made to the patents 7 The amendments sought to be made to the specifications of both patents fall into two categories. 8 The principal amendment is where the "reservoir" is described in each patent as having a "first inlet and a second inlet", rather than as having a "first inlet and a first outlet" (the principal error). 9 There are also a number of typographical or grammatical errors contained in both specifications, as well as a small number of errors that can best be described as an obvious misuse of words. These errors are sought to be corrected as part of the amendment process.

Summary of evidence relied upon by Expo-Net in support of its motion 10 Expo-Net relies on the affidavit of Henrik Sten Nielsen sworn 3 March 2010 (Nielsen Affidavit) in support of the motion. Mr Nielsen is Expo-Net's European patent attorney and was the person responsible for drafting the two patents in suit. His affidavit explains the background to the preparation and filing of the two patents. He explains how the principal error was made shortly after he received instructions from Expo-Net to prepare a patent specification for filing in Europe. He says that the error was not identified until late September 2009 (some four months after the proceedings had commenced) by correspondence received from the respondents' solicitors identifying reasons why the respondents' method and apparatus did not infringe the claims of each patent. 11 Mr Nielsen says that at all times he understood that the invention involved an apparatus which had a reservoir for storing granular material, a heating and pressurising unit, an extruder with rotating heads for extruding the material and a cooling unit for cooling the extruded element. He also understood that the reservoir had an inlet for receiving the material and an outlet for transferring the material to the heating and pressurising unit. He now recognises that the main method claim and the apparatus claim define 'a reservoir having a first inlet and second inlet' and that the reservoir is not defined as having any outlet. He says that he was aware that the reservoir did not have a second inlet but that it must have an outlet so that the material could be transferred to the heating and pressurising unit. Mr Nielsen said that he should have realised at the time that he was reviewing the claims that the words 'second inlet' were an error and should have read 'first outlet'. 12 Claim 1 at line 7 correctly refers to the heating and pressurising unit having a 'second inlet in communication with said first outlet' despite the fact that in the claim as drafted there was no first outlet to which this referred. Mr Nielsen says that he has inspected his firm's files in respect of the application and cannot ascertain whether the incorrect use of 'second inlet' arose as a result of an initial drafting error or an error by the clerical staff who transcribed the claims. Mr Nielsen points out that none of the Patent Offices that have examined the patents or local attorneys prosecuting those patents drew the error to his attention, or queried whether the 'second inlet' should have read first outlet, or pointed out that there was no antecedent for 'said first outlet' later in claim 1.

Obvious mistake 13 Expo-Net contends that the principal error is an obvious mistake. Section 102(3) of the Act provides that the requirement to meet the criteria for allowable amendments set out in s 102 does not apply for the purpose of correcting a clerical error or an obvious mistake made in or in relation to a complete specification. The onus to establish that the error is a clerical error or obvious mistake lies with the patentee. As pointed out in Bodkin C, Patent Law in Australia (Thomson Lawbook Co, 2008) at [13460], an obvious mistake is one such that 'the instructed public can, from an examination of the specification, appreciate the existence of the mistake and the proper answer by way of correction' (citing General Tire and Rubber Company (Frost's) Patent [1972] RPC 259, not considered further in the Court of Appeal). Neither Mr Nielsen, nor any other patent attorney, nor any Patent Office examiner perceived the mistake when examining the patent applications. Mr Nielsen has been unable to provide any explanation for the principal error. I am not prepared to conclude that this was an obvious mistake within the meaning of s 102(3). 14 However, Expo-Net also submits that the proposed amendments are allowable under s 102 of the Act. Amendments are allowed pursuant to an application made under s 105 of the Act if they are allowable under s 102.

