Viskase Corporation v Cryovac Inc

The Present Application 6 An application was filed in this Court on 1 June 2000 seeking orders in the following terms: "2. An order that within 21 days of the date of this order, the respondent do make discovery to the applicant by filing and serving a list, verified by affidavit and conforming to the requirements of Order 15 Rule 6 of the Federal Court Rules, of documents which are or have been in its possession, custody or power and which comprise, or are within, the following categories: (a) documents constituting or recording the results of searches and inquiries carried out by WR Grace & Co-Conn (or any other predecessor in title to the respondent) or its attorneys and the respondent or its attorneys, in relation to Australian Patent No 692957 ("the respondent's patent"), excluding any comments or opinions communicated to them by their attorneys in relation to the searches; (b) documents relating to research and experimentation of the subject matter of the respondent's patent, which record or evidence steps taken in the design and development of the said invention; (c) all documents recording or otherwise relating to any dealing in trade or commerce by WR Grace & Co-Conn (or any other predecessor in title to the respondent) in respect of the respondent's patent with any other party (including but not limited to) any negotiations for or entry into any licence or franchise agreement, joint venture arrangement, partnership or other exploiting of the subject matter of any of the claims of the respondent's patent, prior to the priority date of 12 December 1994; (d) copies of all documents relating to any prior disclosure or exhibition to any member of the public (whether or not such event occurred in circumstances of confidentiality) prior to the priority date of the patent, being 12 December 1994; and (e) copies of all prior art documents relating to any of the claims of the respondent's patent. 3. The respondent pay the applicant's costs of this application in any event."

Statutory Framework - The Rules of Court 7 Order 15A of the Federal Court Rules was made in 1988 and took effect on 26 April 1988. The general heading is "Preliminary Discovery and Discovery from Non-Party". The order provides, inter alia: "1. In this Order, unless the context or subject-matter otherwise requires- "applicant" means applicant for an order under this Order; "description" includes the name, and (as applicable) the place of residence, registered office, place of business, occupation and sex of the person against whom the applicant desires to bring a proceeding, and also whether that person is an individual or a corporation; "possession" means possession, custody or power. 2. An order made under this Order shall not operate to require the person against whom the order is made to produce any document which, on the ground of privilege, the person could not be required to produce- (a) in the case of an order under rule 3 or rule 6, if the applicant had commenced a proceeding against the person; . . . 6. Where- (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained; (b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and (c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision- the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c). . . . 9(2) An application under rule 6 shall, unless a Judge otherwise orders, be served personally on the person mentioned in paragraph (a) of that rule. (3) An application under any rule of this order shall be supported by an affidavit: (a) stating the facts upon which the applicant relies; and (b) specifying or describing the documents or any class of documents in respect of which an order is sought. (4) A copy of the supporting affidavit shall be served on every person upon whom the application is served. . . . 11(1) On an application under this Order the Court may make an order for the costs and expenses of the applicant, of the person against whom the order is made or sought and of any party to the proceeding, including the costs of making and serving any list of documents, of producing any document for inspection in accordance with rule 10 or of complying with any order made under Division 2 of Order 15 including such expense or compensation as would have been allowable under Order 27 rule 4A." 8 Also referred to in submissions was O 58 r 15 of the Federal Court Rules which provides, inter alia: "15(1)A party who disputes the validity of a patent must deliver with the pleading or other document in which the party disputes the validity of registration, particulars of the grounds of invalidity on which the party relies. (2) If one of the grounds referred to in subrule 1 is that the invention is not a patentable invention because of information about the invention in a document or through the doing of an act, the particulars must specify: (a) in the case of a document - the time when, and the place where, the act is alleged to have become publicly available; and (b) in the case of an act: (i) the name of the person alleged to have done the act; (ii) the period in which, and the place where, the act is alleged to have been done publicly; (iii) a description that is sufficient to identify the act; and (iv) if the act relates to apparatus