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1 cited instrument linked from this judgment.

DUSA applied to be joined as a respondent and for Queens to be removed. PhotoCure did not oppose DUSA joining, but opposed removing Queens. Queens had not entered an appearance and had not been served with DUSA's application [2]. The immediate question was therefore procedural: whether the assignee could take Queens' place in the proceeding, or whether both the original grantee and assignee could remain parties.

Merkel J ordered that DUSA be joined, but dismissed its application to remove Queens. DUSA was also ordered to pay PhotoCure's costs of its 16 August 2002 motion [orders 1-3]. The reasons additionally state that DUSA should pay PhotoCure's costs of an earlier motion dated 5 June 2002, which DUSA had not proceeded with through no fault of PhotoCure [11]. The formal orders reproduced at the beginning of the judgment expressly record the costs order for the 16 August motion.

The judgment does not decide whether the patent was valid or whether it should ultimately be revoked. It addresses who should remain before the Court while that substantive dispute proceeded.

Why the court decided this way

The Court considered two provisions of the Federal Court Rules 1977 (Cth). Order 6 r 9(b) allowed the Court to order that a party who had “ceased to be a proper or necessary party” cease to be a party. Order 6 r 10(2) applied where a party's interest passed by assignment, and authorised orders adding, removing or rearranging parties and orders for further conduct of the proceeding. Under r 10(3), such action could follow an application by a party or the person to whom the interest passed, or be taken by the Court of its own motion [3].

PhotoCure relied on a statement in Emory University v Biocham Pharma Inc (1998) 86 FCR 1. In that revocation proceeding, Lindgren J had observed that owners of rights the applicant sought to extinguish were proper parties, and stated: “Accordingly, the original grantee and any assignee is a proper party” [4]. Merkel J explained that the statement did not decide whether the original grantee remained proper after assignment. In his view, Lindgren J was saying that an original grantee and assignee are proper parties to the extent each owns rights that the revocation applicant seeks to extinguish [5]. The decision therefore did not treat Emory as establishing a categorical rule for this situation.

Merkel J held that O 6 r 10(2) applied. He referred to Frederikshavn Vaerft A/S v Stena Rederi Aktiebolag [2002] FCA 1024 at [23] in connection with the rule's application when a party's interest passes to another person [6]. The Court rejected PhotoCure's argument that the rule was confined to assignment of the cause of action. Its language was “drawn in very wide terms”, and it provided the Court with discretion to substitute DUSA for Queens [6]-[7].

The existence of that discretion did not resolve how it should be exercised. Merkel J gave three main reasons for declining to remove Queens at that stage.

First, Queens had not been served with the application and had not had an opportunity to state a view. Although it had not appeared in the proceeding, that did not show it lacked an interest in the revocation question. The assignment deed was unclear about whether Queens might have some liability to DUSA if the patent were revoked [8].

Second, the Court was not satisfied that assignment meant Queens had ceased to be a proper party. Queens had been the patent's grantee, and PhotoCure might have a good reason to ensure that Queens was bound by the outcome. The Court also considered discovery. It noted that Queens was a foreign respondent and that PhotoCure's rights to discovery against Queens as a non-party might differ from its rights against Queens as a party. The judgment links this point to the observation in Emory that a party should not be joined solely for discovery, while also recognising that a respondent should not be able to act unilaterally, by assignment or otherwise, and thereby cease to be liable to provide discovery [9].

Third, the Court was not satisfied that removing Queens could not prejudice PhotoCure or the conduct of its case. Conversely, DUSA had demonstrated no prejudice from Queens remaining [10]. Weighing those circumstances, the Court found no appropriate basis to exercise its discretion to remove Queens [11].

Before and after state of the law

The judgment's account of the applicable rules is specific to the text of O 6 rr 9 and 10 of the Federal Court Rules 1977 (Cth) as set out in the reasons. Before the Court considered the assignment, PhotoCure's proceeding named Queens, the original grantee, as respondent. Once Queens assigned its patent interest, r 10(2) empowered the Court to consider adding, removing or rearranging parties [3], [6].

The important interpretive point was that r 10(2) was not restricted to assignment of the cause of action. Merkel J considered that the rule applied where an “interest” in the proceeding passed by assignment and rejected a narrower construction [6]. This gave the Court power to consider substitution, but did not make substitution automatic. The text and reasons distinguish the existence of power from its discretionary exercise [7]-[11].

The judgment also clarifies the limited proposition for which it understood Emory to stand. The cited observation about the original grantee and assignee being proper parties concerned their status to the extent they owned rights targeted by the revocation proceeding. It did not answer whether the original grantee ceased to be proper after transferring its interest [4]-[5]. The decision thus leaves that status to be assessed in light of the circumstances, rather than treating the quoted sentence as a rule that both must always remain or that the assignor must always be removed.

