Discovery - privilege - patent infringement action - claim for revocation - obviousness - lack of novelty - motion for production of documents relating to design and development of invention - claim of privilege - extent of patent attorney and client privilege - motion for production allowed in part.

Patents Act 1990 (Cth) s.200(2)

Terrell On the Law of Patents 13th Edition, Sweet and Maxwell (1982)

Moseley v. The Victoria Rubber Co (1886) 3 RPC 351

Re Dormeuil Trade Mark (1983) 100 RPC 131

Imagic v. Futuretronics (1983) IPR 382

Wilden Pump Engineering Co v. Melvin Fusfeld (1985) FSR 159

Sepa Waste Water Treatment Pty Ltd v. J.M.T. Welding Pty Ltd (1986) 6 NSWLR 41

Pfizer Pty Ltd v. Warner Lambert Pty Ltd [1989] FCA 402; (1989) 24 FCR 47

O'Reilly v. Commissioners of the State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1

Allen Allen and Hemsley v. Deputy Commissioner of Taxation [1989] FCA 125; (1989) 20 FCR 576

Halcon International Inc v. Shell Transport and Trading Co Ltd (1979) 96 RPC 459

Welcome Foundation Ltd v. V.R. Laboratories (Aust) Pty Ltd [1981] HCA 12; (1981) 148 CLR 262

Solicitors for the Respondents: Freehill Hollingdale and Page

On the Respondents' amended motion filed in Court on 25 August 1993:

1. The Applicants to produce to the Respondents' solicitors by

Monday, 6 September 1993 all documents recording or evidencing

steps taken in the design and development of the tillage points

the subject of Australian Patent No 570643 and Australian

Patent No 596351.

2. The documents referred to in Order 1 herein and the information

contained therein (hereinafter referred to collectively and

separately as the "Applicants' Confidential Documents") are

until further order to be regarded as confidential for purposes

of the within proceedings and shall not, without the written

authority of the Applicants or leave of the Court, be used by

the Respondents or either of them otherwise than for the

purposes of the proceedings and as provided for herein.

3. Disclosure of the Applicants' Confidential Documents will be

limited to:

(a) the Respondents' legal advisers and patent attorneys; and

(b) such of the Respondents' independent expert witnesses as

may be named and approved by the Court or agreed to by

the Applicants.

4. A person from the class of persons mentioned in Order 3 shall

not receive the Applicants' Confidential Documents unless that

person shall first have given a written undertaking to the

Applicants and the Court that the said documents and the

information contained therein will not otherwise be used or

disclosed without the written authority of the Applicants or

leave of the Court.

5. The Respondents' solicitors keep a written record of any

document contained in the Applicants' Confidential Documents of

which they have made copies.

6. All copies of the Applicants' Confidential Documents and any

other document recording the same or part thereof be returned

to the Applicants' solicitors on determination of the

proceedings unless the Court otherwise orders.

7. The parties do have liberty to apply on two days written

notice.

8. The costs of the motion be in the cause.

Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT ON MOTION FOR INSPECTION OF DOCUMENTS

FRENCH J Wundowie Foundry Pty Ltd (Wundowie) and Clarewood Pty Ltd (Clarewood) claim injunctive and other relief against Milson Foundry Ltd (Milson Foundry) and David Wallace for alleged infringement of a patent for an improved form of agricultural share. Milson Foundry and Wallace counterclaim for revocation. The trial of this action on the question of liability has been set down for four days commencing 19 October. Discovery has been given by list. Milson Foundry and Wallace now move for production of certain documents in respect of which Wundowie and Clarewood claim, inter alia, privilege from production by reason of the statutory privilege conferred on patent attorney and client communications.