Relevant legislation and principles 15 Section 105 provides as follows: (1) In any relevant proceedings in relation to a patent, the court may, on the application of the patentee, by order direct the amendment of the patent, the patent request or the complete specification in the manner specified in the order. (2) An order may be made subject to such terms (if any) as to costs, advertisements or otherwise, as the court thinks fit. (3) The patentee must give notice of an application for an order to the Commissioner, who is entitled to appear and be heard, and must appear if the court directs. (4) A court is not to direct an amendment that is not allowable under section 102. (5) The patentee must file a copy of an order within the prescribed period. (6) On the filing of a copy of an order, the patent, patent request or complete specification is to be taken to have been amended in the manner specified in the order. 16 Relevantly, ss 102(1) and (2) provide: (1) An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim matter not in substance disclosed in the specification as filed. (2) An amendment of a complete specification is not allowable after the relevant time if, as a result of the amendment: (a) a claim of the specification would not in substance fall within the scope of the claims of the specification before amendment; or (b) the specification would not comply with subsection 40(2) or (3). 17 For the purposes of s 102(2), the 'relevant time' is defined in s 102(2A)(a) as 'after the specification has been accepted'. 18 Sections 40(2) and (3) of the Act provide as follows: (2) A complete specification must: (a) describe the invention fully, including the best method known to the applicant of performing the invention; and (b) where it relates to an application for a standard patent -- end with a claim or claims defining the invention; and (c) where it relates to an application for an innovation patent -- end with at least one and no more than 5 claims defining the invention. (3) The claim or claims must be clear and succinct and fairly based on the matter described in the specification. 19 These provisions have been considered in recent applications made to the Court by patentees to amend their patent specifications in the course of proceedings: see eg. Apotex Pty Ltd v Les Laboratoires Servier (No.2) (2009) 83 IPR 42 (Apotex (No. 2)); Zetco Pty Ltd v Austworld Commodities Pty Ltd [2010] FCA 235; Bristol-Myers Squibb Company v Apotex Pty Ltd [2010] FCA 814. 20 Those cases confirm that: (a) The focus of s 102(1) is what is proposed to be claimed as a result of the amendment. The section requires consideration of whether the proposed claims claim matter not in substance disclosed in the specification as filed. The specification as filed includes the claims: Apotex (No. 2) at [29]. (b) Section 102(2)(a) requires a comparison between the proposed new claims and the claims of the specification before amendment: Apotex (No. 2) at [30]. The section requires consideration of whether the proposed claims claim matter not in substance falling within the scope of the claims before amendment. (c) Section 102(2)(b) requires, first, identification of the precise amendment sought by identifying the difference between the specification as it stood immediately before the amendment and the specification as proposed to be amended, and, secondly, determination whether, as a result of the amendment, the specification would not comply with ss 40(2) and 40(3) of the Act: Apotex (No. 2) at [34]. Section 40(2) is concerned with the invention being described fully (including the best method of performing the invention) and that the specification end with claims which define the invention, while s 40(3) is concerned with the claims being clear and succinct and fairly based on the matter described in the specification: Apotex (No. 2) at [33-34]. (d) The notion of "in substance disclosed" bears a close relationship with the test of fair basis, such that it would be a rare case where a claim which claims matter in substance disclosed in the specification as filed is not, equally, fairly based on the matter described in the specification: Apotex (No. 2) at [44], referring to obiter dicta in ICI Chemicals & Polymers Ltd v Lubrizol Corporation Inc (2000) 106 FCR 214. (e) In determining fair basis, the question is whether the subject matter of the claims is broadly described in the body of the specification. The inquiry involves examining what the body of the specification, read as a whole, discloses as the invention: Apotex (No. 2) at [37], citing Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274. 21 Even though proposed amendments may be allowable under s 102 of the Act, the Court has a discretion under s 105 of the Act in determining whether an application to amend a patent should be granted. 22 The role and nature of the Court's discretion was recently discussed in Apotex (No. 2) at [86-88], which confirmed that the Court is not limited in the factors which will be taken into account in exercising its discretion. However, relevant factors include: (a) Whether there has been full disclosure of all relevant matters; (b) Whether the patentee has sought to obtain an unfair advantage from the unamended patent; (c) Whether there has been any unreasonable delay in seeking amendment; and (d) Whether there are any other circumstances which arise that would lead the Court to refuse the amendment.

Section 102(1) and s 102(2)(a) 23 The proposed amendments to the claims of the Standard Patent are: (a) In claims 1 and 16, deletion of 'second inlet' and insertion of 'first outlet'. (b) In claims 1, 2, 4, 11, 14, 15 and 19, correction of typographical or grammatical errors, all of which can be described as clerical errors or obvious mistakes. 24 The proposed amendments to the claims of the Innovation Patent are: (a) In claims 1 and 5, deletion of 'second inlet', and insertion of 'first outlet'. (b) In claim 1, deletion of the word 'units' and insertion of the word 'heads'. (c) In claim 1, correction of two typographical or grammatical errors.

The typographical/grammatical amendments 25 The amendments to the claims of both patents which involve correction of typographical or grammatical errors do not offend s 102 of the Act.