The decision does not set out later amendments to the Rules, subsequent authorities, or a general account of the present law. It should be read as a ruling on the provisions and record before Merkel J in 2002, not as a statement about the current wording or application of procedural rules.

Key passages with plain-English translation

At [6], Merkel J said O 6 r 10(2) was “drawn in very wide terms” and rejected the suggestion that it applied only to assignment of the cause of action. In plain English, an assignment of an interest connected with the proceeding could bring the rule into play even if the assignment was not framed as a transfer of the claim itself.

At [7], the judge said the Court had “a discretion to substitute DUSA for Queens as a respondent.” This means the rule authorised a choice about the parties, not a mandatory change of respondent whenever an assignment occurred. The remaining paragraphs explain why the Court chose not to remove Queens.

At [8], the Court observed that Queens had not been served and therefore had no opportunity to express a view. The absence of an appearance did not establish that Queens had no interest. The possible consequences of revocation under the assignment deed were also unclear. In practical terms, the record did not establish that Queens had become irrelevant to the dispute.

At [9], the judge said he was “not satisfied that the fact of assignment has the consequence that Queens has ceased to be a proper party.” The Court identified possible reasons for keeping Queens: it was the original grantee, PhotoCure might wish to have it bound by the result, and its status could affect discovery. This did not establish that an original grantee must always remain a party. It explains why removal was not justified on these circumstances.

At [10], the Court contrasted possible prejudice to PhotoCure from removal with the absence of demonstrated prejudice to DUSA from Queens remaining. This was an important part of the discretionary balance. It does not amount to a general finding that the presence of an assignor can never prejudice an assignee.

What fact patterns trigger this precedent

The decision is most directly relevant to a proceeding in which a party assigns an interest connected with the dispute after the proceeding has commenced, and the transferee seeks to be added while the original party seeks, or supports an application, to be removed. Here, the assigned interest was all of Queens' right, title and interest in a patent under challenge in a revocation proceeding [1].

Its procedural analysis is especially pertinent where the assignment does not itself resolve whether the original party retains a practical or legal interest in the proceeding. Relevant circumstances identified by the Court include whether the original party was notified and given an opportunity to be heard, whether the assignment documents clarify possible liability between assignor and assignee, and whether the applicant has a reason to have the assignor bound by the outcome [8]-[9].

The reasoning also identifies discovery as a potentially relevant circumstance. The Court did not endorse joining a party solely to obtain discovery. Rather, it recognised that a party's removal may alter the applicant's discovery position, particularly where the former party is foreign and the judgment states that rights against it as a non-party may differ from rights against it as a party [9].

The decision does not establish that the original grantee must remain in every patent revocation proceeding, nor that discovery concerns alone will determine joinder. It records the Court's assessment of the particular uncertainties and the absence of demonstrated prejudice to DUSA [8]-[10].

How later courts have treated it

The judgment itself cites Emory University v Biocham Pharma Inc (1998) 86 FCR 1 and Frederikshavn Vaerft A/S v Stena Rederi Aktiebolag [2002] FCA 1024. It explains the scope of the passage relied on from Emory and cites Frederikshavn in support of applying O 6 r 10(2) where an interest passes by assignment [5]-[6]. Those are authorities considered in this judgment, not evidence of how later courts treated this decision.

The material provided contains no later judgments or citations to PhotoCure. Accordingly, it does not establish whether later courts followed, distinguished, or otherwise treated the decision. A reliable account of subsequent treatment would require later legal sources, which are not included in the judgment supplied here.

Still-open questions

The judgment leaves open whether Queens had any continuing interest or liability connected with the patent after assignment. The deed of assignment was unclear about whether Queens might be liable to DUSA if the patent were revoked, and Queens had not been heard on the removal application [8]. The Court therefore did not make a final finding about the assignor's continuing interests.

It also leaves open how the Court might have exercised its discretion if Queens had been served and had expressed a position, or if the assignment documents had clearly addressed the consequences of revocation. Those facts were expressly uncertain at the time [8].

The discovery discussion is contextual rather than a comprehensive ruling on the scope of discovery against parties and non-parties. The Court identified a possible difference in PhotoCure's rights and treated that as relevant to party status, but did not decide any specific discovery application [9].

Finally, the decision did not determine patent validity, revocation, or the substantive rights of PhotoCure, Queens or DUSA. Its holding was confined to the interlocutory party question and the exercise of discretion on the circumstances before Merkel J [1], [7]-[11].

This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have it checked by a qualified Australian lawyer.