BACKGROUND
Inverness Medical Switzerland GmbH (Inverness) is the owner of four patents. The inventions described and claimed in these patents relate to assays involving specific binding, especially immunoassays. The device described in the patents is an analytical device suitable for home use as a single step device for, but not limited to, pregnancy testing.
Inverness alleged that pregnancy devices under the names QuickStream and QuickCard infringed various claims in the four patents.
Inverness sought orders against five parties. One party had ceased to exist on deregistration and another had entered into personal insolvency - both were no longer parties to the proceeding.
The remaining three parties were an Australian company MDS Diagnostics Pty Ltd (MDS Aus), a New Zealand company MDS Diagnostic Ltd. (MDS NZ) and a director of MDS Aus and MDS NZ (Dr. Appana).The three parties together are referred to as MDS, unless an issue relates to them individually
MDS did not develop QuickCard or QuickStream. They were supplied by an overseas manufacturer. From 2000, MDS acquired pregnancy testing devices from the product manufacturer, Phamatech and there was no evidence that Phamatech informed MDS of any allegations of patent infringement by its products.
One of the four Inverness patents was Australian Patent No. 626207 (the first patent). From the first patent two divisional patents were granted - Australian Patent No. 656966 (the second patent) and Australian Patent No. 656967 (the third patent).
The fourth patent, Australian Patent No. 643430 (the fourth patent) was filed separately.
The first, second and third patents expired on 26 April 2008.
The matter was determined under the Patents Act 1990 (the Patents Act)
INFRINGEMENT - MDS
After settling on the meaning of particular terms used in the four patents, the Court held that QuickStream and QuickCard infringed claim 1 of the first patent and QuickStream infringed claim 1 of the second patent.
The Court further held that claim 1 of the third patent was infringed by QuickCard but not QuickStream.
In regard to the fourth patent, the Court held that claim 1 of that patent had been infringed by QuickStream and QuickCard.
VALIDITY
MDS challenged the validity of all four patents on the grounds of lack of utility and lack of sufficiency.
MDS also challenged the priority date of the third patent, and in the event of the priority challenge being successful, asserted that claims 1 to 4 of the third patent were bad for lack of novelty.
MDS also challenged the validity of the claims of the fourth patent for lack of novelty and challenged particular claims of the second and fourth patents on the basis of lack of clarity.
Utility
The Court noted that is was for MDS, which asserted a lack of utility, to establish that ground of invalidity.
S18(1)(c) of the Patents Act requires a claimed invention to be useful (ie have utility).
The Court summarised the requirement for utility thusly:
- One test of utility is whether the claimed invention fulfils the promises of the specification, in that it does what was intended and claimed by the patentee, and whether the end obtained is itself useful (Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd [1998] HCA 19; (1998) 194 CLR 171 at 187, Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC [2008] FCAFC 82; (2008) 77 IPR 449 at [144]).
- All within the scope of the claim must be useful if the claim is not to fail for want of utility, so that the claim is bad if it covers something that will not produce the desired result even if the skilled person would know how to avoid it (WM Wrigley Jr Co v Cadbury Schweppes Pty Ltd [2005] FCA 1035; (2006) 66 IPR 298 at [138]). However, this principle does not mean that a specification should be construed in a way that any sensible person would appreciate would lead to unworkability when by construction it could be given a more limited meaning (Welch Perrin and Company Proprietary Limited v Worrell (1961) 106 CLR 588).
- The claims should be construed as they would be by the person skilled in the art desirous of making use of the invention (Martin Engineering Co v Trison Holdings Pty Ltd (1989) 14 IPR 330 at 338, Austal Ships Pty Ltd v Stena Rederi Aktiebolag [2005] FCA 805; (2006) 66 IPR 420 at [227]- [239] ).
- A claim does not need to specify a limitation that was common general knowledge in the art for that limitation to apply in construing a claim to avoid want of utility (Austal Ships at [236] per Bennett J, citing Washex Machinery Corporation v Roy Burton & Co Pty Ltd (1974) 49 ALJR 12 at 18 per Stephen J).
- Where a claim omits the feature, which on proper construction of the claim, is left for a reader to supply, the claim will not be invalid for want of utility if the feature is one a skilled addressee could be reasonably expected to supply and the claimed invention is useful after the feature is supplied (Bodkin C, Patent Law in Australia (Lawbook Co, 2008) at [6080]; Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119 at 143 per Gummow J; appeal allowed but the Full Court did not consider utility).