The amendment from "second inlet" to "first outlet" 26 Figure 1a in each of the patents shows quite clearly that the reservoir has both an inlet and an outlet. On looking at the drawings, the second inlet is clearly the inlet into the chamber of the heating and pressurising unit which is in communication with the first outlet. This is also referred to in Claims 1 and 16 of the Standard Patent and Claims 1 and 5 of the Innovation Patent as the 'said first outlet'. 27 It follows that the amendment to both patents involving the deletion of "second inlet" and insertion of "first outlet" does not offend s 102(1) of the Act. The amendments do not claim matter that is not disclosed in: 1. The specification as filed (of the Standard Patent), as the "first outlet" is disclosed in the description of the invention, the drawings, and the remainder of the wording of Claims 1 and 16 which references 'said first outlet'. 2. The specification as filed (of the Innovation Patent), as the "first outlet" is disclosed in the consistory statement, the drawings, and the remainder of the wording of Claims 1 and 5 which references 'said first outlet'. 28 Amending the claim to make it clear that the first outlet of the reservoir feeds from the reservoir into the second inlet of the heating pressurising unit does not offend s 102(2)(a) of the Act as the proposed amended claims do not exceed the scope of the unamended claims. 29 Consequential amendments are necessary to the body of the specification which repeatedly refers to the "first outlet" as the "second inlet".

The other amendments, including from "units" to "heads" in the Innovation Patent 30 Expo-Net has provided a detailed schedule of the amendments sought to the Standard Patent and the Innovation Patent. The schedule explained precisely the amendments sought and the reason for those amendments. The majority are described as grammatical error, spelling error, or typographical error. I am satisfied in each case that these are correct descriptions and that such errors are allowable either under s 102(3) as clerical errors or obvious mistakes, or are allowable in any event under s 102. Certain other proposed amendments are evident once the sense of a sentence is appreciated. 31 Further, amendments that do not simply involve punctuation or grammar are either apparent from the sentence in which the amendment appears or are referable to other parts of the specification which make the proposed amendment clear. For example, in Claim 1 of the Innovation Patent a reference to 'two oppositely rotating extruder units' is to be changed to 'two oppositely rotating extruder heads'. This mirrors the description in the specification, which can be seen on page 6 lines 32-33 of the Innovation Patent, where it is stated that 'the extruder unit includes two oppositely rotating extruder heads...and the extruder heads define the extruder outlet'. 32 This amendment seeks to correct a drafting error. It does not offend either s 102(1) or s 102(2)(a). 33 I am satisfied that the proposed amendments to the claims of each patent in suit do not offend either s 102(1) or s 102(2)(a) of the Act.

Section 102(2)(b) 34 Expo-Net submits and I accept that none of the proposed amendments: (a) Result in either of the patents having claims that fail to define the invention (ie. no objection arises under s 40(2) of the Act). (b) Result in either of the patents having claims that lack clarity or fair basis (ie. no objection arises under s 40(3) of the Act). 35 The proposed amendments to each patent are allowable under s 102 of the Act.

