CONSIDERATION
81 Underlying the primary judge's decision to deny Servier leave to amend was her Honour's conclusion regarding the company's motivation in seeking amendment. The primary judge concluded that part of Servier's reason for seeking amendment was a specific, identifiable risk that the unamended patent might be found invalid based on particular issues arising in the UK proceeding. This conclusion was plainly open to her Honour, particularly in light of the email communication of 4 April 2007 between Servier and AAR, tendered by Apotex below, in which AAR stated that the amendments were "desirable in order to deal with validity issues raised in the UK".
82 The primary judge further found that Servier failed voluntarily to disclose this aspect of its reasons for seeking amendment to the Court "until, in effect, compelled to do so". This is a reference to the fact that documents indicating that Servier was motivated by issues arising in the UK proceeding were disclosed to the Court only after the primary judge ordered that Servier give discovery to Apotex of solicitor-client communications relevant to its reasons for seeking amendment.
83 The primary judge considered that Servier's voluntary disclosures of its reasons for amendment, made primarily via two affidavits sworn by the company's solicitor, Mr Hamer, were not a full and frank disclosure of Servier's reasons for amendment (as found by her Honour) in relation to the validity issues raised in the UK proceeding. On the appeal, counsel for Servier sought to have us characterize Mr Hamer's affidavits differently. It was, however, plainly open to her Honour to assess Mr Hamer's affidavits as she did. This was not simply a case of affidavits that in hindsight could have been drafted more clearly. Rather, it was plainly open to her Honour to characterize them as a less than forthright statement of Servier's reasons to amend. While this obfuscation may have been attributable in part to a desire to avoid waiver of client legal privilege, that possibility does not affect the fact that it was open to the primary judge to conclude that Servier failed properly to disclose its reasons as regards the validity issues. The relevance of the validity issues could probably have been revealed to the Court without the waiving of client legal privilege. If, however, it was not possible for Servier to disclose the relevant facts without waiving privilege, this did not transform Servier's obligation into something less than full and frank disclosure.
84 Further, Servier's case is not assisted by references to individual statements which, taken in isolation, could be construed as including the issues raised in the UK proceeding as part of Servier's reasons for seeking amendment. The primary judge's assessment of Servier's disclosures was clearly based on the whole of Servier's conduct before her over a period of several months. Throughout most of the proceeding, including in its final written submissions, Servier was careful to avoid suggesting that its desire for amendment was influenced by any particular reasons for believing that the unamended patent might ultimately be found invalid. The most striking example of this is the statement in a letter dated 5 September 2008 from AAR to Apotex's solicitors that "the reference to invalidity risks in paragraph 4 of Mr Hamer's second affidavit is general and does not relate in particular to the Alpha Crystalline Patent". Servier maintained that the amendment was inspired by Mr Hamer's realization that the specification contained additional "claimable material", which Servier decided to claim based only on the general principle that a narrower claim is less likely to be found invalid. The primary judge did not find this position credible; and it was evidently open to her Honour to so find.
85 In essence, the primary judge concluded that the particular validity concerns raised in the UK proceeding played a far larger role in Servier's decision to seek amendment than Servier voluntarily revealed. Considering that the UK proceeding raised specific reasons to doubt the validity of the unamended patent, and that Servier must have been aware of these reasons, there is no justification to disturb her Honour's conclusion in this regard on appeal. Once the primary judge had reached an assessment of Servier's compliance with its disclosure obligations, which assessment was a relevant factor under s 105, her Honour did not err in placing significant weight on it. As the primary judge noted, the "failure to disclose was not of some minor, though strictly relevant, matter": 83 IPR at 64 [126]. It is also worth stressing again that the primary judge's evaluation of Servier's forthrightness was based on her Honour's first-hand impressions of Servier's conduct over time as the matter unfolded before her. As an appellate court considering an exercise of discretion by the primary judge, this Court should keep this fact well in mind. We consider that the preceding discussion suffices to dispose of Servier's appeal grounds in relation to paragraphs [113], [115], [117], [118], [124] and [126].
