Woodbridge Foam Corporation v AFCO Automotive Foam Components Pty Ltd

REASONS FOR JUDGMENT 1 The applicant is the proprietor of Australian Patent 728093 for methods of producing foamed articles in a mould and for moulds for producing foamed articles. The abstract reads: "A method of producing an article in a mold (sic) comprising an upper mold and a lower mold defining a mold cavity, the process comprising the steps of: dispensing a liquid foamable polymeric composition into the mold cavity; allowing the liquid formable (sic) polymeric composition to expand to substantially fill the mold cavity; and venting gases in the mold cavity through at least one vent in the mold to allow the gases to exit from the mold, the size of each vent being selected such that movement of the liquid foamable polymetric composition into the vent is restricted to substantially prevent exist (sic) thereof from the vent." In this action the applicant claims that its monopoly in the patented methods and products has been infringed. Its statement of claim takes the usual form, describing the parties in paragraphs 1 and 2, claiming proprietorship and asserting the validity of the patent in paragraphs 3 and 4 and alleging infringement in paragraph 5. According to its amended defence, to which detailed reference will be made in a moment, the respondent denies infringement, alleges that the patent is invalid upon the grounds set out in the particulars of invalidity (which were separately delivered), gives notice that it will rely on s123 of the Patents Act 1990 (Cth) (that is, the defence of innocent infringement) and pleads the equitable defences of estoppel and acquiescence. There is a cross-claim in which the respondent asks for revocation of the patent on the ground of invalidity. 2 The applicant contends that in certain respects the defence and the particulars of invalidity are defective or embarrassing and ought to be struck out. The parties' solicitors have exchanged correspondence about the applicant's complaints, and some points have been remedied to its satisfaction in the amended defence. Disagreement remains about the balance of the complaints which are the subject of the strike out motion. I propose to deal with the points in the order in which they have been raised by the applicant. 3 Before I do that I wish to make a few preliminary observations about the function of pleadings and particulars. I do not embark upon that task to say something new; to the contrary, the points I propose to make are well established. But I am compelled to restate them because, in the course of submissions, it was suggested that nowadays the court adopts a relaxed attitude to the rules relating to pleadings to encourage the parties to get on with their dispute and resolve between themselves any problems that may arise. I wish to explain why I do not accept that there should be a relaxed attitude to pleadings. 4 The principal object of pleadings is to define the issues that are to be litigated, or as Jessel MR put it in Thorp v Holdsworth (1876) 3 Ch 637, 639, "to narrow the parties to define issues". Another function is "to give fair notice of the case which has to be met [by] the opposing party" (Esso Petroleum Co. Ltd. v Southport Corporation [1956] AC 218, 238) so that there can be a fair trial. Pleadings also inform the court what the case is about: The Why Not (1868) 2 A&E 265, 266. Finally, there must be a record of the issues raised in litigation to prevent future litigation on the same issues between the litigants or their privies. For a detailed discussion about the functions of pleadings reference should be made to Jacob, "The Present Importance of Pleadings" (1960) Curr. L. Pr., 171. In relation to particulars see Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214. 5 I hope I have said sufficient to indicate that, in my view, a sloppy approach to pleadings simply will not do if the result is to undermine or compromise their function. Parties can always be encouraged to amicably resolve their disputes about pleadings. If that fails the duty of the court is clear. 6 I now turn to the applicant's complaints. The first matter concerns paragraph 4 of the defence. Having denied the applicant's allegation that the patent is "subsisting and of full force and effect", paragraph 4.2 of the amended defence provides (with irrelevant portions omitted) "that the alleged infringements … were not novel at the earliest priority date of any claim of the patent". This is the so called "Gillette Defence" and is based on the observations of Lord Moulton in Gillette Safety Razor Company v Anglo-American Trading Company Ld (1913) 30 RPC 465. The plea is followed in paragraph 4.3 by the allegation, which is repeated in the cross-claim, that in any event the patent is invalid for the reasons set out in the particulars of invalidity. Reference must be made to those particulars. The grounds of invalidity sought to be established are that the specification does not meet the requirements of ss 40(2) or (3), that the claimed invention is not novel when compared with the prior art, that the claimed invention is obvious and did not involve an inventive step, that the claimed invention is not a manner of manufacture and that it is not useful. Paragraph 4.3 is then followed by a general denial of infringement in paragraph 5. 7 The applicant says that the Gillette Defence is embarrassing because it adds nothing to the respondent's general denial of infringement and its allegation of invalidity for want of novelty or, if it is intended to add something, that something is not spelt out. It is not without some hesitation that I propose to reject this submission. My reason requires me to state what I understand to be the point of the Gillette Defence. This takes me to Mr Frost's textbook Patent Law and Practice, the third edition of which was published in 1906. In a passage which appears to anticipate (if I might borrow a word that has a special meaning in this area) the Gillette Defence Mr Frost wrote (vol 1 p. 56): "Sometimes in a patent case a conclusion may be arrived at in favour of the defendant by considering the infringement apart from the patent. If it can be shown that the alleged infringement is an act which, having regard to the state of public knowledge prior to the date of the patent, the public actually did or had the right to it (ie, passing from what was actually known or done to the act complained of involved no inventive step), the patentee cannot complain. He is in this dilemma, either the patent includes that which was actually done before or that which the public had the right to do - that is, something which involved no invention - in which the case is bad for want of novelty; or it does not include it, in which case the defendant is not an infringer." 