Meth v Norbert Steinhardt & Son Ltd

High Court of Australia|1962-07-01|Before: Owen JJ, Fullagar J

High Court of Australia Dixon C.J. Kitto, Menzies, Windeyer and Owen JJ. Meth v Norbert Steinhardt & Son Ltd [1962] HCA 31

ORDER Appeal allowed with costs. Except in so far as the judgment appealed from dismissed the action as against the appellant Max Meth, set such judgment aside. Order that the plaintiff pay the defendant Max Meth his costs of the action so far as incurred in relation to the cause of action alleged against him. Order that otherwise the action be reheard by a Justice and that the costs of the former hearing (except the aforesaid costs of the defendant Max Meth) be dealt with by such Justice as in his discretion he may think fit.

This is an appeal from a judgment or order pronounced by the late Mr. Justice Fullagar on 6th June 1961 in an action under s. 121 of the Patents Act 1952-1960 Cth in respect of an alleged threat by the defendants appellant of proceedings for infringement of a patent or patents: Norbert Steinhardt and Son Ltd. v. Meth [1] . The order from which the appeal is brought consists of a declaration of right and an injunction against the defendant company and an order for costs against both defendants. As to the defendant Max Meth the cause of action alleged against him failed before Fullagar J. and so far as the appeal relates to him it must be regarded as against the order for costs only. It would seem that the formal judgment or order was not drawn up before his Honour's death which occurred on 9th July 1961 and it is not now denied that in its present form it cannot be sustained: it certainly appears to go beyond his Honour's intention. In substance however the case is a peculiar one and having considered it closely I have come to the conclusion, not only that the remedy contained in the judgment as drawn up ought not to be given, but that the plaintiff, in the circumstances of the case, ought not to have any remedy at all. There were two alleged threats, one by or on behalf of the defendant Max Meth contained in a letter sent from the United States to the plaintiff company in England and the other by the defendant company contained in a letter sent from Sydney to a firm of manufacturers in Adelaide. Fullagar J. held that the first was not actionable under s. 121 of the Patents Act 1952-1960 because, in his Honour's opinion, "an action cannot be maintained in an Australian Court for threats made in another country" [1] . His Honour therefore held that the first of the two letters on which the plaintiff relied afforded no cause of action justiciable in this Court. From that decision the plaintiff did not appeal or cross-appeal and we are not now concerned with it. But his Honour considered that the contents of the second letter amounted to a threat within s. 121 and because the threat was addressed to a potential customer of the plaintiff company the latter was a person aggrieved and "entitled to succeed against the defendant company in this action unless the defendant company can establish that the acts in respect of which the proceedings were threatened constitute or if done would constitute an infringement of a valid patent" [1] . The defendants were entitled to a Commonwealth Patent upon which they relied as a justification. His Honour held that the threat expressed in the letter was wider than the claims in the specification because it was expressed in terms which failed to mention certain limitations, appearing in the claims, upon the method or material employed under the patented invention of the defendants. Towards the close of his judgment his Honour remarked: "The truth most probably is that it was merely per incuriam that the "threat" was expressed too widely" [2] . However that might be the result which ensued from his Honour's adoption of the view that too wide or perhaps it is better to say too unqualified or too absolute a statement had been made of the kind of manufacturing process which the defendants asserted a right to stop, seems to be quite paradoxical. For the whole case was thereby made to depend on nothing but a comparison between on the one side the terms in which the defendant company had expressed its claim in asserting its monopoly with on the other side the actual monopoly granted by the patent itself. The entire contest arose actually from an attempt (ultimately successful) on the part of the plaintiff to sell to the trader to whom the threats were addressed a process (secret or quasi-secret) involving some chemical preparations which, or the use of which, the defendants said amounted to an infringement of the defendants' patent. The defendants' threats were levelled against this transaction. Yet the attempt on the part of the defendants to prove that the use of the plaintiff's process would infringe the patent was excluded as irrelevant, and relief by declaration of right and injunction was granted. In what terms his Honour would have drawn the declaration or injunction had it fallen to him to do so I am not sure. But it seems to me that no declaration of right or injunction which covered, in the sense of contained or included, future threats falling within the true ambit of the defendants' actual monopoly could properly have been made and no injunction could be granted which would or might operate to prevent threats if they were confined to that area. That means that the relief given to the plaintiff could properly cover only the margin or difference between the actual monopoly and the wider or unqualified description used in what was held to be the "threat". An injunction covering the whole ground would preclude the defendants from asserting their actual rights granted by a patent ex hypothesi valid. There is nothing to show or even suggest that the plaintiff's process lay within that margin. If not, is it clear that the plaintiff was aggrieved? In any case why should relief, particularly by way of injunction, be granted at all simply because in a communication to a trader a claim to an actual monopoly is stated in good faith in too wide a form? Is not the evident answer to this question that it might be granted if it appears that the excess prejudiced the real interests of the plaintiff but not if it did not appear to be material to his interests?