2. Wundowie is a company which, since 20 August 1990, has been registered as the proprietor of Australian Patent Number 596351 for an invention entitled "Tillage Points". The patent is a Patent of Addition to Australian Patent 570643. The application date for the patent was 26 February 1985 and the Complete Specification was filed on 25 February 1986. The patent was published and became open to public inspection on 4 September 1986. The invention is described in the Complete Specification as an improvement or modification to agricultural shares and in particular to such shares known as scarifier, cultivator, combine or tillage points. The first claim defining the invention is set out in the Complete Specification in the following terms:

"An agriculture share formed by casting a ferrous alloy

having from 1 to 5 wt % carbon; the alloy having a

sufficient quantity of chromium, and being cast, to

provide a microstructure of eutectic iron-chromium

carbides in a matrix of austenite in the as cast

condition or martensite and/or retained austenite and

precipitated secondary carbides in a heat treated

condition, said agricultural share having a forward

working end in the form of a flattened, protruding

arrow-head and a rearward mounting end; the forward

end defining a protruding nose and, on each side of

the nose, a respective forwardly facing work edge

which extends rearwardly and laterally from the nose

to a respective one of two laterally opposed heels;

the rearward and defining mounting means intermediate

and rearwardly of the heels and providing respective

rearwardly facing trailing edges extending from each

heel toward the mounting means; the share having upper

and lower major surfaces each bounded by the work

edges and the trailing edges and a thickness between

those surfaces which decreases rearwardly of a line

extending between the heels."

Clarewood is a company said to have exploited the Wundowie Patent in Australia since February 1988 pursuant to an exclusive licence from Wundowie.

3. By their amended statement of claim, Wundowie and Clarewood allege that Milson Foundry and/or its Australian agent, David Wallace, have infringed the Wundowie Patent. The amended particulars of infringement allege, inter alia, that Milson Foundry and/or Wallace have imported, marketed, used and sold in Australia a range of cast tillage points under the brand name "MAXI-POINT" which incorporate features within various of the claims of the Wundowie Patent. Wundowie and Clarewood allege that they have suffered loss and damage by reason of the infringements. By their defence, Milson Foundry and Wallace deny the alleged infringements and assert that the Wundowie Patent is invalid on the grounds that it did not involve an inventive step, was not novel and was obvious. Further, it is alleged, that the patent is not clear and not fairly based on the matter disclosed in the specification. Particulars of Objection were filed with the defence. Milson Foundry and Wallace also cross-claim for revocation of the patent and damages for unjustifiable threats of infringement proceedings on the part of Wundowie and Clarewood.

4. Wundowie and Clarewood each filed a list of documents on 3 June 1993 and a further list of documents on 13 August 1993. In these lists privilege was claimed in relation to classes of documents which can be compendiously defined as follows:

1. Letters, memoranda, documents, opinions and other

correspondence passing between the applicants and their patent

attorneys and former patent attorneys, all having been made

solely for the purposes of such communications.

2. Memoranda, opinions and other documents brought into existence

by the applicants solely for the purpose of the design and

development of the tillage points which are the subject of the

Wundowie Patent.

3. Memoranda, opinions and other documents brought into existence

by the applicants solely relating to the design and development

of the product the subject of the Wundowie Patent.

4. Letters, memoranda, documents, opinions and other

correspondence passing between the applicants' patent

attorneys, former patent attorneys and the Patents Office

relating to the application for the grant of the Parent Patent

(Australian Patent No. 570643) and the Wundowie Patent

(Australian Patent No. 596351) including in particular

documents within the possession of the applicants, their patent

attorneys and former patent attorneys.

Privilege was claimed in respect of the classes of documents in paras. 1, 2 and 3 on the grounds that they comprise communications passing between the applicants and their patent attorneys or records or documents made for the purpose of obtaining professional advice and assistance from the attorneys. The documents set out in para.4 were said to be privileged on the ground that they are not liable to be inspected or produced pursuant to s.55 of the Patents Act 1952 (Cth) which right continues notwithstanding the repeal of that Act by the Patents Act 1990 (Cth).

5. By a motion for discovery and production of documents filed on 17 August 1993, Milson Foundry and Wallace seek an order for the production of certain classes of documents and specific discovery in relation to another class. The motion came on for hearing on 25 August 1993 in an amended form filed in Court on that day. Production of the following classes of documents was sought:

"1. All documents relating to the design and

development of the Wundowie Fabcast range

of tillage points since 16 August 1983.