86 The primary judge's discussion of the delay by Servier must be understood in the context of her conclusions regarding the contrast between Servier's actual reasons for seeking amendment and the position Servier maintained before the Court. The primary judge clearly considered that the invalidity issues raised in the UK proceeding were of significant concern to Servier, and that Servier had good reason to doubt the validity of the unamended patent in this case on account of them. Her Honour also considered that those issues were apparent to Servier before it applied to the Court to amend (and before it applied to the Commissioner under s 104). Unless Servier could point to a new factor that changed the calculus on amendment, the delay between its awareness of the validity issues and its action in seeking amendment was unexplained. Servier's position was that Mr Hamer's identification of "claimable material" was the decisive factor, but the primary judge did not find this position credible as regards Servier's motivation. The primary judge's analysis of delay went hand-in-hand with her view of Servier's disclosures. The question as regards delay was why Servier sought amendment when it did and not earlier, and, in the circumstances, the primary judge considered that Servier had not given the Court the full story.
87 The relationship between the various grounds for the primary judge's decision can be seen in paragraphs [126]-[128] of her Honour's reasons:
In my view, it is appropriate to exercise the discretion afforded by s 105 to refuse the proposed amendments. I do not accept that there was an "iterative process" in Servier's reasons for amendment. It may well be that Mr Hamer had his own reasons for proposing amendment but I do not accept that those reasons were those of Servier[ ] at the relevant time. The UK proceedings exposed the arguments relied upon to establish invalidity of the AC Patent. Servier was entitled to seek to amend the Australian patent to strengthen it but was then obliged to inform the court of that reason. To the contrary, Servier put forward other reasons or permitted other reasons to be advanced. It was only when Servier produced documents pursuant to the court's order of 14 October 2008 that the correspondence between Servier and its solicitors demonstrated that the reasons for the application to amend were not limited or based upon those set out in Mr Hamer's first affidavit. Further, as noted above, the reference in Mr Hamer's second affidavit to the reduction of invalidity risk was said by Servier to be a "general" statement, rather than being of particular relevance to the AC Patent. Servier failed voluntarily to disclose all relevant matters until they were exposed by Apotex. That failure to disclose was not of some minor, though strictly relevant, matter. It was a failure to disclose Servier's reason for the amendments.
.… Servier should have given its reason for the amendments voluntarily and at the time it sought the amendments. It knew the grounds of Apotex's opposition to the amendments and it knew of Apotex's challenge to the validity of the corresponding patent in the UK and its defence to infringement. That clearly raised the scope of the claims and the reasons to amend them: Vector Corp v Glatt Air Techniques Ltd [2007] RPC 255.
Servier had ample opportunity to amend the AC Patent application if it was of the view that it contained additional claimable matter. It litigated the unamended patent in the UK and pursued the grant of the unamended patent in Australia, abandoning the s 104 amendments. Servier has not sufficiently explained why it took this course. At the time of abandoning the s 104 amendments, Servier was aware of the first instance decision in the UK. Servier's conduct in relation to the amendments disentitles it from presently amending the AC Patent in circumstances where litigation over the validity of that patent with Apotex was in clear prospect and the contest over the patent had already commenced. The lack of forthrightness in providing Servier's reasons to amend reinforces that conclusion.