(1961) 105 C.L.R. 440. 2. (1961) 105 C.L.R., at p. 442. 3. (1961) 105 C.L.R., at p. 445. 4. (1961) 105 C.L.R., at p. 448.

Section 121 is not an easy provision to apply; there are so many presuppositions in the language used and so many imprecise terms. But for present purposes the words "threatens a person with an action for infringement" have a special importance and they are moreover to be read with the words "the acts in respect of which the proceedings were threatened". In the present case I think the acts in respect of which proceedings were threatened were the acquisition of rights to use and the use of the plaintiff's process. The acts were of course contingent: for the persons to whom the alleged threats were addressed had not done these acts, but I think this view of the matter makes it impossible for the plaintiff to succeed in the present state of the record before us.

So far I have dealt with the case in the abstract so to speak. I have done so, in the hope of making clear what are the points on which I think the appeal should be decided. I now turn to the facts of the case.

The manufacturing process, or processes, with which we are concerned is that of producing silvered mirrors with a copper plated surface over the silvering. The practice of the industry not long ago seems to have been to place the glass to be silvered on a horizontal rack and pour the silver nitrate or the like upon the sheet of glass or plate mixed with a reducing agent. It was washed and dried and placed in a copper electroplating bath, the silver coating becoming an electrode for the deposit of a layer of copper. Advances in small respects upon this method were made but the defendant Max Meth claims to have devised a process for accomplishing the same end which has many advantages. The plate silvered or to be silvered may be placed vertically or at some angle of inclination. The invention is explained by the following extract from the specification for the patent on which he relies, a convention patent numbered 204,989: "In carrying out the present method any known process for depositing the silver reflective coating may be used. The transparent plate may be placed horizontally and the flow method used, but in connexion with the present disclosure it is preferable that the spray method be used and the plates racked up substantially vertical or at a sharply acute angle to the vertical. A tank is provided containing a water solution of copper sulphate (CuSO4) to which has been added a small amount of phosphoric acid, which tank is substantially above the level of the work to establish flow, and is provided with a lower outlet aperture. A second tank is also used, which tank contains a very finely divided metallic dust suspended in water. It is highly necessary and a very important part of the present improved method that this suspension be kept violently agitated. Any desired means may be used to maintain a homogeneous suspension, such as compressed air or vibration of the container, but agitation by a motor driven screw or paddles has been found to be very efficient. Hoses or conduits are used to conduct the solution and suspension from the tanks to a mixing nozzle. In one method, compressed air is supplied to the nozzle and the two fluids simultaneously mixed and sprayed upon the silvered reflective surface. It may be noted that the use of compressed air has been found effective since the air tends to maintain the violent agitation of the zinc particles within the mixing nozzle which gives a more efficient reaction. Upon the mingling of the CuSO4 and phosphoric acid solution with the metal suspension, the more active metallic dust tends to combine with the sulphate (SO4) radical and free metallic copper is immediately deposited. The substantially simultaneous mixing of the solution and suspension and application to the reflective surface insures that the metallic copper will be deposited in a firmly adhering coat at the maximum rate and without loss of efficiency due to partial reaction and deposition as might occur in a mixing chamber. The homogeneous metal suspension, due to violent agitation, provides maximum reaction efficiency and an even coating of the free hard copper, and is absolutely necessary to the practical success of the method. The method is not limited to the use of any one metal dust. Zinc is preferred because it is the most easily obtained and is the cheapest of all metallic dusts commercially available. Also it acts instantaneously to precipitate the copper from the copper sulphate and causes the most nearly complete reaction of the copper sulphate thus wasting a minimum amount. However, dusts of iron, cadmium, nickel, cobalt, and chromium, are all adaptable and commercially preferable more or less in the recited order." It is important to notice that this passage of the specification speaks sometimes of metal dust, sometimes of zinc particles and then, so to speak, condescends upon dusts of iron, cadmium, nickel, cobalt and chromium. The claims appear to be confined to dusts of these metals. This is explained perhaps by another convention patent of the defendant Meth which was also relied upon before Fullagar J. (No. 208,362 complete specification published 9th August 1956). In this he says in effect that dusts of other metals had been tried but zinc dust appeared best to cause instantaneous and substantially complete reaction and since zinc dust may be purchased commercially more cheaply he had stated a preference for its use. He then says that other metals which proved acceptable were iron, cadmium, nickel, cobalt and the chromium group including chromium tungsten and molybdenum. After stating his preferences among these he adds: "All metals were not tested due to the great difficulty of obtaining many of them in powdered form, so that I do not know whether their adaptability to my process follows the Electromotive Series as found in a chemical handbook". In his several claims in this specification he again specifies particular metals he has chosen for the purpose. It will be noticed too in the specification of the first mentioned patent (No. 204,989) phosphoric acid is given as the acid to be used. Again the claims appear to be confined to phosphoric acid, although we are told that with the help of an alkali, sulphuric acid or other acids may safely be used.