8 What Lord Moulton said in Gillette is to the same effect. He pointed out that it is permissible for a patent case to be decided without regard to the patent in suit. That is really the important point. A plea of invalidity for want of novelty can only be resolved after there has been a close examination of the patent in suit and the claimed invention has been compared with prior disclosures. Issues of infringement begin with a construction of the claims, which may also involve a close examination of the patent, and then the alleged infringing product or process must be compared with the claims. The Gillette Defence avoids these steps and the complexities that usually will result. 9 Mr Caine points out that the current editors of Terrell on the Law of Patents (it is now in its 15th edition) states that the Gillette Defence is not a good defence. I regret to say, however, that I do not follow their explanation. The point seems to be that such a defence does not comply with the pleading requirements relating to allegations of invalidity set out in the Practice Direction in Part 49 of the Civil Procedure Rules 1998 (UK) which applies to business in the Patents Court (see Terrell par 12.108). The same point was made in the previous edition (par 12.91) but with reference to O 104 r 6 of the Rules of the Supreme Court 1965 (UK), which were to the same effect as the Practice Direction. The reason I have difficulty with the explanation is that the Gillette Defence does not attack the validity of the patent and therefore is not covered by the Practice Direction or the rule which it replaced. In any event it is clear that Lord Moulton believed it was a good defence, and the judges in Page v Brent Toy Products Ltd (1949) 57 RPC 4, 9, 13 said the defence could have been raised but for the fact that the defendant was not in a position to assert that the plaintiff was in the dilemma of either no invention or no infringement. So, I propose to allow the defence to stand. 10 The second matter relates to the innocent infringement defence. The defence is found in paragraph 5.3(a) which I will set out in full because it relates to next point as well. Paragraph 5.3(a) reads: "In the premises of paragraph 5.2(c): (i) AFCO relies on the provisions of section 123 of the Patents Act 1990 for any proved infringement of the Letters Patent prior to about mid-March, 2001, when notice was given to AFCO by letter from the Applicant dated 15 March, 2001; and (ii) the Applicant is estopped from obtaining injunctive relief or from recovering any monies from AFCO for any proved infringement of the Letters Patent in that by return of the moulds identified as B and C by WHAG to AFCO for onging production of Toyota and Holden headrests without notice or complaint of patent infringement from either WHAG or the Applicant, the Applicant by or through WHAG has acquiesced in the conduct of AFCO about which complaint is now made alternatively is estopped from recovering any moneys for any period prior to about mid-March, 2001 when notice was given to AFCO by letter from the Applicant dated 15 March, 2001" Section 123, which is relevantly incorporated by reference, provides that an infringer who at the date of infringement was not aware, and had no reason to believe, that the patent existed is not liable for damages nor for an account of profits. The applicant's complaint is that the respondent has not set out the material facts upon which it intends to rely to establish that it has no reason to believe that the patent in suit existed. I do not think that this is a valid complaint. The material facts upon which the plea is based are the facts alleged in paragraph 5.2(c), as is made clear by the introductory words "In the premises of paragraph 5.2(c)". In that part of the pleading it is alleged that the moulds used by the respondent to manufacture foamed articles (headrests for motor vehicles) were made by a third party and were used by WHAG (a business partly owned by a wholly owned subsidiary of the applicant) and that, when they were provided to the respondent by WHAG, there was no notice or complaint of any patent infringement by either WHAG or the applicant. 11 To be frank, I doubt whether the respondent could make out the statutory defence on those "facts" even if they are true. It is likely that the respondent will apply to further amend its defence to plead additional facts if it ultimately intends to run a defence of innocent infringement. But that is a problem for another day. For present purposes the only question which concerns me is whether material facts have been pleaded in support of the defence, and the answer is that they have. 12 I now come to a point where the applicant appears to be on firmer ground. It says that the defences of estoppel and acquiescence are not properly pleaded because the amended defence does not set out the material facts upon which those defences are based. The estoppel relied upon seems to be by conduct or by representation, in which I include representation by silence. Some of the facts that will support this plea are set out. They are the same facts upon which the respondent relies for innocent infringement. On the other hand, it is clear that further facts must be pleaded. For example, to make out the defence it will be necessary for the respondent to show that the conduct or representation induced an erroneous impression in the minds of its relevant personnel. But there is no allegation to this effect. If there was, the allegation would pick up O 12 r 3 of the Federal Court Rules which would then require the respondent to give particulars of the state of mind of those persons. The respondent must also show that it altered its position for the worse and no facts in support of this issue are to be found in the defence. It is clear that the pleading is deficient. 