88 It is convenient here to digress briefly to address Servier's allegation of error based on the primary judge's treatment of the circumstances surrounding the sealing of the patent. Servier objected to the characterization of its actions, in the paragraph quoted above, as "abandonment" of the s 104 amendment application. This argument can be disposed of briefly. While Servier may perceive a pejorative intent in the primary judge's use of the term "abandoned", her Honour's description of Servier's actions vis-À-vis the s 104 application is accurate. That is, after Apotex challenged the grant of leave to amend the patent by filing an application in the Administrative Appeals Tribunal (for review of the decision dismissing its opposition), Servier chose not to contest Apotex's application and pursue amendment under s 104; instead, it requested that the patent be sealed unamended. The fact that the present proceeding was initiated shortly thereafter, with the result that leave could not have been granted under s 104 if the application were still pending, does not affect this conclusion. Further, the "abandonment" of the application was only one relatively minor fact mentioned in the course of the primary judge's discussion of all the relevant factors. In context, the primary judge's reference to a lack of explanation refers not just to the "abandonment" but also to Servier's entire course of conduct and the delay in seeking amendment. The primary judge's reasons for considering that delay weighed against granting leave to amend have already been noted.
89 In oral and written submissions, Servier made two points about the role of delay in the primary judge's exercise of discretion. First, it argued that there was no delay because the possibility of amendment did not occur to Servier until Mr Hamer noticed the presence of additional "claimable material" in the specification. Her Honour rejected this position. As noted above, it was open to her Honour to do so; and this conclusion is not vulnerable to challenge on appeal.
90 Secondly, Servier argued that its delay was not relevant because it still maintained that the unamended claims were valid. Servier asserted that, in these circumstances, its delay was not an "abuse of the patent system" and therefore not "blameworthy" delay, which it argued was the only variety of delay relevant for s 105 purposes. Servier argued that its conduct could be distinguished from the conduct of a patentee who knows an unamended patent is invalid and nonetheless fails to seek amendment.
91 In support of this position, Servier took the Court to various cases containing statements to the effect that amendment should be denied where a patentee "knows" that existing claims are too wide but fails to promptly seek amendment. Servier referred to the authorities cited in Smith Kline & French 1 FSR at 566-569, and also to Vector Corp v Glatt Air Techniques Ltd [2007] R.P.C. 255 ('Vector Corp'). In particular, Servier relied on the distinction referred to by Aldous J in Smith Kline & French between delay which constitutes an "abuse of the patent system" and delay which does not: 1 FSR at 568, citing Matbro Ltd v Michigan (Great Britain) Ltd [1973] R.P.C. 823 ('Matbro') at 834 and cases discussed therein; and on a passage from Vector Corp at 279-80, in which the Court, citing Kimberly-Clark Worldwide Inc v Procter & Gamble Ltd [2000] R.P.C. 422 at 436, stated that amendment should not be refused on "moral or quasi-moral grounds", and that "[w]here . . . there has been no abuse of a monopoly, there would seem to be no reason to refuse an amendment in order to protect a patentable invention that would otherwise be unprotected".
92 Servier's argument does not justify overturning the primary judge's exercise of discretion. The fact that delay has weighed against granting leave to amend in cases where patentees knew that unamended claims were invalid does not mean that is the only circumstance in which delay is relevant. Rather, the significance of any delay must be considered in the circumstances of each case. Here, although the primary judge did not find that Servier knew for certain that the unamended claims were invalid (nor did she reach a conclusion as to the validity of those claims: see below), her Honour considered that Servier knew of significant invalidity risks in light of the UK proceeding, yet delayed in seeking amendment. The argument that the primary judge could not take this delay into account under s 105 must be rejected, for several reasons. First, the practical outcome of accepting Servier's position would be that a patentee who did not intend to concede the invalidity of existing claims would have no motivation to expeditiously seek amendment, even in circumstances where the patentee was aware of potentially substantial problems with the existing claims.
93 Secondly, Servier's position is contrary to the guidelines propounded in the very cases upon which it relies. In Smith Kline & French, Aldous J, with reference to Bristol Myers Company v Manon Freres Ltd [1973] R.P.C. 836 ('Bristol Myers') at 857, said ([1989] 1 F.S.R. at 567):
. . . [T]he judge indicated that amendment will be refused if a patentee delays in amending, because the patentee is thereby representing to the public that he has a valid claim when he knows his claim cannot be supported. He allowed the amendment because there was no good reason why the patentees ought to have thought they should amend. I believe that the judge was indicating that it is in the public interest that patentees should not delay in seeking to amend and that amendment will not be permitted in cases where a patentee knows or ought to know that amendment should be sought and fails to do so for any substantial period of time.