Now we know very little about the plaintiff's process though it is evident that abroad there has been a conflict, perhaps still proceeding, between Max Meth's patented processes and the process of the plaintiff which has extended to Australia, this and other suits being part of its manifestation. It is not the fault of the defendants that we know so little about the plaintiff's process, for the defendants sought to go into evidence on the subject and were not permitted to do so. We are informed however by the plaintiff's pleading that the plaintiff company claims that in the course of a manufacturing business it has developed a process of producing copper-plated silvered mirrors involving the use of chemical solutions or mixtures of materials which it calls its compounds, and that the process does involve amongst other things spraying on a silvered mirror copper sulphate simultaneously with a finely divided metal, the metal dust being maintained in an agitated suspension in water. It also appears from the evidence that in applying the process according to the plaintiff's formula the concentrate copper solutions and reducing solutions supplied, and distilled water, were mixed. They were sprayed on the backs of the silvered mirrors with a spray gun having two nozzles, the copper solution being sent through one nozzle and the reducing solution through the other: they met and blended about three inches in front of the gun. The metal dust was put on with the copper concentration in the tank which was agitated by means of an electric motor and a bar. We are told too by the pleading that from time to time in the course of its business the plaintiff company has been willing to sell to other manufacturers of mirrors in Australia and elsewhere its process and its compounds. Among the firms in Australia with whom the plaintiff opened a correspondence was that of Symons & Symons of Glenside (Adelaide): that was in March 1956. They referred to their Silver Spray and Galvano Copper Spray Processes and said that they had installed both these processes with many leading mirror manufacturers in the United Kingdom and abroad. It appears that in Sydney a discussion took place between a partner in the firm of Symons & Symons and a director of the defendant company named J. B. Kerr concerning the superiority of the Meth process over other silver spray processes and that some reference was made to a firm who were licensees of the Meth process in Adelaide, presumably as to the possibility of a sub-licence to Symons & Symons. What occurred between Kerr and Symons is not proved explicitly but it would seem that Kerr learned of the communications between Symons & Symons and the plaintiff company. Later, however, he is said to have consented, as the result of the intervention of a third party, to supply spray guns to Symons & Symons. But on 3rd October 1956 he sent on behalf of the defendant company a letter to that firm which the plaintiff relies upon as containing the second "threat" sued upon under s. 121, the threat on which Fullagar J. founded his judgment in favour of the plaintiff respondent the subject of this appeal. It seems necessary to set it out in full: "When you were at my works I discussed with you the silver spray process and advised you that I would, on my visit to Adelaide, discuss with our Licensees, Thompson & Harvey Ltd., the question of your introduction to the process and I advised you the results which had been obtained by the others who had taken over the same process which you possess, and suggested that as Thompson & Harvey had the right to sub-license the silver process you would on investigation and opinion, prove to yourself (as have Pittsburg Plate Glass and others throughout the world) that this is the only satisfactory silver spray process. We are not prepared to sell guns for any opposition spray process whatsoever. I must also advise you that any copper spray process which agitates the metal solution, and uses any form of metal dust, infringes the patent of Mr. Max Meth, which is patented throughout the world and any infringement of this patent will be dealt with at law. As you advised that you anticipated purchasing a copper patent which we know is an infringement, I feel it my duty to advise you. I regret that this decision is necessary, but as you can appreciate we have had these guns primarily for our licensees in this country on the basis that tools and equipment belong to Meth Processes Pty. Limited and the manufacturer cannot sell guns whatsoever. The writer feels that the way has been opened to you to obtain a satisfactory spray process and guns and the matter is therefore one for your own decision. We regret therefore, we must return your order No. 2181 and cheque No. 568." If this letter is read in the circumstances in which it was received by the recipients and written by the sender, it seems to me to contain no threat of proceedings against Symons & Symons the recipients except a threat confined to the contingency of Symons & Symons the recipients taking the plaintiff's process or perhaps one should say a process of the plaintiff and of course using it. It seems to me to be wrong to take the loose words in which the extent of the patent rights of the defendant Max Meth are described and divorce them from the sentence that follows viz : "As you advised that you anticipated purchasing a copper patent which we know is an infringement, I feel it my duty to advise you." It is all one statement and it identifies "the acts in respect of which the proceedings were threatened", to use the language of s. 121. The acts are the use of the plaintiff's process or system. The expression "copper patent" is of course an absurd one to use of an infringing process but there is no doubt what Kerr meant by it and although Norbert Steinhardt & Son Limited are not named it was their process that is referred to and that is alone the subject of a "threat". The earlier sentence has no other bearing. But if it is given some separate meaning it must be as a general statement and it cannot therefore contain or import any threat to Symons & Symons. It must be borne in mind that we are not here concerned with a circular or advertisement to traders at large but with a letter addressed to an individual firm of manufacturers called forth upon a particular occasion. The only reason why it is a "threat" is that it relates to a proposed probable or possible transaction between Symons & Symons to whom alone the letter is written and the plaintiff company. In Halsbury's Laws of England 3rd ed., vol. 29, p. 120; 2nd ed., vol. 24, p. 705 it is said: "It is not necessary that the alleged threat should refer to what is actually happening; there may be a threat of proceedings in some future event, for example, that if a particular machine should be manufactured it would infringe a particular patent might constitute a threat". That seems to me to put the position here, but the threat must be to Symons & Symons and there is no future event affecting that firm in contemplation unless it be their acquiring or using a process of the plaintiff. There is nothing that I see in the letter to suggest that the defendant company was threatening to proceed against Symons & Symons in the uncontemplated contingency of that firm engaging in the use of some process other than the plaintiff's. There was no "threat" of such a kind. But if there were, how would the plaintiff be aggrieved thereby?

