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[2009] FCA 527
Federal Court of Australia
2009-05-21
Emmett J, Lindgren J
Original judgment source is linked above.
Introduction 1 On 23 December 2008 I granted the University leave to file and serve a second further amended statement of claim (SFASOC) to be consistent with the reasons for judgment that I delivered on that date: see The University of Sydney v ResMed Ltd (No 2) [2008] FCA 1969 (Earlier Reasons). I will use the abbreviated forms of reference that I used in the Earlier Reasons. I directed that any SFASOC be filed and served by 30 January 2009 and that the proceeding be stood over to Friday 6 February 2009 for directions. 2 In the early part of this year there was correspondence between the parties over the form of the SFASOC proposed by the University. While I was on leave there was a hearing before Emmett J on 8 April 2009. Following that hearing the University introduced further amendments into its proposed SFASOC. 3 ResMed still objected to the filing of the proposed SFASOC. ResMed's objections were the subject of a hearing before me on 13 May 2009 at which, in circumstances that do not presently matter, some of ResMed's objections disappeared. 4 The parties remain at issue over two of ResMed's objections. I will call these: (1) the pleading in respect of pre-Agreement Information, and (2) the pleading in respect of improvements.
The pleading in respect of pre-Agreement Information 5 Paragraphs [42]-[44] of the Earlier Reasons were as follows: [42] There is, however, in my view a defect in the pleading that needs to be remedied. The Licensing Agreement was dated 17 May 1991, and was deemed to commence on 1 January 1991 (see [18]-[19] above). On its face it purported to operate prospectively from 1 January 1991. However, according to para 11B of the SFASOC, the Information was supplied by the University to ResMed during the period 21 May 1990 to the end of 1991. If it is to be alleged that some of the items of the Information were supplied prior to 1 January 1991, facts should be pleaded showing the basis on which it is said that those items constituted "Intellectual Property" within the meaning of the Licensing Agreement. [43] Likewise, the CDA purported to operate prospectively from its date, 25 February 1991. There is no pleaded basis on which the para 11B items of Information supplied by the University to ResMed during the period 21 May 1990 to 25 February 1991 could have been supplied pursuant to the CDA. [44] The pleading should be amended in order to make clear to ResMed and the Court precisely what the University's case is in these respects. It is not enough to say, as counsel for the University said, that the evidence may disclose pre-contract facts which would cause the contracts to be construed in such a way so as to catch the pre-contract supplies of items of the Information. The express terms of the contracts point too clearly in the opposite direction to make it fair to ResMed for such an unexpected construction to prevail on the hearing without advance notice. 6 The University has purported to address the matters raised in [44]. In the first place, the University no longer relies on the Confidential Disclosure Agreement (CDA). 7 In the second place, the University's proposed SFASOC inserts paras 11AA-11AF between existing paras 11A and 11B. The proposed new para 11AA-11AF are as follows: 11AA. The Agreement provides that it commences on 1 January 1991. Particulars Clause 2 and Schedule 6 of the Agreement. 11AB. On a proper construction of the Agreement, the commencement date of 1 January 1991 referred to in paragraph 11AA does not operate to limit the Intellectual Property the subject of the Agreement, but defines the commencement date of the licence. 11AC. Alternatively, when the Agreement is construed in light of the circumstances set out in paragraphs 11AD to 11AF below, the commencement date of 1 January 1991 referred to in paragraph 11AA does not operate to limit the Intellectual Property the subject of the Agreement, but defines the commencement date of the licence. 11AD. Prior to 1 January 1991, the Applicant disclosed the Membrane Mask to the Respondent Particulars (i) The Membrane Mask was disclosed by oral explanation, by demonstration, and by the provision of prototypes. (ii) The explanation was provided by Professor Sullivan to Mr Ken Hely, or alternatively to Mr Ken Hely and also one or more of Dr Peter Farrrell and Mr Chris Lynch. The Applicant is currently unable to identify the precise date or dates on which this explanation was given. (iii) The demonstration was provided by Professor Sullivan to Mr Ken Hely, or alternatively to Mr Ken Hely and also one or more of Dr Peter Farrrell and Mr Chris Lynch. The Applicant is currently unable to identify the precise date or dates on which this demonstration occurred. (iv) The prototypes were supplied by Professor Sullivan and Mr Bruderer to one or more of Ken Hely and Chris Lynch. The Applicant is currently unable to identify the precise date or dates on which these prototypes were provided. 11AE. By at least as early as 21 June 1990, the Applicant and the Respondent had commenced communications about the licensing by the Applicant to the Respondent of the right to manufacture and market the Membrane Mask. Particulars (i) Letter from Mr Maclennan of the Applicant to Dr Farrell of the Respondent of 21 June 1990. (ii) Response of Dr Farrell of 3 July 1990. (iii) Further particulars may be provided following discovery. 11AF. By on or about 12 December 1990, the Applicant and the Respondent had reached an in-principle agreement for the Applicant to license to the Respondent the right to manufacture and market the Membrane Mask. Particulars (i) Letter from Mr Maclennan of the Applicant to Dr Farrell of the Respondent of 21 June 1990. (ii) Response of Dr Farrell of 3 July 1990. (iii) Meeting between Mr Maclennan and Dr Farrell on or about 6 November 1990. (iv) Letter from Dr Farrell to Mr Maclennan of 7 November 1990. (v) Letter from Dr Farrell to Mr Maclennan of 12 December 1990. (vi) Further particulars may be provided following discovery. 8 Paragraph 11B alleges that during the period between May 1990 to the end of 1991, the University supplied to ResMed the items of the Information described in subparas (a) to (m) of para 11B. 9 The expression "the Membrane Mask" is defined in para 4A of the SFASOC to mean "a facial gas delivery mask involving the use of a thin, flexible membrane to provide an airtight seal between the mask and the face of the wearer". In para 5 it is asserted that the University is the registered proprietor of Australian Patent No 643994 "for the Membrane Mask" (the Patent). 10 Claim 1 of the Patent begins as follows: A nasal mask which comprises a face contacting portion in the form of an elastomeric material membrane which is capable of distending and which is shaped, when distended, to define a chamber, the chamber having an externally convex end region which is arranged in use of the mask to balloon outwardly and to be depressed by and accommodate the nose of a wearer, ... 11 It is clear that what is now being alleged in the new proposed paras 11AA-11AF is that prior to 1 January 1991, the University disclosed all of the integers of the invention that was the Membrane Mask and that was ultimately the subject of the Patent. It is not to the point that the description of the Membrane Mask in Claim 1 of the Patent is more elaborate. 12 Accordingly, the allegation is that those of the items of the Information referred to in para 11B of the SFASOC that would be disclosed by a disclosure of all of the integers of the invention the subject of the Patent, were disclosed prior to 1 January 1991. 13 ResMed submitted that it was entitled to be told which of the items of the Information were disclosed on what dates prior to 1 January 1991 and by whom and to whom. I understood that this was because ResMed understood that only some of the information constituting the integers of the invention were disclosed prior to that date. 14 As can be seen from the proposed paras 11AA-11AF set out above, the University has provided some particulars of disclosures but has not tied any of the items of the Information to a disclosure on any particular date or occasion. Moreover, the letters dated 21 June 1990, 3 July 1990, 7 November 1990 and 12 December 1990 referred to in the particulars do not descend into detail of that kind. They speak of the proposed "patent" and the granting of a licence to ResMed in respect of the invention to be the subject of it. 15 The disclosure of the invention that is called in the pleading "the Membrane Mask" was perhaps progressive over the pre-1 January 1991 period. On the basis that the University has made clear that there was pre-1 January 1991 disclosure of all of the items of the Information falling within the integers of the invention, I do not think that the University should be required to plead or particularise the progression of the disclosure down to 1 January 1991. That is a matter for evidence. 16 Counsel for the University referred to the practical difficulty of requiring Professor Sullivan to attempt, without the benefit of discovered documents, to tie particular disclosures to particular dates or occasions. I agree that the difficulty of doing so would be enormous, but that it not the reason why the University should not be required to amend further its proposed SFASOC. The reason is simply that it is now made clear that the University's allegation is that all of the integers of the invention called the Membrane Mask were disclosed by 1 January 1991, and it follows that the items of the Information the subject of para 11B that constitute those integers were disclosed by that date. This is sufficient for pleading purposes. 17 The University should be required, however, to identify any of the items of the Information referred to in para 11B of the proposed SFASOC that it will contend lie outside the integers of the invention the subject of the Patent.
The pleading in respect of improvements 18 At [64] and [65] of the Earlier Reasons I stated: [64] Another attack which ResMed makes on the "improvements" cause of action is that there is no pleading of "a relevant connection" between the discoveries or improvements allegedly incorporated into the Mirage Masks, and the Intellectual Property. [65] I agree with ResMed that the University must plead facts showing "the connection" it alleges between the discoveries and improvements identified in Annexure A to the SFASOC and the particular aspects of the Intellectual Property. The improvements described in Annexure A to the SFASOC and the patent applications, patents and designs described in Annexure B to the SFASOC speak for themselves. The expression "Intellectual Property" for the purposes of the SFASOC is defined in the particulars to para 10. The University should identify in the SFASOC the particular piece or pieces of the Intellectual Property with which each improvement is alleged to have a connection. (Emphasis added) ResMed relies on the final sentence of [65]. 19 The University purports to respond to that sentence in Annexure A to the SFASOC. Annexure A lists 12 varieties of Mirage Mask. Annexure B lists Patents in Section 1 and Designs in Section 2. At the end of the various paragraphs in Annexure A identifying species of Mirage Mask and at the end of every paragraph in Schedule B identifying Patents and Designs, there is a sentence commencing "this is a discovery or improvement in connection , with ...". By way of example, at para 1(a) of the Annexure A which relates to "the original Mirage Mask", the sentence is: This is a discovery and improvement in connection with the elastomeric material membrane of claim 1 of the Patent. 20 Paragraph 2(b) of Annexure A, which relates to the Ultra Mirage Mask, concludes: This is a discovery and improvement in connection with the removable mounting of the face contacting portion to the shell as described in claims 4 and 5 of the Patent, and the connector moulding of claim 6 of the Patent. 21 Similar illustrations can be found in Schedule B. 22 ResMed's objection to the particularisation of the "connection" is well expressed in para 36 of its submissions as follows: In respect of each of the improvements alleged in Annexures A and B, the University should plead with precision the connection which the improvement is alleged to have with the Intellectual Property, including the relevant piece of intellectual Property and a precise description of that which is alleged to have been improved upon. ResMed submits that the deficiency in Schedules A and B in the present respect is not merely formal, and that it arises because of the tension between asserting primarily that each Mirage Mask is a licensed product on the one hand and asserting in the alternative that it is a new and unlicensed product constituting or incorporating an improvement on the other hand. 23 While it would be possible for the University to go further, I think that the SFASOC informs ResMed and the Court of the case that ResMed will have to meet and the Court will have to try, sufficiently to enable ResMed to plead, and for disputes as to evidence and discovery to be resolved.
Conclusion 24 The University should have leave to file the SFASOC but there should be a direction as contemplated by [17] above. 25 My present view is that there should be no order as to costs. While it is true that the University has succeeded on the two issues that were contested on the hearing on 13 May 2009, other objections raised by ResMed were withdrawn only when the University made its position clear and no doubt further issues were resolved between the parties prior to the hearing. As well, ResMed has obtained the direction mentioned. 26 I will reserve liberty to the parties to raise the question of costs if either of them should wish to do so. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.
Solicitor for the Applicant: Mallesons Stephen Jaques
Counsel for the Respondent: Mr A J L Bannon SC and Mr A R Lang
The University of Sydney
ResMed Ltd