or machinery - whether the apparatus or machinery exists and, if so, where it can be inspected. . . . (4) Except by leave of the Court, evidence is not admissible in proof of a ground of invalidity of which particulars have not been given." Statutory Framework - Patents Act 1990 9 Section 18 of the Patents Act 1990 provides: "18(1) Subject to subsection (2), a patentable invention is an invention that, so far as claimed in any claim: (a) is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and (b) when compared with the prior art base as it existed before the priority date of that claim: (i) is novel; and (ii) involves an inventive step; and (c) is useful; and (d) was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee's or nominated person's predecessor in title to the invention. (2) Human beings, and the biological processes for their generation, are not patentable inventions." 10 Section 138 provides for revocation of patents in the following terms: "138(1) The Minister or any other person may apply to a prescribed court for an order revoking a patent. (2) At the hearing of the application, the respondent is entitled to begin and give evidence in support of the patent and, if the applicant gives evidence disputing the validity of the patent, the respondent is entitled to reply. (3) After hearing the application, the court may, by order, revoke the patent, either wholly or so far as it relates to a claim, on one or more of the following grounds, but on no other ground: . . . (b) that the invention is not a patentable invention;" 11 Schedule 1 to the Patents Act sets out a dictionary of definitions for the purposes of the Act given effect by s 3. The dictionary includes: "invention means any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention." 12 The term "prior art base" is also defined in Schedule 1 thus: "prior art base means: (a) in relation to deciding whether an invention does or does not involve an inventive step: (i) information in a document, being a document publicly available anywhere in the patent area; and (ii) information made publicly available through doing an act anywhere in the patent area; and (iii) where the invention is the subject of a standard patent or an application for a standard patent - information in a document publicly available outside the patent area; and (b) in relation to deciding whether an invention is or is not novel: (i) information of a kind mentioned in paragraph (a); and (ii) information contained in a published specification filed in respect of a complete application where: (A) if the information is, or were to be, the subject of a claim of the specification, the claim has, or would have, a priority date earlier than that of the claim under consideration; and (B) the specification was published after the priority date of the claim under consideration; and (C) the information was contained in the specification on its filing date and when it was published."

The Operation of Order 15A Rule 6 13 Order 15A has its ancestry in the Bill of Discovery which was available in equity provided that it was "filed in aid of some proceedings either pending or intended". Allegations to that effect were required as "a court of equity did not compel discovery for the mere gratification of curiosity" - Bray, Law of Discovery and Digest (1885), Legal Book Pty Ltd (1985) p 611. Objections could be made to such a Bill including the objection that the party seeking discovery had not the character or interest which he alleged himself to have and that the proceedings in respect of which the delivery was sought were not maintainable - Bray p 615-616. The continuing availability of discovery as an equitable remedy was discussed in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133. Lord Reid observed: "Discovery as a remedy in equity has a very long history. The chief occasion for its being ordered was to assist a party in an existing litigation. But this was extended at an early date to assist a person who contemplated litigation against the person from whom discovery was sought, if for various reasons it was just and necessary that he should have discovery at that stage." (173) See also at p 191 (Lord Cross of Chelsea). The action for discovery was evidently available in all equitable jurisdictions in the Australian States - Branson, Pre-action, Subsequent and Third Party Discovery in Zariski (ed) Evidence and Procedure in a Federation LBC (1993) pp 108-110. 14 Pre-action discovery in equity covered discovery for the purpose of ascertaining the identity of a possible respondent to proceedings (identity discovery) and discovery for the purpose of obtaining information from a prospective respondent (information discovery). There is a question whether the Bill of Discovery would now be available for "information discovery" - Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200 at 205 (Finn J). The question seems however to be largely academic as the same results can be obtained through rules of court of the kind set out in O 15A which are now available in all State jurisdictions except Queensland and Tasmania - Airservices at 204-205; Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 10. 