In a statement to Fullagar J. of the evidence which he wished to call, the defendants' counsel, after speaking of evidence to explain the defendants' invention, the state of the art and the inventive steps between the defendants' two or perhaps three specifications, said "I would also seek to bring evidence to show what the plaintiff's process is and what it involves" [1] . The plaintiff's counsel objected and the learned judge ruled against it. Among other things his Honour said: "It has not seemed to me to be anything to the point in this case to say or prove that the persons to whom the threat was addressed were in fact using a process which infringed a patent owned by the defendant" [1] . In concluding his judgment as to liability, his Honour said: "The defendant has, in my opinion, brought itself within the strict terms of s. 121 (1). It has threatened the plaintiff (sic, query "firm" viz. of Symons & Symons) with an action for infringement of a patent and it has not been able to satisfy me that the acts in respect of which the action was threatened would constitute an infringement of any patents possessed by it" [1] . I cannot, I regret to say, agree in this conclusion and for a number of reasons. In the letter of 3rd October 1956 I see no threat of an action of infringement except against Symons & Symons and I see no threat of such a proceeding except in respect of the adoption or use of a process of the plaintiff. That would constitute "the acts in respect of which the action was threatened" and one reason why the defendants had not been able to satisfy the learned judge that those acts would constitute an infringement of any patent rights possessed by the defendant company was the ruling out, on the objection of the plaintiff, of the evidence that the defendants sought to adduce. No point has arisen as to the availability to the defendant company of the patent rights secured by Meth.

(1961) 105 C.L.R., at p. 447. 2. (1961) 105 C.L.R., at p. 447. 3. (1961) 105 C.L.R., at p. 448.

There is one thing further to be said about the application made of the view which his Honour adopted that the letter contained threats wider than the invention claimed in the patent he considered alone material (No. 204,989). I have not understood why this view should have led to the complete rejection of the evidence as to the plaintiff's process and its infringing the defendants' patent rights. Surely, if it had appeared that the plaintiff's process was an infringement, that must have limited the remedy available to the plaintiff even if it was not considered to show that the plaintiff was not aggrieved and on that ground could not maintain an action. For it could only be in the margin between the actual protection afforded to the defendants by the claims and the excess that his Honour found to exist in the defendants' "threat" that there could be any room for a declaration or injunction against the defendants. The very differences Fullagar J. found to exist between the ambit of what he regarded as the threat provide an illustration of the difficulty. He thought the excess of the statement in the letter lay chiefly in three or four things. First, any spraying of copper seemed to his Honour to be covered in the letter though it might not involve phosphoric acid. As to that we know nothing of the plaintiff's process. Secondly, any metal solution (metallic dust agitated) was covered in the letter though six metals only were covered by the claims. As to the metallic dust or dusts used by the plaintiff we know nothing. Thirdly, the letter was not confined to agitation during spraying. Fourthly, "the threat covers spraying of copper and of a metal solution which are separate in point of time: the specification speaks only of simultaneous sprayings of copper and of a metal solution or mixture". But we do know that the fourth of these is a feature of the defendants' process and as to the third we may be sure that agitation during spraying is a necessary part of it. On any hypothesis why should the plaintiff have a remedy depending upon these differences?