2. All documents relating to the design and

development of the tillage point the

subject of the Australian Patent no 596351

("the Wundowie Patent").

3. All documents filed with the Patents

Office in relation to the application for

Australian Patent no 570643.

4. All documents filed with the Patents

Office in relation to the application for

the Wundowie Patent.

5. Any documents constituting or recording

the results of searches and inquiries

carried out by the Applicants' attorneys

in relation to Australian Patents nos

596351 or 570643."

Specific discovery was also sought of "(a)ll documents bearing upon the Applicants' metallurgical knowledge including, without limitation, text books and other documentation dealing with the casting and uses of ferrous alloys."

6. On the hearing of the motion, I ordered that the applicants do by 6 September 1993 produce to the respondents for inspection documents in their power or possession constituting or recording the results of searches and inquiries carried out by them or their attorneys in relation to Australian Patents 596351 and 570643 provided that they shall not be required to produce any comments or opinions communicated to them by their attorneys in relation to the searches. The motion was otherwise adjourned to the judgment on 1 September 1993. In relation to the first class of documents sought from the applicants, I indicated in the course of argument that it was, on any view, too widely expressed. It seems that this class was in truth directed to documents relating to the design and development of the Wundowie Fabcast range of tillage points the subject of Australian Patent 570643, that is the Parent Patent. Argument proceeded on that basis.

7. The principal objection to the production of the design and development documents was that they are the subject of a statutory privilege which extends to documents and records made for the purpose of communications between patent attorney and client. In this respect, s.200(2) of the Patents Act 1990 was relied upon. That sub-section provides:

"200(2) A communication between a patent attorney and

his or her client, and any record or document made for

the purposes of such a communication, are privileged

to the same extent as a communication between a

solicitor and his or her client."

An attorney-client privilege expressed in narrower terms had been embodied in the former Patents Act 1952 in s.134(1A) which provided:

"134(1A) A communication between a patent attorney and

his client is privileged to the same extent as a

communication between a solicitor and his client."

Thus, sub-section 200(2) of the 1990 Act extended the privilege to include not only communications between attorney and client but also "any record or document made for the purposes of such a communication".

8. The privilege was created in Australia in 1960 when sub-s.(1A) was inserted into s.134 of the Patents Act 1952. There was no such privilege at common law. Indeed, communications between a client and his solicitor who was also the client's patent attorney were not privileged if the solicitor received them in his capacity as a patent attorney - Moseley v. The Victoria Rubber Co. (1886) 3 RPC 351 at 355-356 (Chitty J), see also Re Dormeuil Trade Mark (1983) 100 RPC 131; Imagic v. Futuretronics (1983) IPR 382; Wilden Pump Engineering Co v. Melvin Fusfeld (1985) FSR 159. It appears that the position of patent agents in the United Kingdom was first altered in this respect by s.15 of the Civil Evidence Act 1968 and subsequently provided for in s.104 of the Patents Act 1977 (UK). The privilege is now provided by s.280 of the Copyrights Patents and Designs Act 1988 (UK). The privilege in the United Kingdom applies only to communications "made for the purpose of any pending or contemplated patent proceedings" - see Terrell On the Law of Patents, 13th Edition, Sweet and Maxwell (1982) p 409. In Australia, the privilege extends to communications passing between a patent attorney in his capacity as such and the patent attorney's client which would be privileged if the attorney were a solicitor. It is not limited to communications made in the course of conduct of activities under the Patent Act but covers the legitimate professional activities of a patent attorney - Sepa Waste Water Treatment Pty Ltd v. J.M.T. Welding Pty Ltd (1986) 6 NSWLR 41 at 43 (McLelland J) approved by Gummow J in Pfizer Pty Ltd v. Warner Lambert Pty Ltd [1989] FCA 402; (1989) 24 FCR 47 at 49-50. Each of these decisions related to s.134(1A) of the Patents Act 1952.