Discretionary considerations 36 Expo-Net submits that the Nielsen Affidavit provides a fulsome disclosure of all relevant matters relating to the circumstances which gave rise to Expo-Net's application to amend the two patents in suit. Privilege has been waived over various communications as part of that disclosure. The Nielsen Affidavit also explains how it was not until after these proceedings had commenced that the principal error came to light, upon which Expo-Net proceeded expeditiously to file the motion. 37 Expo-Net submits that, in the present case, there are no circumstances which have arisen which would lead the Court to exercise its discretion to refuse to allow the amendments sought. 38 A summary of Mr Nielsen's evidence is set out below. Mr Nielsen's evidence 39 In 2004, Mr Nielsen, a European patent attorney, commenced representing Expo-Net in respect of its patent matters. Mr Nielsen was (and remains) a partner of the firm Budde Schou A/S in Denmark. 40 On 13 August 2004, Expo-Net (by its then managing director Mr John Klinkby) invited Mr Nielsen to attend Expo-Net's production plant in Hjorring, Denmark. On 20 August 2004, Mr Nielsen visited the plant and inspected equipment which Expo-Net had developed, and was testing, for manufacturing contact filter blocks with rough-textured elements. 41 On 22 December 2004, Mr Nielsen received instructions from Mr Klinkby to prepare a patent specification for the invention. 42 On 12 January 2005, Mr Nielsen sent to Mr Klinkby a "claim proposal" for his approval. The claim proposal was drafted in English, but the covering letter sent to Mr Klinkby was in Danish. The claim proposal referred at Claim 1 (method claim) and Claim 11 (apparatus claim) to the reservoir as having a 'first inlet and a second inlet'. At the time Mr Nielsen prepared the claim proposal he was aware that the reservoir did not have a 'second inlet'. He was also aware that it had a 'first outlet' so that material could be transferred from the reservoir to the heating and pressurising unit. Despite this awareness, the claim proposal contained an error of drafting in that it referred to the reservoir as having a 'first inlet and a second inlet', yet correctly (at line 7 of claim 1) referred to the heating and pressurising unit as having a 'second inlet in communication with said first outlet'. 43 Mr Klinkby then confirmed that the claim proposal met with his approval. He apparently did not identify to Mr Nielsen the drafting error in respect of the reservoir. Mr Nielsen then requested a Mr Jacob Mikkelsen, an experienced trainee patent attorney, to prepare a draft patent specification for Expo-Net's invention. On 8 February 2005, Mr Nielsen reviewed the draft specification prepared by Mr Mikkelsen but did not identify the drafting error (which had been repeated in the draft specification). That same day the document was forwarded to Mr Klinkby for his approval. 44 On 22 March 2005, Mr Klinkby instructed Mr Nielsen to file the draft specification as a European patent specification (European Application). On 25 January 2006, Mr Nielsen received instructions from Mr Klinkby to file a PCT application claiming priority from the European Application (PCT Application). 45 On 3 October 2006, Mr Nielsen received instructions from Mr Klinkby to enter the national phase from the PCT Application in, amongst other countries, Australia and New Zealand. Mr Nielsen then instructed Mr Peter Franke of Watermark Patent & Trade Mark Attorneys (WPTA) to file the Australian and New Zealand national phase applications based on the PCT Application. In doing so, he instructed WPTA simply to attend to filing the PCT Application in the form it was provided to them by him. 46 On 30 October 2006, WPTA informed Mr Nielsen that the PCT Application had been filed in Australia and was known as Australian Standard Patent Application No. 2006226731. The prosecution of the Standard Patent then proceeded in the coming months and years, including receipt of and responding to an Examiner's Report. That Report did not raise any issue which might identify the drafting error in respect of the reservoir. 47 On 24 April 2007, a divisional innovation patent application was filed based on the Standard Patent. That specification was prepared by WPTA and was based on the Standard Patent. An Examiner's Report issued on 22 May 2007 with respect to the Innovation Patent did not raise any issue which might identify the drafting error in respect of the reservoir. 48 During the prosecution of both patent applications in Australia, Mr Nielsen reviewed the specifications but did not identify the drafting error in respect of the reservoir. 49 Specifications for Expo-Net's invention were also filed in New Zealand, Eurasia, Europe and Germany. None of the prosecutions in respect of those specifications drew to Mr Nielsen's attention the drafting error in respect of the reservoir, or provided an occasion by which he became aware of the drafting error. 50 The present proceedings were commenced on 14 May 2009. The respondents filed their Defence and Cross-Claim, as well as Particulars of Invalidity, on 11 August 2009. 51 On 10 September 2009, the respondents were ordered (by consent) to inform Expo-Net which features of the patent claims were said not to be taken by the respondents' method and apparatus. 52 On 25 September 2009, the respondents replied and informed Expo-Net that one of the reasons for non-infringement of the patent claims in suit was that the respondents' apparatus did not have a reservoir with a 'second inlet'. It was this correspondence which drew Expo-Net's attention to the drafting error in respect of the reservoir. 53 Mr Nielsen has searched his files and cannot provide any reference to how or where the drafting error occurred, save that it appeared in the initial claim proposal which he prepared in late December 2004. He is unable to explain why he did not identify the drafting error during his infringement analysis conducted prior to the commencement of the proceedings, except to say that he had always understood that the reservoir had a first inlet and a first outlet, and not a second inlet.

Conclusion 54 The error with respect to the reservoir traces back to the earliest point in the patent drafting process. The Nielsen Affidavit reveals the complete chain of events from the point of commencement of patent drafting through to Expo-Net becoming aware of the drafting error as identified by the respondents. 55 There is no evidence of any disentitling conduct on the part of Expo-Net. There is no evidence that Expo-Net sought to make use of the unamended patents in any way to its advantage prior to this application being brought. There is no real explanation as to how the errors occurred or how they were overlooked by so many for so long. However, as soon as Expo-Net was informed of the major errors, in particular the principal error, it moved immediately to amend to correct it and at the same time sought the other amendments to correct more minor mistakes. 56 The respondents have been content to proceed on the basis of the amended patents. There is no evidence that the respondents or any other person has suffered any prejudice by reason of the patents in their existing form. There has been full disclosure by Expo-Net. No unfair advantage has been sought. There has been no unreasonable delay in seeking amendment and there are no other circumstances which would lead the Court to refuse to make the proposed amendments. In all the circumstances, I am satisfied that it is appropriate to allow the proposed amendments to both of the patents as identified in Annexures A and B to the motion.

I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Patents Act 1990(Cth)ss 102

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