My view of the case is simply that the defendant company on 3rd October 1956 made a threat to Symons & Symons to proceed against the firm for infringement if they adopted the plaintiff's process and that the defendants could show that it was justifiable if they could show that the plaintiff's process infringed one or other of their Australian patents; but the case went off on other and as I think erroneous lines.

The particular threat seemed in itself unimportant at all events in its consequences. For Symons & Symons were not deterred from adopting the plaintiff's process though probably the plaintiff indemnified that firm. It is true that on this view the plaintiff has made out a "threat", but it is owing to the rejection of evidence on objection that the defendants have not advanced any proofs that it is justifiable. The foregoing opinion may mean that the issue should be tried whether the threat to Symons & Symons to proceed against them if they adopted the plaintiff's process was unjustifiable. By appropriate declarations and orders it would be possible to send that issue down for hearing. But ought that to be done? The plaintiff took its stand at the trial that that was a false issue and by its objection caused the issue to remain untried. It may be said indeed that the plaintiff set up threats which I say were not made and so incidentally excluded from his case the only one which I think was made. One motive actuating the plaintiff may have been an unwillingness to divulge its process in full. But whatever it may have been, the result was that his case was shaped in a way which excluded the issue the defendants tendered. In these circumstances I do not think that justice requires that the action should be sent down for a new trial. I would allow the appeal and simply dismiss the suit.

It is a separate matter and does not arise on my view of the case but I think that on no view should the defendant Max Meth have been ordered to pay costs. He was a successful defendant.

On 8th May 1956 one Davis, a Maryland patent attorney acting for the appellant Max Meth, wrote a letter to the respondent, a company incorporated in England whose business includes the supplying of formulae and other information, as well as materials, for the silver and copper spraying of mirrors according to certain processes which it has developed. The letter was sent to the respondent's London office. It asserted that the appellant Meth had some (unspecified) patent rights in Australia, as "the inventor of the process of copper plating mirrors by galvanic action", and that Meth had been shown letters from the respondent to Australian (and other) mirror manufacturers offering to sell them a process for copper plating mirrors by galvanic action. It demanded that the respondent cease offering the process in Australia "if your process infringes his patents". This was followed by a statement that if the respondent's process involved spraying copper sulphate simultaneously with a finely divided metal, the metal dust being maintained in an agitated suspension in water, then it infringed Meth's patents. The letter said that Meth intended to sue every infringer of his patent rights in order to protect himself and his business, and it added that if the respondent were offering or had offered Meth's patented process for sale, Meth would demand the names of the companies to whom it had sold the process, an accounting of profits, and an injunction against further infringement in each country in which it should be found guilty.

Five months later, on 3rd October 1956, the appellant Meth Patents Pty. Limited, a company incorporated in New South Wales of which Meth is a director, wrote to a firm known as Symons & Symons, which has a mirror manufacturing business in South Australia. Symons & Symons were at that time exchanging letters with the respondent on the subject of its copper spraying process, and were considering entering into a contract with the respondent concerning the process - buying it, is the expression used in the trade. The appellant company's letter said, amongst other things, that "any copper spray process which agitates the metal solution, and uses any form of metal dust, infringes the patent of Mr. Max Meth, which is patented throughout the world and any infringement of this patent will be dealt with at law." It added: "As you advised that you anticipated purchasing a copper patent which we know is an infringement, I feel it my duty to advise you." These are the material portions of the letter.

The respondent at once instituted the action out of which this appeal arises. It is an action under s. 121 (1) of the Patents Act 1952-1955 Cth which enables a person who is aggrieved by threats of an action or proceeding for infringement of a patent, or some like proceeding, to bring an action against the person making the threats and to obtain a declaration to the effect that the threats are unjustifiable and an injunction against their continuance, and to recover such damages (if any) as he has sustained. His title to relief arises upon proof of the threats, unless the person making the threats satisfies the court that the acts in respect of which the proceedings were threatened constitute, or if done would constitute - (a) an infringement of a patent in respect of a claim in the specification which is not shown by the plaintiff to be invalid, or (b) an infringement of rights arising from the publication of the complete specification in respect of a claim which is not shown to be one which would be invalid if a patent were granted in respect of the complete specification.

The appellants filed a joint defence of which it is unnecessary to say more than that it denied that either of the letters constituted a threat within the meaning of s. 121, declined to admit that the respondent was aggrieved by the letters, and set up that before the commencement of the action a certain complete specification for a patent, lodged by the appellant Meth, was published, and that thereafter letters patent No. 204,989 were sealed (scil. in respect of that specification), and that the acts in respect of which proceedings were threatened by the letters (if the letters contained threats) constituted, or if done would constitute, an infringement of the letters patent or of rights arising from the publication of the specification. The respondent by its reply denied the validity of any claim in the specification which would be infringed by the acts in respect of which proceedings were threatened in the letters, but the attack upon the validity has not been pressed.