- Similarly, where a claim leaves the choice to the skilled reader to select the features to include in the invention, the fact that it is possible to make a purposeful selection of inappropriate features with the intention of making something useless does not imply that the claim lacks utility (Bodkin at [6070]; Martin Engineering at 338 per Burchett J).
- In order to determine whether a claim is bad for lack of utility, it is necessary to construe the claim, understand the specification and consider any evidence on the usefulness, or lack thereof, of the invention
MDS argued that what was promised in the first patent and claimed in claim 1 is an analytical test device which will function as an analytical test device for the target and analyte and, for that, accuracy is necessarily a promise and that was not achieved by what was claimed. MDS also argued that a device yielding false positives and false negatives is not useful. MDS submitted that false negative results may occur in certain contexts of the devices claimed in the Inverness patents.
The Court's analysis of the specification of the first patent was that:
... the claimed invention of the first patent is an improved diagnostic test device, with the improvement not being in the ability to detect the analyte with greater certainty or with less cross-reactivity of the reagent, but in the speed and convenience of the test. The specification recognises that the operations involved in the prior art devices involve time and introduce the possibility of error and it is apparent that the devices of the first patent are intended to reduce the steps involved and thereby reduce error. There is no statement that error will be eliminated. There is no evidence that the known techniques which were to be adapted were of any particular sensitivity ...The first patent promises convenience of use. ... The specification says nothing about false positives, false negatives, cross-reaction, accuracy or commercial success.
In finding against MDS on the ground of lack of utility the Court stated that a test device constructed according to the claims and as understood by the skilled addressee has not been shown to lack utility. The fact that, in theory, one could construct a device according to the claims that, in certain circumstances, would not detect the analyte is insufficient to render the invention so far as claimed in the claims invalid for want of utility.
Sufficiency
S 40(2)(a) of the Patents Act requires that a complete specification describe the invention fully, including the best method known to the applicant of performing the invention. This is sometimes referred to as "sufficiency".
In dismissing the lack of sufficiency ground, the Court stated at [132]-[133]:
MDS submits, in effect, that the claimed device of each of the patents is to test for an analyte with no cross-reactivity and no false positive or false negative results, so that a device within the claims is not possible in the absence of scavenger molecules.
The claims of the patents are not limited to devices which give no false positives and no false negatives. The test is not whether the specifications are sufficient to enable the production of such a device. The claims include devices which may give a false positive for hCG and may give a false negative for hCG. The specifications are sufficient to enable the production of such a device, which is useful even without the use of scavenger molecules. There is no evidence that the skilled worker could not make the inventions as claimed or that he or she would make a device that failed to detect an analyte. ... Further, for the reasons given in respect of the claimed lack of utility, I reject the underlying premise in MDS’ submissions that a lack of cross-reactivity is a necessary part of the invention.
Priority date
The Court indicated that the priority date of the third patent was to be determined as follows:
The third patent was filed as a divisional of the first patent. Accordingly, it takes the priority date of the first patent if it is fairly based on matter disclosed in the priority documents from which the first patent takes priority (s 79B of the 1990 Act; Reg 3.12(1)(c) and (2C) of the Patents Regulations 1991 (Cth)). If fairly based on the first patent but not on the priority documents, the third patent will take as its priority date the filing date of the first patent. The first patent claims priority from two Great Britain applications (GB 8709873 and GB 8800322) (Parent Priority Documents) with priority dates of 27 April 1987 and 30 October 1987 respectively. The filing date of the first Patent is 26 April 1988.
MDS contended that the third patent was not fairly based on the Parent Priority Documents or on the first patent such that the priority date of the third patent is its own date of filing, 21 May 1992. MDS asserted lack of novelty of the third patent by reason of a publication of 29 June 1989. This ground of invalidity could only succeed if the priority date of the third patent were its own date of filing.
