Pechiney Plastic Packaging Incorporated v Cryovac Australia Pty Ltd

REASONS FOR JUDGMENT 1 The issue for consideration is the applicants' Notice of Motion of 14 July 2003, seeking to amend the Application and Statement of Claim by introducing allegations of breaches of Part IV of the Trade Practices Act 1974 (Cth) ("the TPA"). This proposed amendment is opposed by the respondent in principle and in the form proposed. 2 The Application in this matter was filed on 28 February 2003, together with a Statement of Claim of the same date. A Notice of Appearance was filed on 19 March 2003. On 14 April 2003, a Defence and Cross-Claim was filed, and on 1 May 2003, a Reply and Defence to Cross-Claim was filed. 3 The proceedings as presently framed concern the rights to, and exploitation in Australia of, certain packaging technology, including apparatus and plastic film used by meat processors for the packaging of variable cuts of chilled fresh red meat. 4 There are at present two relevant proceedings before the Court. In proceeding N 167 of 2003 as presently constituted, the third applicant ("MDL"), as patentee, and the first applicant ("Pechiney") and the second applicant ("Danaflex"), as licensees, seek relief from the respondent, Cryovac Australia Pty Ltd ("Cryovac"), for infringement of two petty patents. The alleged acts of infringement involve the supply and offering for hire or sale of meat packaging apparatus known as FlexiBag M501 machines to meat processors in Australia. Cryovac denies infringement and cross-claims against MDL for revocation of the pretty patents. 5 Proceeding N 709 of 2003 is an appeal by MDL pursuant to s 60(4) of the Patents Act 1990 (Cth) ("the Patents Act") from a decision of a delegate of the Commissioner of Patents, given in opposition proceedings concerning a standard application. That patent application is related to the two petty patents that are the subject of the infringement proceedings. MDL is the applicant for those patents. The respondent in that proceeding is Sealed Air Corporation ("SAC"), which was the opponent before the delegate. SAC is the parent company of Cryovac. 6 The applicants' Notice of Motion of 14 July 2003 seeks a substantive order granting leave to the applicants to amend the Statement of Claim in order to introduce claims against Cryovac based on ss 46 and 47 of the TPA. These claims are said to arise out of the same factual matrix as the claims of patent infringement and for this reason, the applicants submit that they ought to be dealt with in the same proceeding. 7 The applicants allege that the course of conduct relied on in each case under the TPA is the supply or offering for hire or sale by Cryovac of meat processing apparatus. The applicants contend that Cryovac, by supplying or offering for hire or sale meat packaging apparatus, has both infringed the petty patents, and has misused market power and engaged in exclusive dealing in contravention of sections 46 and 47 of the TPA, having regard to the conditions imposed. It is therefore contended that the acts of infringement of the petty patents and the TPA claim arise out of the same conduct. In these circumstances, the applicants submit that the Court should deal with all the claims together, including the TPA claims, so that as far as possible all matters in controversy between the parties may be completely and finally determined, and all multiplicity of proceedings concerning any of those matters may be avoided, as provided for by s 22 of the Federal Court of Australia Act 1996 (Cth) ("the FCA"). It is suggested that there are many examples of cases in which the courts have permitted parties to raise claims under the TPA in conjunction with, or in response to, claims of patent infringement. Some examples have been given which involve claims under Part V of the TPA, and reference has been made to Coopers Animal Health Australia Ltd v Western Stock Distributors Ltd (1986) 67 ALR 390; Elconnex Pty Ltd v Gerard Industries Pty Ltd (1991) 32 FCR 491; Australian Solar Mesh Sales Pty Ltd v Tomlin Industries Pty Ltd (1991) 21 IPR 447; Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (2001) 52 IPR 305. 8 The applicants also refer to two other cases which are said to illustrate that claims under Part IV of the TPA have been introduced in the same proceedings as claims of patent infringement. Abbott Laboratories v Corbridge Group Pty Ltd [2000] FCA 1713 ("Abbott Laboratories") concerned s 46 of the TPA and infringement/revocation, and Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83 ("Transfield") combined claims under s 45 of the TPA with claims relating to the licensing of a patent. 9 The applicants say that it was only after the present proceeding was commenced that they became aware of the facts alleged which gave rise to the claims in the proposed amendments to the Application and Statement of Claim. It is said that there will be no inconvenience or identifiable prejudice to Cryovac as a result of these amendments being made after the close of pleadings. Further, it is said that dealing with these claims together is likely to save considerable time and costs, in view of the similar facts or issues involved, and would avoid a multiplicity of proceedings. 10 The respondent resists the introduction of the amendments because they add a fundamentally new claim for relief, based on a completely new foundation in law, and arising out of material facts which are substantially different from those already pleaded in support of the existing claims for relief for infringement of the applicants' petty patents. 11 More specifically, the respondents point to O 13 r 2(7) of the Federal Court Rules ("the FCR"), which provides that amendments may be made if a new claim for relief, or foundation in law for the claim, arises out of the same facts, or substantially the same facts, as those already pleaded to support existing claims for relief by the party applying for leave to make the amendment. 12 The respondents submit that the only issues alleged by the parties are patent infringement and revocation concerning three of the applicants' petty patents. The new relief sought includes claims in damages and account of profits. The new relief, it is said, arises from conduct not previously pleaded, and the new foundation for the claim arises solely from the TPA and has no factual basis in the existing material facts that are pleaded in support of claims of infringement of the applicants' petty patents. The allegations under the TPA are therefore in substance unrelated to the presently pleaded case, and should not be run together with the presently pleaded case. There is no common matrix of underlying facts which might suggest any substantial saving in time or expense in combining the two types of claim. 