15 In the Federal Court, O 15A is an exercise of the rule making powers conferred on the judges of the Court by s 59 of the Act. The Full Court in Hooper set out some general propositions about O 15A derived from earlier authorities as follows: 1. The power conferred by O 15A r 6, if valid, is to be construed beneficially as befits remedial legislation - Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728. 2. Information discovery under O 15A r 6 is available only against the person in respect of whom there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court. That person must be someone whose description has been ascertained. 3. It follows from the language of O 15A r 6 that the rule can apply only before substantive proceedings have been instituted. After proceedings have commenced the rule ceases to apply. 4. An applicant must satisfy each of the conditions specified in pars (a), (b) and (c) of O 15A r 6 in order to obtain an order for information discovery. 5. Order 15A r 6(a) poses an objective test, namely, whether there is reason to believe that the applicant has or may have the right to obtain relief from the prospective respondent. While it is not necessary for the applicant to demonstrate a prima facie case it is not enough merely to assert that there is a case against the prospective respondent - see also Hodder & Associates Pty Ltd v National Mutual Trustees Ltd [1999] FCA 708 at par [17] (Weinberg J) and at par [16] where it was said: "R6 is designed to enable an applicant, in a situation where his proof can rise no higher than the level the rule describes, to ascertain whether he has a case against the prospective respondent." 6. An order may be made in favour of an applicant who already has available evidence establishing a prima facie case for the grant of relief. But the applicant, after having made all reasonable inquiries, must not have sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain relief against a prospective respondent: see (b). The absence of sufficient information is to be assessed objectively: Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (24 May 1996, unreported) at 31. 16 It is also of importance to keep in mind that O 15A r 6 confers upon the Court a discretion to be exercised when the conditions of "reason to believe" in relation to the right to obtain relief, the making of "all reasonable inquiries", the possession of "insufficient information" to enable a decision to be made, and reasonable cause to believe the prospective respondent to have the relevant documents are satisfied. The discretion to order preliminary discovery when these conditions are fulfilled is a discretion and not an obligation - Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215 at 220 (Branson J). The power conferred by the rule enables the Court to "penetrate obscurities and uncertainties in the interests of justice" and should not be "weakened by restrictive and unnecessary glosses" - Paxus Services Ltd v Peoples Bank Ltd at 733 (Burchett J). But as his Honour said in that case: "[t]he proper brake on any excesses in its use is the discretion of the court, which is required to be exercised in the particular circumstances of each case." Lindgren J said in Alphapharm: "…for better or for worse, pre-action discovery, whether documentary or oral does not characterise the adversary system as administered in Australian courts and provisions such as that in O 15A r 6 afford only a limited exception to the general position." 17 Order 15A r 6 is not to be applied to provide discovery as though the relevant proceedings had been commenced and pleadings in place to find the issues. Pre-action discovery is limited to serving the purposes of the rule. To that extent cases about the scope of discovery available in patent litigation such as The Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 and, more recently, F Hoffmann-La Roche AG v Chiron Corporation (2000) 171 ALR 295, are of only limited assistance. The Case for Discovery 18 In his affidavit evidence, Mr Baddeley said he had read and understood the complete specification for Patent 692957. He identified as features central to the invention claimed: . a patch bag having the patch formed from a particular polymer film; . the polymer film forming the patch is a heat shrinkable homogenous ethylene/alpha-olefin copolyner film; . the film is adhered to the substrate film. He had also considered prior art documents being: 1. US Patent 4755403 dated 5 July 1988 which relates to "a protective patch for a biaxially heat shrinkable, thermoplastic vacuum bag for protecting the bag from puncture by sharp protruding bones in bone-in cuts of meat which are vacuum packaged within the bags. The patch is made from multilayer film and comprises a layer of linear low density polyethylene and a layer of ethylene vinyl acetate copolymer. The patch is biaxially heat shrinkable and shrinks with the bag." The assignee of that patent is WR Grace & Co. 2. European Patent Application 600425, filed 29 November 1993 and described as "…directed to a heat-shrinkable, thermoplastic film or bag which contains at least one homogeneous ethylene alpha-olefin copolymer with at least some limited long chain branching. Oriented films made in accordance with the present invention exhibit improved processability as well