94 Although the discussion of Bristol Myers was cast in terms of a patentee "knowing" that a claim is invalid, the proposition Aldous J derived from the case was broader. His Honour indicated that the relevant inquiry was whether the patentee knows "amendment should be sought".
95 Aldous J made similar observations with reference Matbro, saying (1 FSR at 568):
. . . [T]he judge drew attention to the fact that there is a detriment to the general public by the maintenance in an unamended form of a patent which should be amended for a substantial period of time. He also drew a distinction between two categories of delay with knowledge. In the first category is a patentee who knows of the prior art and never thought or should have thought amendment was the right course. . . . In the second category is a patentee who becomes aware of an objection to a patent and takes no steps to amend. In both categories the patentee had knowledge of the prior art which prompted the request for amendment and failed to apply to amend for a substantial period of time. The difference between the two categories is the unreasonable conduct of the patentee, referred to as culpable by the judge, in not applying to amend when he knew or should have known that he should amend. In both categories, the failure to amend earlier is contrary to the public interest, but in the [first] category the patentee's conduct could be excused as he has acted reasonably and therefore not acted in a way which was an abuse of the patent system. Thus, in a case where a patentee who is aware of the facts and either decides not to amend or takes no action, but later changes his mind, the court will refuse to exercise its discretion in his favour unless there is a good and proper reason for his failure to seek amendment promptly. (Emphasis added; note "[first]" has been substituted for "second", the latter apparently being in error.)
This passage too does not speak solely in terms of patentees who know that a patent is invalid and therefore must be amended. Rather, delay is distinguished as "culpable" where the patentee is aware of an "objection" in light of which amendment is "right course" and the patentee "should" amend. This plainly encompasses a situation where a patentee is aware that there is a significant risk of invalidity if he maintains the patent in its unamended form. That was essentially the situation in the present case on the facts as found by the primary judge.
96 Finally, in arguing that only particular, circumscribed categories of conduct derived from past cases can constitute relevant delay under s 105, Servier's argument confused judicial expression of guidelines with inflexible rules. While references to "abuse of the patent system" and "culpable delay" may assist in some cases, these are general expressions not susceptible to any one legally correct definition. Whether a particular patentee's delay is an "abuse" or "culpable" are questions open "to differences of opinion which, within a given range, are legitimate and reasonable answers": see Norbis 161 CLR at 518.
97 Like the primary judge's view of Servier's forthrightness, her Honour's view of the company's delay followed from the conclusion that Servier was aware of invalidity risks prior to Mr Hamer's realization regarding "claimable material". In essence, Servier's argument regarding delay amounted to a challenge to the primary judge's view that Servier should have sought amendment earlier than it did (absent a credible explanation for the delay, which, on her Honour's view, was not forthcoming). This view was reasonably open to the primary judge, and the unexplained delay was a relevant factor for her Honour to consider under s 105. We consider that the preceding discussion suffices to dispose of Servier's allegations of error in relation to paragraphs [114] and [128] of her Honour's reasons.