13 Turning to the plea of acquiescence, the respondent confronts difficulties of a different kind. First, acquiescence is a chameleon like term and it is not clear in which sense it is being used by the respondent: see Glasson v Fuller [1922] SASR 148. Perhaps the respondent is saying that the applicant has waived or abandoned its right to sue for infringement, in which case the applicant's knowledge is a material fact which must be raised in the pleading. Another possibility is that the respondent is merely asserting a loss of right by delay. It is not enough for the respondent to say, as it does in its present defence, that the material facts are set out in paragraph 5.2(c) because they do not elucidate the position. In any event, on their own those "facts" do not support the defence, whatever the respondent means by 'acquiescence'. Here again the defence is deficient. 14 Now I come to the complaints about the particulars of invalidity. It is not necessary for me to deal with every point raised by the applicant because some of the difficulties were clarified during the course of the hearing. For example, certain parts of the particulars were ambiguous, and the respondent's position has been clarified. So, I will concentrate attention only on those issues which remained in dispute at the conclusion of the hearing. 15 To understand the first complaint it is necessary to refer to the complete specification for the patent. It is customary to describe an invention by reference to drawings. The complete specification of the patent in suit is no exception; it includes 10 drawings. In the section headed "Best Mode for Carrying out the Invention" the prior art is discussed by reference to drawings 1 and 2. This is followed by a description of the claimed invention which is described by reference to drawings 3 to 10. The claims describing the invention include the following: "28 A method of producing an article, in a mold as substantially hereinbefore described. 29 A mold for producing foamed articles, substantially hereinbefore described with reference to the accompanying drawings." 16 Returning to the particulars, I have mentioned that included in the grounds of invalidity is a claim that the patent does not comply with ss 40(2) or (3). The particulars say that the claims of "the complete specification [do] not define the invention fully" as required by s 40(2)(b) and are not "clear and succinct" as required by s 40(3). By way of particulars in support of each allegation it is alleged that "Claims 28 and 29 specifically comprehend the prior art admitted in the specification description". It is these particulars that are the subject of the complaint. The applicant says, first, that these particulars have nothing to do with the allegation of invalidity and, second, it is not clear what is meant by the phrase "specifically comprehend the prior art". 17 The point the respondent wishes to make is that the claimed invention incorporates the prior art with the consequence that, and I quote respondent's counsel, "they've ... recited themselves out of court by their own claims". Reference was made to a number of cases including Chapman & Cook, & Lectro Linx, Ld v Deltavis, Ld (1930) 47 RPC 163, Raleigh v Miller (1948) 65 RPC 141 and Sonotone Corporation v Multitone Electric Coy, Ld (1955) 72 RPC 131. The assumption that lies behind this submission is that, as a matter of construction, the prior art is incorporated in the claims, particularly in claims 28 and 29. 18 I propose to allow the particulars to stand but it should not be thought that I believe there to be merit in the defence. It is because I cannot say that the construction point is hopeless that I will not interfere. 19 The next complaint concerns the claim that the invention is invalid for want of novelty. This allegation is particularized in paragraph 2 where reference is made to the prior publication of certain foreign patents and certain reference books. When the prior art is in a publication, the rules require the particulars to specify the time when, and the place where, the publication became publicly available: see O 58 r 15. The Patents Regulations 1991 (Cth) are to the same effect: see reg 12.4(2). These particulars have not been provided. Mr Hess said that the place of publication of the foreign patents is the Australian Patent Office in Canberra and that the time of publication is when they were first lodged at the Office. That is sufficient to eliminate the difficulties so far as the foreign patents are concerned. But it will be necessary for proper particulars to be given of the reference books. 20 The want of novelty claim also relies on acts of prior use. The use is particularised in paragraph 2C of the Particulars of Invalidity. It is alleged that the use was by five named corporations and some examples are given. However, O 58 r 15 and reg 12.4(2) require the respondent to specify for each alleged act the name of the person who did the act, the period in which, and the place where, the act was done publicly, a description that is sufficient to identify the act and, if the apparatus exists, where it can be inspected. 21 Mr Hess acknowledged that these particulars have not been provided but complains that to do so is a difficult task. I accept that may well be so but that is not a proper basis for ignoring the rules. If the respondent wishes to persist with this part of its defence the particulars must be given. 22 I will order that para 5.3(a)(ii) of the amended defence be struck out and that proper particulars of the alleged invalidity for want of novelty be delivered. The applicant should have its costs of the application.