At the trial of the action the respondent proved that the threatening letters were received, the one by it and the other by Symons & Symons; it proved that the process which the respondent was trying to sell to Symons & Symons fell within the description of a copper spray process which agitates the metal solution and uses a form of metal dust, and was the process referred to in the letter of 3rd October 1956 as that which Symons & Symons had advised that they anticipated purchasing; and it proved that the receipt of that letter deterred Symons & Symons for a while from going on with the idea of buying the respondent's process, although in the end they bought it. The appellants proved the publication of the specification pleaded, and the grant of letters patent thereon to Meth. Their counsel then intimated that he desired to call certain evidence directed to proving the nature of the patented invention and to showing (that is, to showing with more particularity than the respondent had shown) what the respondent's process was and what it involved. The learned presiding judge ruled, however, upholding an objection by the respondent, that evidence would not be admissible for either of these purposes, because the case did not raise any question of subject-matter or novelty and did not appear to him to raise any question of the construction of the specification to which the evidence could be relevant. His Honour proceeded to dispose of the case on the material before him. As to the first letter he held that the action was not maintainable, because although the letter threatened proceedings for infringement in Australia amongst other countries the threats in it were not made in Australia. As to the second letter his Honour held that the action should succeed, because the acts in respect of which it threatened proceedings were of so wide a description that it was impossible to say that the doing of them must constitute an infringement of Meth's patent.

The decision as to the first letter is not challenged by the respondent on this appeal, and I express no opinion upon it. We are concerned only with the second letter. There can be no doubt that the learned judge was right in holding, as he did, that within the meaning of s. 121 that letter, "though expressed in wide, vague and ambiguous terms", threatened proceedings for infringement of Meth's patent. Indeed the appellants do not now deny it. They do still submit that the respondent was not, within the meaning of the section, a person aggrieved by the writing of the letter; but in answer to this it is enough to say for the moment (though it will be necessary to return to the point) that the evidence which has already been mentioned as to the deterrent effect of the letter upon Symons & Symons underlines what in any case is clear, that the sending of the letter had, as it was intended to have, a tendency to defeat endeavours which the respondent was making to bring negotiations in the course of its business to a successful issue. Its profit-making activities were thus adversely affected. It was aggrieved in a business sense and in the sense of the section.

The respondent, however, was not entitled to relief if the acts in respect of which the letter threatened proceedings were such that, if done, they would infringe Meth's rights under one or more of the claims of his specification. The appellants make two submissions as to what the acts were for which they threatened proceedings. Their primary contention is that, to practical persons in the trade such as the firm of Symons & Symons, no threat of proceedings would have been conveyed except in respect of the use of the particular copper process identified in the letter as that which Symons & Symons were anticipating purchasing; and they say that that threat was justifiable, because the use of the process referred to would infringe Meth's patent in respect of every claim of the specification. Alternatively they contend that if, as the learned presiding judge considered, the letter conveyed a threat extending to the employment of any copper spray process at all which agitated the metal solution and used any form of metal dust, no relief should have been granted in respect of that threat, because the range of acts thus comprehended, broad though it is, does not go beyond the area covered by two of the claims in the specification, namely the seventh and the eighth. They proceed to submit that whichever view of the letter is correct, the question whether the acts for which proceedings were threatened would infringe Meth's patent is a question to which the rejected evidence was relevant; and on that ground they seek a new trial of the action so far as it relates to the letter of 3rd October 1956.

On the construction of the material passage in the letter, it seems to me, with great respect, that the learned judge took too narrow a view. The meaning which it would convey to the recipients would necessarily be, I think, that any copper spray process in which the metal solution is agitated and a metal dust of any description is used would infringe Meth's patent and that the use of the respondent's process in particular would do so, and since Meth intended to take legal proceedings for any infringement of his patent Symons & Symons should consider themselves warned that if they should use the respondent's process they would be sued. "I feel it my duty to advise you", were the concluding words of the letter on the subject. Advise them of what? Surely, that what they contemplated doing would bring upon them proceedings for infringement of patent. There were, as I read the letter, two threats made: a general threat relating to all infringements of the patent, and a particular threat relating to the use of the respondent's process.

If this be so, it is obvious that no conclusion can be reached on the appellants' attempt to justify the narrower threat by relying upon Meth's patent, unless the precise nature of the respondent's process is first ascertained. And unless the narrower threat were found to be unjustifiable the wider threat could not be so found either, except to the extent to which it exceeded the narrower threat. Consequently the appellants' evidence as to what the respondent's process was should, in my opinion, have been admitted. Indeed it seems clear that the learned judge would himself have so ruled if he had read the letter as containing any threat relating specifically to the use of the respondent's process.