98 This leaves only Servier's argument regarding paragraph [122] of the primary judge's reasons, which is set forth below:
Servier commenced proceedings for infringement on the existing claims. It has moved with reasonable expedition to apply to amend the claims since the commencement of these proceedings. However, Servier says that the presence of the compound in the form of individual needles is part of the invention. Indeed, Servier's analysis of the AC Patent makes it apparent that it is a necessary part of the invention. Yet Servier does not seek to amend the AC Patent by deleting those claims that do not possess this limiting integer. It wishes to maintain both the broad, unlimited claims and the new proposed limited claims. That of itself is not unusual - it is the way in which independent and dependent claims are often drafted. Further, it is not impermissible for a patentee to amend to attempt to "catch" an infringer or to remove a lawful ground of objection. The latter is specifically provided for in s 104(1) of the Act, so long as the amendment is allowable under s 102. However, maintenance of the existing claims that are wider than the invention together with the proposed narrowing claims that define the described invention may give to Servier an unfair advantage. One of the considerations that has been discussed is whether the patentee has knowingly taken advantage of wide claims. The issue is not whether Servier commenced proceedings on the unamended claims. That itself would not disentitle Servier from obtaining a grant of the proposed new claims. However, Servier advances the proposed new claims as reflecting the invention. That is, the invention is the form of the compound in individual needles, yet Servier maintains the existing, wider claims which are not limited by that form. In other words, Servier intends knowingly to take advantage of the wider claims which do not reflect the invention described in the AC Patent, while at the same time seeking amendment better to defend the validity of the AC Patent and prove infringement by Apotex.
According to Servier, this paragraph indicated that the primary judge had "prejudged" the issue of whether the existing claims were fairly based on the specification (see s 40 of the Patents Act) in a way that "infected her Honour's reasons".
99 We should start by noting that, as the primary judge stated, "[w]hether the patentee has sought to obtain an unfair advantage from the unamended patent" and "whether the patentee has knowingly taken advantage of wide claims" are factors relevant to the exercise of discretion under s 105. Servier does not dispute the relevance of these factors. The question whether the patentee has sought to gain advantage from unduly broad claims is one which necessarily involves some consideration of the validity of the claims of an unamended patent, for the simple reason that a claim cannot be considered unduly broad if it is valid. This is one reason why applications for amendment under s 105 are sometimes decided at the time of trial: compare Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (1997) 74 FCR 306 at 309-10. Here, however, although the question whether Servier sought to obtain an unfair advantage by maintaining unduly broad claims was put in issue in Apotex's statement of grounds in opposition to the amendment application, neither party questioned the appropriateness of the primary judge dealing with the application on an interlocutory basis until the time of this appeal.
100 In any event, although it must be granted that paragraph [122] is not entirely clear, it does not appear to us that the primary judge expressed any concluded view regarding the application of s 40 to the claims of the unamended patent. Rather, her Honour appears to have addressed, on an interlocutory basis, the potential consequences of an argument regarding the construction advanced by Servier. The primary judge's analysis begins with a consideration of what "Servier says" and the results of "Servier's analysis". To the extent that Servier complains that the primary judge mischaracterized its submissions in paragraph [122], we note that it is clear at least that her Honour was concerned not just with describing Servier's position precisely as the company put it but with considering the consequences that followed from that position. On her Honour's view, Servier advanced an argument on s 102 that was potentially inconsistent with the company's expressed view that the unamended claims were unproblematic. The primary judge's view in this regard was not expressed in definitive terms: ". . . [M]aintenance of the existing claims that are wider than the invention together with the proposed narrowing claims that define the described invention may give to Servier an unfair advantage".
101 The issues discussed in paragraph [122] were different from the issues arising out of the UK proceeding, which centred on anticipation by prior art. However, the potential disingenuousness which on the primary judge's view arose from the matters discussed in paragraph [122] can be seen to fit in with the overall pattern of conduct underlying the primary judge's analysis of forthrightness and delay. It is in this sense that we understand the discussion of "unfair advantage", which the primary judge may have felt compelled to comment on due to its frequent inclusion in lists of relevant factors under s 105. That is, the discussion in paragraph [122] reinforced her Honour's view that Servier had been less than candid in its representations to the Court regarding its reasons for amendment and its assessment of the likely validity of the unamended claims. This interpretation was open to her Honour.
102 Even if we are wrong in our understanding of the import of paragraph [122], it must be kept in mind that, whatever the primary judge intended, the considerations discussed in that paragraphs were clearly peripheral to the overriding reasons for her Honour's decision, namely, considerations related to Servier's delay and failure to disclose its reasons for seeking amendment. Her Honour did not err in finding that those considerations warranted denial of leave to amend.