GS Technology Pty Ltd v Elster Metering Pty Ltd

REASONS FOR JUDGMENT 1 QUD 46 of 2000 is an appeal pursuant to s 69(7) of the Patents Act 1990 (Cth) (the Old Act) from the decision of a delegate of the Commissioner of Patents (the Commissioner) delivered on 19 May 2000. Delegate Bruhn refused to grant an extension of Petty Patent No 662284 (PP2) on the grounds that the applicant was not entitled to the grant of PP2. The decision is reported: GS Technology Pty Ltd v Davies Shephard Pty Ltd & Another (2000)50 IPR 202. The decision of Delegate Bruhn largely followed the reasoning of Cooper J in proceedings which related to an earlier provisional patent, Petty Patent No 645740 (PP1). Both PP1 and PP2 are divisionals of Application No 85236/91. 2 These reasons are concerned with three Notices of Motion filed in the appeal from Delegate Bruhn's decision. 3 Section 160 of the Old Act conferred extensive powers on the Court in relation to appeals from a decision of the delegate concerning the extension of Petty Patent 2. The proceedings are in the nature of a rehearing: Karen Aluminium Corp and Coal and Kaiser Aluminium and Chemical Corporation v Reynolds Metal Co (1960) 120 CLR 136 per Kitto J at 142 - 143. On the hearing of the appeal, the Court may, amongst other things, admit further evidence and give such judgment or make such order as it thinks fit in all the circumstances. 4 On 16 January 2006, GS Technology Pty Ltd (the applicant or GST) filed and served a Notice of Motion seeking that leave be granted pursuant to O 13 r 2 of the Federal Court Rules to file an Amended Statement of Claim. 5 On 5 December 2005, GSA Industries (Aust) Pty Ltd (the second respondent) filed an Amended Notice of Motion seeking that the proceeding be dismissed pursuant to O 20 r 2 of the Federal Court Rules and that Australian Petty Patent No 662284 be revoked. The Notice of Motion also sought costs of the proceeding and of that Notice of Motion. 6 On 13 December 2005, Elster Metering Pty Ltd, formerly Davies Shephard Pty Ltd, (the first respondent) filed an Amended Notice of Motion seeking the same relief as was sought by the second respondent in its Notice of Motion. 7 Both respondents seek summary dismissal of the proceeding on the basis that the proceeding is an abuse of process of the Court: O 20 r 2(1)(c) of the Federal Court Rules. Each respondent claims that there is an issue estoppel binding the applicant which is a complete bar to the proceeding. 8 In Wong v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 146 FCR 10, the Full Court (Emmett, Conti and Selway JJ) said at [36]. The doctrines of resjudicata and issue estoppel are founded on the broad rules of public policy expressed in the maxims nemodebetbisvexariprounaeteademcausa ('a person ought not to be vexed twice for one and the same cause') and interest reipublicaeut sit finislitium ('it is in the interests of the State that there be an end to litigation'). It would be an abuse of process to allow parties to litigate repeatedly matters that have been finally determined by the Court. Also, quite apart from any psychological detriment that might flow from an individual having to undertake litigation of the same issue a second time, the State has an interest in ensuring that, once an issue has been determined according to law and all rights of appeal have been exhausted, that should be an end of the matter. The resources of the community ought not to be expended in the litigation, more than once, of the same issue. 9 An application for summary dismissal pursuant to O 20 r 2 calls for the caution expressed by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (N.S.W.) [1964] 112 CLR 125, Chief Justice Barwick said at 128-129: The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. 10 The Chief Justice quoted the observations of Dixon J (as he then was) in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 where Sir Owen Dixon said at 91: A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. 11 The present Notices of Motion have to be seen against a background of extensive litigation between the parties to this proceeding, and other entities, in relation to claimed intellectual property rights and entitlements to an invention described as "water meter assemblies". Notwithstanding the complexity of that background, the three motions really turn on whether there is an issue estoppel preventing the applicant from seeking an extension of PP2. If there is no such estoppel, as the applicant asserts, the applicant seeks to rely on an affidavit of Alan Joseph Grieves, which annexes a Deed of Agreement dated 22 October 1996, to argue that, in the light of the terms of that document, the applicant is entitled to the favourable exercise of discretion, having regard, amongst other provisions, to sections 15(1)(a), (b) and (c), s 28(1)(a), s 33, s 69, s 105 and s 138 of the Old Act. Both respondents argue that there is no power to amend the patent request pursuant to s 105 of the Old Act, and even if there were power, there are good reasons, including discretionary considerations, why that power should not be exercised. 12 The respondents contend that the applicant is not entitled to seek an extension of the term of PP2, with the consequences that any amendment to the Statement of Claim in these proceedings would be futile. The applicant's Notice of Motion seeking leave to amend should therefore be dismissed. 13 As to issue estoppel, the underlying principles were stated by Dixon J (as he then was) in Blair v Curran (1939) 62 CLR 464 at 531-532: A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second for, the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order. Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order. In the phraseology of Coleridge J in R v Inhabitants of the Township of Hartington Middle Quarter (1855) 119 ER 288 at 293, the judicial determination concludes, not merely as to the point actually decided, but as to the matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous. (Emphasis added). 14 In Stack v Brisbane City Council [2004] FCA 354 (the Third Set of Reasons) Cooper J said at [21] and [22]: For there to arise an issue estoppel binding against Stack and GST it must be shown that: (a) the issue ruled upon was indispensable or fundamental to the ultimate decision: Blair and Perpetual Trustee Co Ltd v Curran (1939) 62 CLR 464 at 531; (b) the judgment is capable of giving rise to an issue estoppel: Administration of the Territory of Papua New Guinea v Guba (1973) 130 CLR 353 at 451; (c) the issues must be the same in each proceeding: Blair v Curran at 510, 532, 541; and (d) the parties to be bound by an issue estoppel were in controversy on the issue in question: Ramsay v Pigram (1968) 118 CLR 271 at 276, 279; Taylor v Ansett Transport Industries Ltd (1987) 18 FCR 342 at 356-358; 365. A practical test as to whether an issue was indispensable or fundamental to the ultimate decision is whether an appeal lies from a finding in respect of the issue: Murphy v Abi-Saab (1995) 37 NSWLR 280 at 288. In the instant case, each of the declarations was appealed to the Full Court of this Court and special leave to appeal in respect of them was refused by the High Court of Australia. Further, the fact that the proceedings were in respect of preliminary issues does not deny that they were capable of creating issues estoppel binding the parties to the proceedings: Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 at 642. 15 A recent discussion of what matters considered in an earlier proceeding can constitute an issue estoppel in later proceedings is to be found in Spassked Pty Ltd v Commissioner of Taxation [2007] FCAFC 205. See also Day v Commissioner of Taxation v Day [2007] FCAFC 193. 16 So as to put these issues in context, it is necessary to refer to the extensive litigation history that underpins the current three Notices of Motion. 17 Cooper J in his reasons for judgment published on 15 September 1999, Stack v Brisbane City Council [1999] FCA 1279; 47 IPR 525 (the First Set of Reasons), summarised the history of the litigation to that point at pars [1]-[11]: 1 On 17 March 1994 George Stack ("Stack") and GS Technology Pty Ltd ("GST") commenced proceedings QG28 of 1994 against the Brisbane City Council ("BCC"), Davies Shephard Pty Ltd ("DS") and Davies Shephard (Queensland) Pty Ltd ("DSQ"). 2 The proceedings were brought by Stack as patentee of Australian Petty Patent No 645740 ("the petty patent") and by GST as the registered patentee by assignment of the petty patent as and from 23 October 1995. The applicants claimed against the BCC a declaration that the BCC, as an authority of State, had exploited the petty patent within the meaning of s 163 of the Patents Act 1990 (Cth) ("the Act") and sought orders fixing the terms for such exploitation pursuant to s 165 of the Act. The applicants sought against DS and DSQ, injunctive relief to restrain an alleged infringement by them of the petty patent and damages or an account of profits for such infringement. 3 DS and DSQ, by their defence and cross-claim, inter alia, alleged that each of the claims of the petty patent was invalid and sought revocation. In their particulars of objection filed with the defence and cross-claim, DS and DSQ alleged that Stack was not entitled to be granted the petty patent (paragraph 1), that the claimed invention was not novel (paragraph 2), that the claimed invention was obvious and did not involve an inventive step (paragraph 3), that the complete specification of the petty patent did not comply with s 40(2) or s 40(3) of the Act (paragraph 4), and finally, that the claimed invention was not a "manner of manufacture" within the meaning of s 6 of the Statute of Monopolies (paragraph 5). 4 On 19 December 1994 Stack applied for an extension of the petty patent for a further period of twelve months. The application was made pursuant to s 69 of the Act. On 20 December 1994, DS and GSA Industries (Australia) Pty Ltd ("GSA") each filed a notice pursuant to s 28 of the Act notifying grounds upon which they contended the petty patent was invalid. 5 On 5 January 1996, a Deputy Commissioner of Patents delivered a preliminary decision on the objections taken in the s 28 notices filed by DS and GSA. On the basis of a priority date of 30 August 1990 he held that Claims 1 and 2, and on the basis of a priority date of 30 August 1991 for claim 3, were novel, involved an inventive step and that the invention was a "manner of manufacture" within the meaning of the Statute of Monopolies. Notwithstanding registration on 23 October 1995 of GST as patentee by deed of assignment dated 16 March 1994, the Deputy Commissioner was not satisfied that Stack was originally entitled to the petty patent. Over objection, the Deputy Commissioner allowed Stack three weeks to make an application to adduce further evidence of entitlement. 6 On 25 January 1996, DS filed a notice of appeal pursuant to s 69(7) of the Act from the decision of the Deputy Commissioner. Those proceedings (VG39 of 1996) were filed in the Victorian District Registry of the Court. On 29 January 1996 GSA also filed an appeal (VG40 of 1996) in the Victorian District Registry against the decision of the Deputy Commissioner. Each appeal sought revocation of the petty patent on the grounds contained in the s 28 notices. Those grounds replicated the invalidity grounds pleaded in the defence and cross-claim in QG28 of 1994. 