The other evidence rejected was the evidence concerning the nature of Meth's invention. It was described by counsel at the trial as being evidence directed to explaining the state of the art and of knowledge (in the relevant field) at the priority date of the patent, and the true nature of the inventive step which Meth took. The purpose of this evidence was to provide a background of fact against which Meth's specification should be read and construed, the appellants' object in adducing it being to found a contention that the patented invention was as wide as the letter of 3rd October 1956 asserted, that is to say that it extended to every spray process for copper-plating silvered surfaces using an agitated metal solution with any form of metal dust. The appellants do not suggest that they could make good such a contention in relation to any of the first six claims of the specification, but it is upon the seventh and the eighth that they wish to rely on this part of the case. The first six claims all relate to a solution of copper sulphate and phosphoric acid in water in which metallic dust selected from a limited group of metals is suspended or mixed, the proportions being prescribed within stated ranges. But the seventh claim is for the method of copper plating a silvered surface by galvanic action "substantially as hereinbefore described", and the eighth is for the method of making a mirror "substantially as hereinbefore described"; and what the appellants wanted to establish, by proving the prior state of the art and of relevant knowledge, was that Meth's patent on its true construction not only covered processes differing to some extent from the particular processes described in the first six claims, but extended to a range of manufacture of which these processes were examples, a range wide enough to justify the more general of the threats in the letter. The answer, in my opinion, is not far to seek. Whatever latitude the word "substantially" may be considered to introduce into the seventh and eighth claims, the context of the whole document makes impossible a reading of those claims which would sweep in every copper spray process which uses a metal dust in an agitated solution, whatever the metal, whatever the chemicals employed, and whatever the proportions in which they may be used. I cannot do better on this point than repeat what the learned primary judge said about it. After referring to the width of the general threat with which the material passage in the letter of 3rd October 1956 begins, his Honour said: "The claims in the specification are much narrower: probably of necessity, lest they be too wide and invalid. Any spraying of copper is involved in the threat: the specification speaks only of the spraying of a solution of copper and phosphoric acid. (It is not, I think, to the point to say that there may be obvious chemical equivalents of phosphoric acid.) The spraying of any metal solution is involved in the threat: the specification speaks only of the spraying of six specified metals. Any agitation of the metal solution at any stage is covered by the threat: the specification speaks only of agitation during the actual process of spraying. The threat covers spraying of copper and of metal solution which are separate in point of time: the specification speaks only of simultaneous sprayings of copper and of a metal solution or mixture. There are minor differences between what is threatened and what is claimed by the specification, but those which I have stated appear to me to be vital differences, and to make it impossible to say that the doing of the acts threatened must constitute an infringement of Mr. Meth's patent No. 204,989" [1] . True, there is in this passage of the judgment no specific mention of the seventh claim or the eighth; but no evidence could give either of those claims so wide a meaning that his Honour's observations would not apply to them.

The conclusion from the foregoing is that the wide general threat at the beginning of the material passage in the letter of 3rd October 1956 was not justifiable by reference to Meth's patent. But it does not follow that the respondent was entitled to relief in respect of it under s. 121. For what made the respondent a person aggrieved was not the making of the general threat considered by itself, but the making of the more particular threat, that is to say the application that was made of the general threat by the concluding words of the relevant passage. This is so because Symons & Symons were not dealing with the respondent over any other process, and the respondent's business, so far as appears from the evidence, was not concerned with any but the one copper spraying process. The only threat by which the respondent was aggrieved was the narrower threat. As to that threat the question whether relief should be granted was not considered by the learned primary judge, and obviously it could not properly have been considered unless the appellants had first been permitted to adduce evidence upon the issue whether the respondent's process involves infringement of Meth's patent.

Accordingly I am of opinion that the order under appeal, except insofar as it dismissed the action as against the appellant Max Meth, should be set aside, and the action remitted for further hearing.

There remains a question as to the costs of the first hearing. The order appealed from gives the respondent three-fourths of its costs of the action, and does so as against both the appellants. The decision of the learned judge that the action should be dismissed as against the appellant Meth disposed of a distinct matter of complaint, namely the threat contained in Meth's patent attorney's letter of 8th May 1956. Meth was therefore entitled to have his costs of the action, so far as it related to that letter, as against the respondent. An order to that effect should now be made. The remaining costs of the action (other than the costs of this appeal) should, I think, be in the discretion of the judge finally disposing of the action.

In my opinion the appeal should be allowed with costs.