as improved physical properties such as excellent optics and impact resistance. A homogeneous ethylene alpha-olefin with long chain branching may be present in a monolayer film either alone or in a blend or may be included in one or more layers of a multilayer film in accordance with the present invention. The applicant is WR Grace & Co-Conn. 3. European Patent 662989. The date of filing was 1 October 1993. The invention is described as relating "generally to shrink film compositions having improved properties, particularly improved shrink range, optics, toughness, (low) shrink force, (low) extractables and the like." More specifically, the improved shrink films of the invention are directed to alloys or combinations comprising precise relative amounts of "narrow" melting point polyolefin with a higher melting point polyolefin. The inventors were Messrs. Garza Kneale and Snyder. The patent is held by EI Du Pont De Nemours & Company. 4. European Patent Application 597502. This application was filed on 12 November 1993. It is said to be directed to a heat-shrinkable, thermoplastic film or bag which contains at least one homogeneous ethylene alpha-olefin copolymer having a density of at least 0.90 g/cc. Oriented films made in accordance with the invention exhibiting proved optics and improved impact resistance. A homogeneous ethylene alpha-olefin may be present in a monolayer film either alone or in a blend or may be included in one or more layers or a multilayer film in accordance with the invention. The applicant for the patent was WR Grace & Co-Conn. According to Mr Baddeley on the basis of his qualifications and experience and his consideration of Patent 692957 and comparing its claims to the matters disclosed by the contents of the prior art documents, he believes that this case has or may have the right to obtain an order pursuant to s 138(3)(b) of the Patents Act 1990, revoking Cryovac's Patent on the grounds that the invention claimed is not a patentable invention. This is said to be by reason of it being arguably obvious to a worker skilled in the art as at the priority date and thus not involving an inventive step and/or not novel as at the priority date. 19 This is as far as Mr Baddeley's evidence went on the merits of the case for possible revocation. He was, he said, "unable to advise Viskase as to whether it should commence proceedings for revocation of the patent". He could not do so without access to the research and development documentation relating to the invention which he would expect to be confidential but believed would or would be likely to reveal what consideration was given by the inventors to the available prior art in the research and development process leading to the invention the subject of the claims of the patent. He would also require access to documents relating to prior commercial dealings, prior use or prior publication by WR Grace & Co-Conn before the priority date of the patent. He would need the opportunity to consider such materials which, by their nature, he believed to be directly relevant to the possible grounds of revocation of the patent for lack of novelty and lack of inventive step and the opportunity to confer with and take the advice of an independent expert retained by Viskase in relation to what any documents produced convey or would probably convey to a non-inventive but skilled worker experienced in the field of the art addressed by the claims of the patent as at the priority date. He asserted his belief that Cryovac has, or is likely to have, or has had, or is likely to have had, possession of documents which are or are likely to be of relevance to a possible challenge to the validity of the patent. These would include: (a) documents constituting or recording the results of searches and inquiries carried out by Cryovac or its predecessor in title, WR Grace & Co-Conn; (b) documents relating to research and experimentation of the subject matter of Cryovac's Patent which record or evidence steps taken in the design and development of the invention; (c) all documents recording or evidencing or otherwise relating to any dealing in trade or commerce by WR Grace & Co-Conn including (but not limited to) any negotiations for or entry into any license or franchise agreement, joint venture arrangement, partnership or other exploiting of the subject matter of any of the claims of the Cryovac Patent before the priority date of 12 December 1994; (d) copies of all documents relating to any prior disclosure or exhibition to any member of the public; (e) copies of all prior art documents relating to any of the claims of Cryovac's Patent. These contentions have a decidedly formulaic tone. They do not strengthen any case for preliminary discovery. They could be made at any time, about any patent, by any patent attorney or legal practitioner familiar with the relevant law. 20 The contention that there is an arguable case itself is little more than that, a conclusion stated by reference to identified prior art but without any accompanying analysis. 