9. It seems to have been assumed on both sides of the argument that the relevant privilege in relation to the documents, the subject of the motion, derives from s.200(2). However, many of the documents will have come into existence prior to the commencement of the Patents Act 1990, which occurred on 30 April 1991. While s.200(2) clearly applies to documents which came into existence after the commencement date, it is not clear why it should apply to documents which came into existence before that time. In the event, I am content to dispose of the matter on the assumption that s.200(2) applies as the difference between that sub-section and its predecessor does not affect the outcome of this case.

10. Sub-section 200(2) defines a class of communication and records or documents which are the subject of privilege and also the extent of that privilege. The privilege applies to communications between patent attorney and client and any record or document made for the purpose of such a communication. But it operates only "to the same extent as a communication between solicitor and client". This suggests that records or documents made for the purpose of a privileged communication are only privileged if directly related to that purpose. There is a distinction to be made between records or documents which involve confidential communications between patent attorney and client and those which merely evidence various transactions - O'Reilly v. Commissioners of the State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1 at 22 (Mason J); Allen Allen and Hemsley v. Deputy Commissioner of Taxation [1989] FCA 125; (1989) 20 FCR 576.

11. While design and development documents in relation to a particular invention may be confidential, it does not follow from their nature that they are brought into existence for the purpose of communication with patent attorneys. It is true that ultimately such documents may form the basis of a brief to an attorney to prepare a patent specification. That does not place them in the category contemplated by s.200(2). They are not of themselves privileged communications nor can it be said that they are made for the purposes of a privileged communication. Design and development documents are, by definition, necessarily related to the development of the invention. It is not to be assumed that all design and development documents are produced with a view to their incorporation into a patent specification or their transmission to patent attorneys for that purpose. In my opinion, the objections to the first two classes of documents based upon attorney/client privilege must fail.

12. Accepting that the first two classes of documents sought by the respondents are not subject to privilege, they are expressed too widely in so far as they extend to documents "relating to" the design and development of the inventions. Such documents can be relevant to issues of obviousness and novelty - see e.g. Halcon International Inc. v. Shell Transport and Trading Co. Ltd (1979) 96 RPC 459. In that case Whitford J observed at p 464 that evidence as to the way in which an inventor arrives at the invention might be of considerable assistance to the Court in reaching a determination as to whether what is alleged to be inventive was really little more than routine work. At the same time his Honour cautioned against excessive exploration of marginal documents. In the leading Australian decision on the point, Welcome Foundation Ltd v. V.R. Laboratories (Aust) Pty Ltd [1981] HCA 12; (1981) 148 CLR 262, Aickin J, with whom the other members of the Court agreed, held that evidence of research and experimentation of a patentee leading up to his claimed invention is generally admissible though not always likely to be helpful. And as his Honour noted, so far as discovery is concerned, the test is wider than the test of admissibility. In my opinion the class of documents to be produced should be limited, at this stage, to those which record or evidence steps taken in the design and development of the invention. In the event that there is a case to be made that some particular document relating to the design or development of the inventions which falls outside that class is potentially of importance to the respondents' case, then a further application can be made.

13. In opposition to the production of the documents mentioned in classes 4 and 5, Wundowie and Clarewood invoke the privilege argument and take general points about the relevance of the documents and the fishing nature of the inquiry. The operation of s.55 of the Patents Act is invoked. In my opinion, however, whatever the effect of that Act, Milson Foundry and Wallace have made no case for the production of documents which have been filed at the Patents Office and which are not already on the public record. I propose to dismiss that aspect of the motion.

14. For the preceding reasons I propose, in addition to the order made on 25 August 1993, to make an order that the applicants produce to the respondents' solicitors all documents recording or evidencing steps taken in the design and development of the tillage points the subject of Australian Patent no 570643 and Australian Patent no 596351. I will make confidentiality orders restricting access to solicitors, counsel and expert witnesses who have signed appropriate undertakings. The parties may bring in a minute proposing the terms of such order.