Ground 3(a)
68 Garford submitted that the primary judge gave insufficient weight to what it referred to as copying by the DSI parties which it said was an important secondary indicium of non-obviousness. The relevant ground of appeal asserts that the primary judge failed to apply Doric No 2 (in particular [115]-[116] of the High Court's judgment) in so far as it held that secondary considerations of non-obviousness must be taken into account.
69 Copying may provide some evidence of inventiveness. What weight, if any, proof of copying should be given for the purpose of assessing obviousness depends upon the circumstances in which it occurred and other evidence relevant to the issue of obviousness. In Doric No 2 the High Court stated that there was no error shown in the trial judge's reliance in that case on evidence of copying the "bare idea" of the inclusion of a certain lock release means and that the trial judge was entitled to give it such weight as was appropriate in all the circumstances. The High Court said at [116]:
An Australian court should be slow to ignore secondary evidence or to rely on its own assumed technical expertise to reach conclusions contrary to such evidence. Australian courts have long recognised that the importance of such evidence and its weight will vary from case to case; it will not necessarily be determinative.
(citations omitted)
70 It is clear that the copying that occurred in that case was only one of a number of factors which, taken together, provided evidence of inventiveness. The High Court summarised this evidence at [119]:
In summary, despite some obscurities as analysed by the primary judge, the evidence showed a felt want, the failure of others (including the inventive Mr Garland) to come up with the same solution as Lockwood, and the copying of Lockwood's "bare idea" by Doric. When skilled, non-inventive persons, and in this case also a skilled inventive person (Mr Garland), looking for improvements, fail to arrive at the invention, it is impossible to suggest that it would have been obvious to the skilled and not necessarily inventive person. The evidence supports the primary judge's findings.
(citation omitted)
71 It is necessary to say more about the "copying" relied upon by Garford. The issue was considered by the primary judge at [311]-[314] of his reasons. The following brief statement of the facts, as found by the primary judge, is drawn from those paragraphs.
72 Camada Technology International Pty Ltd (Camada), an Australian company, entered into a joint venture agreement with Thiessen Equipment Ltd (Thiessen), for the manufacture and supply of Garford's cable bolts to certain distributors in Canada and the United States of America. Garford previously appointed Camada as its licencee, and for this purpose, built and supplied Thiessen with a machine for making continuous bulbed cable which was used by Thiessen in Canada.
73 In March 2004, Mr Hedrick was informed by one of Camada's directors that Camada had terminated its joint venture arrangement with Thiessen and was proposing to enter into a sub-licence with a DSI Canadian company, most likely DSI Canada, which subsequently purchased either Thiessen's assets or its shares and gained possession of the machine that Garford had supplied to Thiessen.
74 After gaining possession of the machine, DSI Canada used it to manufacture and supply continuous bulbed cable, and paid royalities to Camada which in turn paid royalties to Garford. After DSI Canada's licence with Camada expired, DSI Canada commenced negotiations for a further licence. These negotiations did not result in a licence. DSI Canada then made an offer to buy Garford's assets. That offer was rejected. In the meantime, DSI Canada continued to make continuous bulbed cable. Garford subsequently sued DSI Canada for infringement of Garford's Canadian patent rights.
75 Referring to the evidence that led to these findings the primary judge said at [314]:
Garford sought to use this evidence in various ways, including in relation to its case on infringement. This evidence is plainly not relevant to that question. But evidence of this nature can be relevant to the issue of obviousness. Its probative value, however, depends on the facts of the particular case. For example, if a rival has sought to solve a problem for some time and, upon publication of a patent, copies the alleged invention that is disclosed, the inference might be irresistible that the disclosure is truly inventive: see the discussion in Elconnex at FCR 510-11; ALR 266; IPR 573. Those are not the facts in the present case. The more likely complexion to be placed on the facts of the present case is that, after manufacturing continuous bulbed cable in Canada, and after having failed to reach appropriate commercial arrangements with Garford in respect of the continued use of the machine that had originally been supplied to Thiessen, DSI Canada simply decided to continue to engage in manufacture. The evidence does not establish what machine was used for that purpose. If it was the original machine supplied by Garford, the evidence does not enable me to conclude that it had the features of the invention as claimed. I am not prepared to speculate on that matter. In any event, no relationship between the features of that particular machine and the features of the DSI apparatus, the subject of the present infringement proceeding, has been established. In the end result, I would not infer from these facts that the invention, as claimed in the challenged claims, possesses an inventive step.