21 In an affidavit sworn on 3 July 2000, Andrew Dark, a patent attorney employed by Davies Collison Cave, the patent attorneys for Cryovac, referred to Mr Baddeley's affidavit and the letter of 22 February 2000 to Cryovac from Viskase's solicitors. Following that letter he had considered Patent 692957 and as a result of that consideration filed with the Australian Patent Office on 6 June 2000 a Request to Amend the Complete Specification of the Cryovac Patent together with a Second Statement of Proposed Amendments. A First Statement of Proposed Amendments had been filed in the Patent Office in the course of examination of the Cryovac Patent in response to an examiner's report. The amendments comprising the Second Statement of Proposed Amendments were aimed at clarifying the claims of the Cryovac Patent to more closely define various aspects of the invention claimed in it. They were also aimed at removing any overlap between disclosures in the Cryovac Patent and disclosures in other Cryovac patents which were, at the time of examination of the Cryovac Patent only patent applications, with earlier priority dates than the Cryovac Patent but which were not published until after its priority date. On 14 June 2000, Mr Dark received a letter from the Patent Office informing him that leave to amend the specification in accordance with Regulation 10.5 of the Patent Regulations had been granted. Details of the request were notified in the Official Journal of Patents on 29 June 2000. Mr Dark expressed his opinion that the Cryovac Patent as amended is valid. 22 Mr Dark expressed his belief, contrary to the contention in the Viskase letter of 22 February, that the company already had ample information on which it could have made a decision whether or not to seek revocation of the Cryovac Patent. Given that the Second Statement of Proposed Amendments effectively narrowed the claims of that Patent it should, in his opinion, be easier for Viskase to make a decision whether or not to seek its revocation. In a reply affidavit, Mr Baddeley referred to the amendments which he noted expanded the original thirty claims to seventy five in total as well as effecting numerous internal changes. He said: "Without the opportunity of being provided access to and inspecting the research and development documentation relating to each and every one of the amended claims, I am unable to properly advise the applicant upon the impact of the various amendments of the claims in terms of whether or not a claim for revocation of the Cryovac Patent is available or not." Nevertheless he sought directly from the Commissioner of Patents a copy of the Amendment Request form and any supporting documentation. He observed that in Mr Dark's letter to the Commissioner dated 6 June 2000, he had asserted that the amendments were primarily aimed at clarifying the claims to more clearly define various aspects of the invention. But nothing was said about issues of novelty and inventive step of the claims in original form or as amended. No information was provided as to the nature or extent of the "overlap" referred to in Mr Dark's affidavit. Mr Baddeley expressed his belief that there is a reasonable prospect that the amendment request might be opposed by Viskase. 23 Viskase seeks to demonstrate the existence of reasonable cause to believe that it has or may have the right to obtain relief against Cryovac by reference to the opinion of Mr Baddeley. That opinion was essentially a conclusion expressed in the terms of the rule. The conclusion is said to be based upon the prior art referred to but it did not indicate how it was reached. No doubt there are aspects of the prior art that overlap in terms of product and function the claims set out in the Cryovac Patent. But if that prior art does in truth anticipate the Cryovac Patent so as to render it either obvious or not novel there is enough to decide whether to bring a claim for relief. If it does not, because of its context or the relevant priority dates, then it does not show reasonable grounds for believing that the patent is invalid. Mr Baddeley's conclusionary statement, in my opinion, is insufficient to meet the requirements of O 15A r 6(a). On that basis I am not satisfied that either of the conditions set out in r 6(a) or (b) has been satisfied. 24 If I am wrong in that conclusion I would nevertheless not exercise my discretion in favour of making an order. For if I am wrong, on the facts of this case the slender basis for the order sought would, if that order were made, establish a very low threshold for the application of the rule. The rule should not operate to production of information except for good cause shown in terms of the conditions. In respect of patents for inventions, the exercise of the discretion must have regard both to the intrusive nature of the order and the need to encourage research and development unhampered by the prospect of speculative review of working papers by competitors. To allow the remedy in this case based upon formulaic recitations of wide application would set the threshold for pre-action discovery so low that there would be few cases in which a person wishing to challenge a patent could not

obtain discovery of the kind which is sought here. In my opinion, this application should be dismissed with 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 French.

Solicitor for the Applicant: Blake Dawson Waldron

Solicitor for the Respondent: Davies Collison Cave Solicitors