As it happened, judgment in this action did not determine what was clearly enough the real issue between the parties. The defendant Meth was the holder of Australian patents, including Letters Patent No. 204,989 - which is the only one now relevant - the complete specification for which was published on 15th March 1956, for a process of copper plating the silvered reflecting surface of mirrors. The defendant company was the licensee of this patent. On 8th November 1956 the plaintiff commenced a threats action against both defendants on the footing that each had made a groundless threat of legal proceedings for infringement of Meth's patents justifying relief under s. 121 of the Patents Act 1952-1955. The threat alleged to have been made on behalf of the defendant Meth was held to have been made in England and accordingly to have afforded no right to relief under s. 121. No question arises now as to this. The action against the defendant company had been commenced on the footing that it had by a letter dated 3rd October 1956 threatened one of the plaintiff's potential customers, a firm Symons & Symons, mirror manufacturer of Adelaide, with infringement proceedings if the firm should make use of the plaintiff's process for producing copper-plated silvered mirrors: see statement of claim, pars. 3 and 6. The relevant words in the letter are as follows: "I must also advise you that any copper spray process which agitates the metal solution, and uses any form of metal dust, infringes the patent of Mr. Max Meth, which is patented throughout the world and any infringement of this patent will be dealt with at law. As you advised that you anticipated purchasing a copper patent which we know is an infringement, I feel it my duty to advise you." The defendants seemingly fought the action as the means of having it determined whether the plaintiff's process was an infringement of Australian Letters Patent No. 204,989. However, on 14th June 1960, by amendment of its statement of claim, the plaintiff sought to widen the basis of its action by pleading, in substitution for par. 6 of the statement of claim, that the letter alleged that "any copper spray process which agitated the metal solution and used any form of metal dust infringed the letters patent and would be dealt with at law" and stated that because the firm anticipated purchasing an infringing "patent" it was being advised accordingly. This was a reference to the plaintiff's process. The plaintiff also pleaded that its process "involves inter alia spraying on a silvered mirror copper sulphate simultaneously with a finely divided metal, the metal dust being maintained in an agitated suspension in water". Significantly it retained its original claim for relief enjoining the defendants from threatening other persons with legal proceedings "in respect of any alleged infringement by the sale or use of the plaintiff's process and/or compounds of any letters patent of which the defendants claim to be patentees". This was no doubt based upon the realization that the plaintiff was a person aggrieved by the threat to Symons & Symons only to the extent to which that threat related to the use of its process and products which use was what the firm had in mind. The defendants did not deliver an amended defence until after the hearing had been commenced and then alleged that "the acts in respect of which proceedings were threatened constituted or if done would constitute an infringement" of the defendants' letters patent. By its reply the plaintiff alleged that the letters patent, including No. 204,989, were invalid.

At the threshold of the case, therefore, there was the question what were the acts in respect of which proceedings were threatened. Fullagar J. said that " "the act" to which the threat is directed is the use of "any copper spray process which agitates the metal solution and uses any form of metal dust" ". [1] In considering the correctness of this it is necessary to keep in mind that the threat complained of was a threat to Symons & Symons and must be related to the acts which that firm contemplated doing. These were to buy and use the plaintiff's process. In these circumstances the threat was really of infringement proceedings if the firm should use the plaintiff's copper spray process because that process, so it was said, agitates the metal solution and uses a form of metal dust. It seems, therefore, that even on the amended pleadings the action was in respect of a threat of infringement proceedings if the plaintiff's process or compounds were to be used. In other words, the acts in respect of which proceedings were threatened were the using of the plaintiff's process.

His Honour's finding that there could be copper spray processes agitating the metal solution and using a form of metal dust which fell altogether outside the protection accorded to Meth by Letters Patent 204,989, however sound it was, was not to the point if, contrary to his Honour's decision, it was against the use of the plaintiff's process that the defendant company threatened Symons & Symons. What was to the point, upon this construction of the threat, was whether the plaintiff's process was an infringement of the defendants' patent, but his Honour, having construed the threat as he did, held that the plaintiff's process was not in question and rejected evidence of that process and evidence directed to proving that its use would infringe Letters Patent 204,989.

In consequence, the real issue between the parties (viz. whether the use of the plaintiff's process would constitute an infringement of Letters Patent 204,989, if valid) was not tried and I see no alternative to ordering a re-hearing of the action in which the two issues of whether Letters Patent 204,989 are valid and whether the plaintiff's process constitutes an infringement - and the onus of proof of this lies upon the defendants - can be determined.

I agree that this appeal must be allowed. The trial went off on what was largely a false issue, the real issue was not tried, and evidence that should have been admitted thus became excluded. There should, therefore, I think be a rehearing of the action. I agree in the orders for costs proposed by my brother Kitto.

I agree with the reasons of Kitto J. and with the orders which he proposes.

At a glance

Court

Decision date

Before

Source

Judgment (34 paragraphs)

Parties