76 It seems to us that the primary judge has discounted the evidence of copying relied upon by Garford on two different grounds.
77 First, his Honour recognised that copying may be relevant to the issue of inventive step. He referred to what was said on this topic in Elconnex concerning the circumstances in which copying by a trade rival might give rise to an inference that what was copied was inventive. As we read his Honour's reasons, he was seeking to contrast the facts of this case with those referred to in Elconnex. He did not consider the copying relied on by Garford could be likened to what was postulated in that case.
78 Secondly, the primary judge was not satisfied on the evidence what machine was used by DSI Canada for the purpose of manufacturing the continuous bulbed cable or whether the machine that was used had the features of the invention as claimed.
79 It is convenient to first consider the second of these reasons. It seems to us that there is considerable force in Garford's submission that the primary judge should have drawn the inference that the machine used by DSI Canada to manufacture continuous bulbed cable was in fact the same machine that had been supplied by Garford to Thiessen and that the machine had the features of the invention claimed in the patent, at least as claimed in claim 1.
80 Evidence from Mr Hedricks on this issue, though expressed in somewhat conclusory language, called for some reply by the DSI parties, who instead did not call any evidence on the issue. It was, in our view, open to the primary judge given his other conclusions as to DSI Canada's acquisition of the machine from Thiessen, the dealings between Garford and the DSI parties, and the absence of any countervailing evidence from the DSI parties, to infer that the machine used by DSI Canada was the same machine that was originally supplied by Garford to Thiessen, and that it possessed the features of claim 1 of the patent. But even if this inference is drawn we do not think it advances Garford's case.
81 Although in this case the primary judge accepted that copying may be relevant to the issue of inventive step, he did not think it had any probative value. We think what Garford called "copying" was a matter to which the primary judge was entitled to give no weight when assessing inventive step. This was not a case in which a trade rival of the patentee had unsuccessfully sought to solve a problem for some time and, upon publication of a patent specification or the release of the patentee's patented product, only then produced an infringing article: cf. the observations of Lockhart J in Elconnex FC at 183. In the present case there was no evidence to indicate that the claimed invention constituted a solution to a long-standing problem that others producing cable bolts had been trying to solve. Here, the DSI parties, or at least a related entity, had been using the patented machine under licence, and when the licence under which the machine was being used expired and negotiations to obtain a new licence failed, the decision was made to continue using the machine. Presumably that decision was taken on the basis that, if sued for patent infringement, the DSI parties would seek to argue that, if the patent was infringed, then it was invalid for lack of inventive step. That scenario is quite unlike the situation described by Lockhart J in Elconnex FC or by the High Court in Doric No 2 and does not support an inference that the invention described and claimed in the patent was not obvious.
82 Garford also complained that the primary judge wrongly rejected various documents that formed part of Exhibit K (tabs 2-12, 14, 31 and 33-35). It should be noted that the documents were not rejected in limine, but only after being admitted by the primary judge provisionally. His Honour ultimately held (at [342]) that the documents were not relevant and excluded them from evidence on that basis.
83 Broadly speaking, the excluded documents fall within the following categories:
draft licence agreements and other documents evidencing licence negotiations between Garford and the DSI parties;
a draft letter of intent and other documents evidencing a proposal for the acquisition of the Garford business by the DSI parties;
correspondence exchanged between the parties or their lawyers after cessation of licence/acquisition negotiations.
84 It is apparent that the primary judge concluded that none of this material, either alone or in combination with other evidence, was probative on the issue of inventive step. Having received the material provisionally, and having considered it in light of all the other evidence, it was open to the primary judge to reject it on the basis he did. We do not see how the excluded documents, whether alone or in combination with other evidence, assisted Garford in showing that the claimed invention was not obvious. We are mindful that it was for the DSI parties to establish that the claimed invention was obvious, but if a patentee relies upon secondary considerations such as commercial success or copying as an indicium of inventive merit, then it must bear the evidentiary onus of showing that the secondary considerations relied upon support the inference that the claimed invention was not obvious.