7 On 29 January 1996, Stack also appealed against the decision of the Deputy Commissioner by proceedings QG11 of 1996. The Deputy Commissioner, on 27 February 1996, found that the further evidence tendered by Stack and GST did not establish a prima facie case that Stack was entitled to the grant of the petty patent. On that date the Deputy Commissioner refused to admit the further evidence and concluded that the petty patent was granted to a person who was not entitled to be granted the petty patent. As this circumstance was not capable of rectification by amendment, the Deputy Commissioner refused to extend the term of the petty patent and awarded costs against Stack and GST. (Emphasis added). 8 On 1 March 1996, GST appealed the decision of the Deputy Commissioner given on 27 February 1996. The appeal proceedings (QG29 of 1996) sought orders that the term of the petty patent be extended and that DS and GSA pay the costs of the appeal. 9 On 24 April 1996, Kiefel J ordered that QG11 of 1996 be heard with QG29 of 1996. In the Victorian District Registry, Heerey J, on 29 April 1996, ordered that VG39 of 1996 and VG40 of 1996 be transferred to the Queensland District Registry and be heard with QG11 of 1996 and QG29 of 1996. 10 Stack and GST commenced proceeding QG21 of 1996 on 14 February 1996 against the State of Queensland ("Queensland") and the Commissioner of Patents in respect of another Australian Petty Patent No 662284 ("the second petty patent"). The second petty patent, like the petty patent, concerned water meter assemblies. The proceedings sought, as against Queensland, the fixing of terms pursuant to s 165 of the Act for exploitation of the second petty patent. The proceedings sought orders against the Commissioner that the assignment of the second petty patent to GST be registered. After a hearing before Kiefel J the assignment was registered and the proceedings against the Commissioner were dismissed by consent. 11 On 6 December 1996, Kiefel J ordered that proceedings QG28 of 1994, QG11 of 1996, QG21 of 1996, QG29 of 1996, VG39 of 1996 and VG40 of 1996 be heard concurrently. Her Honour made other orders to progress the various proceedings, including orders that : (a) the validity issues be tried and determined before the issue of infringement; (b) Queensland, the Commissioner of Patents and the BCC be excused from participation in the hearing of the validity issues; (c) the witness statements, affidavits and other evidence filed and served, or to be filed and served in any one of the concurrent proceedings, be taken as filed and served in any other of the concurrent proceedings; (d) the evidence filed by DS may be relied upon by DSQ and GSA. 18 In that matter,Cooper J found that there was an issue estoppel binding against Stack and the present applicant with respect to the entitlement of Stack or the present applicant under s 15 of the Old Act to obtain the grant of a patent in respect of the "water meter assembly invention". That finding, however, was made in favour only of the Brisbane City Council and the State of Queensland in respect of claims made against those parties in respect of Petty Patent No 662284. In that case, the first and second respondents in the present proceeding were not entitled to declaratory relief in respect of that petty patent, because, in those proceedings, there had been no claim made against the present first and second respondent that they had infringed PP2, nor had they sought revocation of PP2 in that proceeding. 19 The decision of Cooper J made on 15 September 1999 concerned, amongst other things, the issue of whether George Stack and/or GST were entitled to the grant of PP1, namely, Australian Petty Patent No 645740. 20 The current proceeding concerns the issue of whether George Stack and/or GST are entitled to the grant of the second petty patent, being Australian Petty Patent No 662284, PP2. 21 The Patents Amendment (Innovation Patents) Act 2000 (Cth) introduced significant amendments to the patent regime. These proceedings are concerned with the provisions of the Old Act. 22 Section 28 of the Old Act provided: 28 Notice of matters affecting validity of petty patents (1) A person may, within the prescribed period after the grant of a petty patent, notify the Commissioner, in accordance with the regulations, that the person asserts, for reasons stated in the notice, that the petty patent is invalid on one or more of the following grounds: (a) that the patentee was not entitled to be granted the petty patent; (b) that the invention is not a patentable invention because it does not (c) comply with paragraph 18(1)(a) or (b); (c) that the specification does not comply with subsection 40(2) or (3). (2) The Commissioner must inform the patentee in writing of any matter of which the Commissioner is notified and send the patentee a copy of any document accompanying the notice. (3) If the Commissioner becomes aware, otherwise than by a notification under subsection (1), of any matter that may affect the validity of a petty patent on one or more of the grounds mentioned in that subsection, the Commission must inform the patentee in writing of the matter. (4) A notice given to the Commissioner and any document accompanying it are open to public inspection. 23 On 15 September 1999, in giving a reserved judgment, after a trial that had lasted 37 days, Cooper J made the following declarations, amongst others: THE COURT DECLARES THAT: