Consideration
58 There can be no doubt that the judgment finding SARB's liability for infringement of the 354 patent was interlocutory in nature, in the sense that not all the issues raised in the first proceeding were finally determined by that judgment. But this is entirely without significance to the present question. VMS's claim that SARB had infringed the 354 patent was fully litigated and, as events transpired, finally determined. In this regard, the appeal which SARB brought from the judgment that was given was dismissed (albeit by consent) on 16 July 2014 and, on 22 July 2014, the first proceeding was discontinued (once again, by consent). As I have noted, although the orders made on 22 July 2014 vacated certain previous orders of the Court, they did not affect, nor did discontinuance of the first proceeding from that date affect, the judicial determinations underpinning the declaratory relief that was granted on 21 May 2013. In short, the declarations remain in force.
59 Notwithstanding this state of affairs, I am not persuaded that VMS should be estopped from litigating its claims of infringement of the 110 patent in the present proceeding. This is so for a number of reasons.
60 First, despite the similarity in language and general subject matter of the claims litigated in the first proceeding and the claims sought to be litigated in the present proceeding, there can be no question of conflicting judgments being given. This is because the rights asserted by VMS in the first proceeding derive from the 354 patent, whereas the rights asserted in the present proceeding (relevant to the question of Anshun estoppel) derive from the 110 patent. As legal conceptions, each bundle of rights is discrete from the other, even though the patents in question are related in the way I have described. Whatever judgment might or might not be made in relation to infringement of the 110 patent, it could not contradict or impeach the judgment on liability given in respect of the 354 patent.
61 Further, as I will come to explain, there is additional support for excluding the possibility of conflicting judgments because of differing subject matter: see [66] - [67] below. Therefore, for the estoppel to arise in the present case, there must be some other fact or circumstance that is sufficient to satisfy the criterion of unreasonableness.
62 Secondly, and in any event, VMS could not have sued on the 924 patent in the first proceeding because that patent was not granted until 4 February 2016, some years after the granting of declaratory relief in that proceeding. Therefore, Anshun estoppel cannot be raised against the bringing of a claim of infringement of the 924 patent in the present proceeding. In the course of oral submissions, SARB accepted this to be the case.
63 If VMS cannot be precluded from suing on the 924 patent in the present proceeding on the basis of Anshun estoppel, there does not appear to be any sound discretionary reason for precluding VMS from also suing on the 110 patent if, as SARB contends, the asserted claims of the 924 patent and the 110 patent are materially the same.
64 Thirdly, although the 110 patent was in force when the first proceeding was commenced on 5 April 2011 and could have been sued on, the plurality in Anshun made clear that there may be a variety of circumstances why a party may justifiably refrain from litigating an issue in one proceeding yet seek to litigate that issue in a subsequent proceeding. Their Honours gave, as examples, the expense of litigation, the importance of the particular issue and motives extraneous to the actual litigation: see at [43] above; see also the observations in Gibbs quoted at [45] above.
65 Such circumstances exist in the present case. Bearing in mind the extensive defences mounted by SARB in the first proceeding (which involved a substantial attack on the validity of the claims of the 354 patent on a number of grounds), I have no reason to think that a similar attack would not have been made on the claims of the 110 patent, had it been put in suit. This attack, however, would have been based on the requirements of patentability set out in s 18(1) of the Patents Act 1990 (Cth) (the Act), which include the requirement for the presence of an inventive step. I accept that litigating both the 354 patent and the 110 patent in the one proceeding would have protracted the hearing and, in all likelihood, added significantly to the costs of the proceeding generally, in circumstances where it could reasonably have been expected that success in suing on the 354 patent alone might result in achieving cessation of the impugned conduct.
66 I am fortified in this view given SARB's assertion in correspondence (see [32] above) that the PinForce Product it currently supplies (in respect of which VMS now sues) is a different product to its former product, which does not possess certain operational features in relation to the detection of vehicle overstay - being features of the invention claimed in 110 patent and, by extension of SARB's argument, also claimed in the now expired 354 patent. There is, therefore, objective support for the argument that successfully suing on the 354 patent could reasonably have been expected to have brought about the prospect that SARB would cease its impugned conduct without the necessity for VMS to sue also on the 110 patent. Whether SARB has made product changes, and, if so, when, and whether such changes are relevant and material to whether the 110 patent (and, I would add, the 924 patent) have been infringed are, of course, questions that remain to be determined.
67 Fourthly, if SARB is correct in its assertion that its current products are different, then its exploitation of these products could not have been the subject of the first proceeding; those products simply did not exist at the relevant time. Further, if SARB is also correct that the claims of the 110 patent are materially the same as the claims of the now expired 354 patent and that the current products or their use do not infringe the 110 patent or, for that matter the 924 patent, then those products or their use could not have infringed the 354 patent, even if the products had been in existence at the relevant time. In short, the subject matter of the first proceeding, and the subject matter of the present proceeding, are different, at least in respect of those products. This also stands as another consideration militating against the possibility of conflicting judgments being given should the present proceeding continue with respect to the "current" products: see [60] above.
68 Fifthly, it is possible that, despite the judgment given in respect of infringement of the 354 patent, SARB continues to supply infringing products that also infringe, or whose use infringes, the 110 patent and, now, the 924 patent. However, there can be little merit in SARB complaining about being vexed by VMS suing it on the 110 patent and the 924 patent in the present proceeding. This is because the price of discontinuance of the first proceeding in relation to the 354 patent included an express acknowledgment by SARB that, by entering into the Deed, VMS did not release, discharge or covenant not to sue SARB in respect of other Claims (as defined) of patent infringement, including claims advanced through patents and patent applications related to the 354 patent: see cl 6.3. It is impossible to think that, by agreeing to this provision in the Deed, SARB was not cognisant of VMS's apparent rights under the 110 patent and its potential rights should the then pending application for the 924 patent mature into a granted patent, and of the risk of being sued on these patents in respect of the very acts that were found to have infringed the 354 patent. Therefore, SARB could not have proceeded on the assumption that its dispute with VMS was necessarily at an end. Plainly, it remained at risk: cf UBS AG v Tyne [2018] HCA 45; 360 ALR 184 (UBS) at [76].
69 In responding to VMS's written submissions, SARB argued that the Deed did not preclude it from raising Anshun estoppel (or a claim of abuse of process) should VMS raise "a further claim for infringement". This may be so as a matter of text. But, it would be unrealistic to construe the Deed as containing what would be, on SARB's argument, a barren acknowledgement of important rights for which VMS had bargained. Therefore, even though the Deed did not, in terms, contain an express covenant precluding SARB from raising the question of Anshun estoppel, SARB's acknowledgement in cl 6.3 of the Deed should be understood and construed as an acceptance and agreement on its part that VMS was at liberty to sue it for infringement of any other patent in respect of the same acts for which VMS had sued it under the 354 patent in the first proceeding. To construe cl 6.3 otherwise would be to deprive VMS of part of the bargain it had struck with SARB when agreeing to discontinue the first proceeding against it. Thus, from the date of the Deed, SARB should be taken as having waived any entitlement it might have had to rely on Anshun estoppel should VMS bring any such claim, as it has now done.
70 In responding to VMS's written submissions, SARB also argued that the application of Anshun estoppel can be seen to serve public policy objectives as well as private interests, in particular the efficient use of scarce and finite judicial resources: Ford Motor Company of Australia Limited v Tristar Steering & Suspension Australia Limited [2003] FCA 596 at [35] - [38]. In short, Anshun estoppel is a principle that may apply independently of the acts of the parties or any agreement they might reach as to how litigation is to be conducted.
71 This is undoubtedly so. But, largely for the reasons I have discussed above, there is a sound basis for thinking that, in the present case, public policy considerations of this kind are not in jeopardy. To start with, the public interest in the efficient use of judicial resources is also served by confining litigation to a scope that is sufficient to achieve outcomes that, as a matter of practicality, are likely to be effective to quell the underlying dispute between the parties. I accept that, with hindsight, it may have been convenient had VMS also sued SARB for infringement of the 110 patent in the first proceeding. But at what additional cost and expense, and use of public and judicial resources, given at least the possibility of an acceptable outcome being achieved by VMS suing on the 354 patent alone? On the material before me, there is nothing that would lead me to conclude that, at the time of the first proceeding, there was, for example, a significant likelihood that VMS would also need to sue SARB for infringement of the 110 patent regardless of the outcome of suing it for infringement of the 354 patent. As I have explained, on the basis that VMS possessed, on SARB's argument, corresponding patent rights under the 110 patent which it should have deployed - and, I would add, which it could deploy in the future, if need be - it would be rational to think that a finding of infringement of the 354 patent would be a constraining influence on future conduct in respect of the PinForce Product.
72 The public interest is also served by encouraging parties to settle litigation, even if settlement is arrived at on a somewhat contingent, conditional or even partial basis. Undoubtedly, cl 6.3 foreshadowed the possibility of further proceedings between VMS and SARB for patent infringement. But, on the material before me, there is nothing that would lead me to conclude that, at the time of entering into the Deed, the prospect of that happening was more than a possibility. On the other hand, the parties were able to achieve a settlement which saw the appeal dismissed and the first proceeding discontinued, without the need for the parties to embark on the costly task of conducting a case for pecuniary relief, and for the Court's resources to be deployed to that end.
73 There may be, therefore, competing views as to how the public interest in the efficient use of judicial resources is best served in a given case. Balancing these sometimes conflicting views and the considerations that inform them is part and parcel of the discretionary calculus that is to be employed in determining whether conduct in not raising an available claim in an earlier proceeding was unreasonable in the particular circumstances. Looking at the matter with the benefit of hindsight, the question whether public policy considerations would have been better served by VMS also suing on the 110 patent in the first proceeding, rather than just on the 354 patent alone, is finely balanced. But a determination of unreasonableness should not be made on that basis, given that unreasonableness is to be determined against the background of the first proceeding. This requires a forward-looking evaluation taken at the time of the first proceeding. As I have explained, at the time of the first proceeding, there was a rational basis for suing on the 354 patent alone and a rational basis for settling the claim in the way provided by the Deed. In each case, the consequence was a saving, at that time, of the cost to the parties of further litigation and of the cost to the public of the future use of judicial resources, with the real prospect that those resources might not be called upon in the future in relation to the same dispute.
74 Therefore, to the extent that the present proceeding does involve the bringing of a claim of infringement of the 110 patent that could have been brought in the first proceeding, I am not persuaded that VMS acted unreasonably and should be estopped from bringing that claim in the present proceeding. In reaching this conclusion, I give particular weight to the terms on which the parties chose to resolve the first proceeding. In the particular circumstances of this case, the public policy considerations that SARB has called in aid are not countervailing. Further, as I have said on a number of occasions, VMS could not have sued on the 924 patent in the first proceeding in any event.
75 There is a further matter which is relevant to the exercise of the broad discretion the Court is called upon to exercise in the present case. Knowing of the existence of the 110 patent and its significance to the first proceeding, it was always open to SARB to cross-claim for a non-infringement declaration of that patent and/or to move for its revocation. It did not do so, perhaps for reasons consonant with the overarching objective referred to in s 37M of the Federal Court of Australia Act 1976 (Cth). If so, that too would have been a rational way in which to conduct the first proceeding, which did not call unnecessarily on the resources of the parties or the Court.