13 The parties do not ask me, on this application, to consider the adequacy of the specific form of pleading in relation to the proposed amendments, which appears on its face to call for some modification, but rather, to express a view in principle as to whether the proposed amendments are such that leave should be granted to amend. 14 I do not consider that any assistance is to be gained from the fact that claims under Part V of the TPA have been pleaded in conjunction with claims of patent infringement in other cases. In my view, a claim under Part V of the TPA is generally speaking not comparable, so far as legal principles, basic issues and specialised evidence are concerned, with claims under Part IV of the TPA. In relation to claims made under Part IV of the TPA being raised in the same proceedings as claims of patent infringement, I consider that Abbott Laboratories, referred to above, is of no real guidance as a precedent. In that case, the Judge simply alludes to the fact that these claims were raised on the pleadings. There is no discussion or statement of principle in relation to whether the combination of these issues is appropriate or not. Moreover, it does not appear to be a case where there was an amendment sought to the pleadings after they had been closed. The other case referred to, Transfield, is not analogous to the present case because it concerned the construction of a clause in a deed of sub-licence. In that case, the High Court considered that the clause in question was not rendered unenforceable by s 45 of the TPA, because it fell within an exception provided for by s 51 of the TPA as being authorised by the Patents Act, and because there was no evidence to enliven the operation of 45. 15 The orders sought in the Amended Application include a declaration that Cryovac has infringed ss 46 and 47 of the TPA by making offers to meat processors in Australia to supply, at no charge, automatic meat packaging apparatus on the condition that the recipients will not acquire the plastic film that is used with this apparatus directly or indirectly from a company other than the respondent, in conjunction with an offer to supply this plastic film at a price significantly less than the price at which one or more competitors of Cryovac are offering to supply the same volume of film. 16 If the proposed amendments are allowed, issues will be raised as to the appropriate "market"; the degree of power the respondent has in that market; whether it is substantial; and whether the respondent has engaged, or would engage, in conduct that would amount to taking advantage of market power: see Natwest Australia Bank v Boral Gerard Strapping Systems Ltd (1992) 111 ALR 631. 17 In relation to the s 47 claim, it will be necessary to establish that the respondent supplies, offers, or refuses to supply goods or services to a person on the condition that the person acquires or does not acquire them from another person, and that it had the purpose, or was likely to have the effect, of substantially lessening competition, and that loss or damage would be suffered as a result of the conduct. 18 Leaving aside, for the time being, the claimed inadequacies in the form of pleading, it is apparent from a consideration of the nature of the amendments that they may involve an examination of many complex and detailed circumstances and expert opinions which are quite different in scope and nature from those which are raised on the application for infringement and the application for revocation. The fact that there may be some small overlap in limited areas is not sufficient to lead me to the view that it would be appropriate to grant leave in the present case. The nature of the claims as presently pleaded are so distinct in nature and extent from those presently raised on the pleadings that it would not be convenient or conducive to the determination of the issues between the parties, or in the interests of the proper administration of justice, to hear them together. 19 It is of course true that in the original Application and Statement of Claim it may have been possible for the applicants to raise the issue of breaches of the TPA. However, as counsel for the applicants frankly conceded, it would be likely that, in the management of such a case, the trade practices issues would be hived off for separate consideration. Accordingly, I can see no useful purpose in permitting the injection, at this late stage, of the proposed claims under the TPA in the present proceeding. 20 I record that it was also argued by the respondents that, having regard to the provisions of s 120 of the Patents Act, that infringement proceedings may be started by the patentee or an exclusive licensee. There is no provision in that section for the institution of infringement proceedings by the second applicant, which is not said to be the exclusive licensee. The patentee is MDL, and Pechiney is the only exclusive licensee. 21 In response to this submission, the applicants contend that s 138 of the Patents Act provides that any person may apply to a prescribed court for an order revoking a patent and that in the present case, the second applicant, Danaflex, is a person claiming an interest in the patent, and is an appropriate party to proceedings for revocation. Therefore, it is said that the argument as to lack of standing advanced for the respondents does not have substance. In Emory University v BioChem Pharma Inc (1998) 86 FCR 1, Lindgren J relevantly held that a person claiming a contractual right to some exclusive right of exploitation of the patented invention, even though that person might have a claim that is less than as the exclusive licensee of the patent, is a person "claiming an interest in the patent" for the purposes of s 139(1). 22 In this case, in view of the conclusion I have reached as to the different nature of the TPA claim in relation to the Patents Act,it is unnecessary for me to determine the question as to whether the second applicant, Danaflex, is a proper party in the proceeding as presently constituted. 23 Accordingly, for the above reasons, it is my conclusion that this is not an appropriate case in which the proposed amendment should be permitted. Rather, the preferable course is that if it is proposed to bring proceedings under Part IV of the TPA, that these be instituted as separate proceedings. 24 Leave to amend is refused in respect of the claims under Part IV of the Trade Practices Act 1974 (Cth), but otherwise allowed. The applicants are to pay the respondents' costs. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.