With due respect to the Court, its approach in determining the priority date of the claims of the third patent is not consistent with the provisions of the Patents Act and Regulations insofar as they relate to the determination of the priority date(s) of the claims of a divisional patent.
s 79B of the 1990 Act relevantly provides:
SECT 79 Divisional applications prior to grant of patent
(1) If a complete patent application for a patent is made (but has not lapsed or been refused or withdrawn), the applicant may, in accordance with the regulations, make a further complete application for a patent for an invention:
(a) disclosed in the specification filed in respect of the first‑mentioned application; and
(b) where the first‑mentioned application is for a standard patent and at least 3 months have elapsed since the publication of a notice of acceptance of the relevant patent request and specification in the Official Journal - falling within the scope of the claims of the accepted specification.
Reg 3.12 governs the determination of the priority date of a claim:
REG 3.12 Priority dates generally
(1) Subject to regulations 3.13 and 3.14 and subregulation (2), the priority date of a claim of a specification is the earliest of the following dates:
(a) the date of filing of the specification;
(b) if the claim is fairly based on matter disclosed in 1 or more priority documents, the date of filing the priority document in which the matter was first disclosed;
(c) if the specification is a complete specification filed in respect of a divisional application under section 79B of the Act and the claim is fairly based on matter disclosed in the specification referred to in paragraph 79B (1) (a) of the Act - the date mentioned in subregulation (2C)
...
(2C) The date for a specification to which paragraph 3.12 (1) (c) applies is the date that would have been the priority date of the claim if it had been included in the specification referred to in paragraph 79B (1) (a) of the Act
Therefore, for Reg 3.12(1)(c) to apply, the claim has to be fairly based on matter disclosed in the specification referred to in paragraph 79B (1) (a) of the Act. The specification referred to in s 79(1)(b) of the Act is the "specification filed in respect of the first‑mentioned application [the Parent]", not the specification of the granted parent patent.
If the claim of the divisional patent is fairly based on the disclosure of the originally filed specification of the parent patent, then Reg 3.12(2C) specifies that the priority date of that claim is the priority date it would have attracted if it had been included in the originally filed specification of the parent patent. The priority date of the claim in the originally filed specification of the parent is then determined by Reg 3.12(1)(a) and (b).
If the claim is not only fairly based on the originally filed specification of the parent patent but also is fairly based on matter disclosed in 1 or more priority documents, the priority date of that claim is the filing date of the priority document in which the matter was first disclosed (Reg 3.12(1)(b)). However, if that claim is not fairly based on the disclosure of any of the 1 or more priority documents, the priority date of the claim is the date of filing of the originally filed specification of the parent patent (Reg 3.12(1)(a)).
If the claim of the divisional is not fairly based on the disclosure of the originally filed specification of the parent patent, Reg 3.12(2C) does not apply and the priority date of that claim is determined by Reg 3.12(1)(a) and (b). Any priority documents of the parent patent are not priority documents of the divisional patent. Unless the divisional patent itself claims priority from 1 or more priority documents, Reg 3.12(1)(a) applies and the priority date is the date of filing of the originally filed specification of the parent.
Applying this to the present matter, a claim of the third patent, which was filed as a divisional of the first patent, cannot take the priority date of the first patent, even if it is fairly based on matter disclosed in the priority documents from which the first patent takes priority, unless the claim is fairly based on matter disclosed in the originally filed specification of first patent.
Fair basing
The Court cited the HIgh Court's statement in Lockwood Security Products v Doric Products Pty Limited [2004] HCA 58; (2004) 217 CLR 274 at [69] that the fair basing requirement in s 40(3) of the 1990 Act requires a ‘real and reasonably clear disclosure’ of what is then claimed. The High Court said that it is wrong to apply an ‘over meticulous verbal analysis’ and the comparison is not analogous to that between a claim and an alleged anticipation or infringement (at [68]). The correct analysis is whether ‘the invention is broadly, that is to say in a general sense, described in the body of the specification’ or whether it ‘travel[s] beyond the matter disclosed’ (Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 95 per Gummow J, quoted with approval in Lockwood at [69]; Synthetic Turf Development Pty Ltd v Sports Technology International Pty Ltd [2005] FCAFC 270; (2005) 67 IPR 475 at [26]; Lockwood at [57]).
Disclosure is not limited to preferred embodiments set out in the specifications (Lockwood at [69]). The Court indicated that these principles are equally applicable to determining whether the claims in a divisional patent are fairly based on matter disclosed in a parent patent or a priority document.
Third patent claim not fairly based
The Court found that claim 1 of the third patent was broader than the disclosure of the priority documents of the parent patent and therefore was not fairly based on the parent priority documents and so not entitled to the dates of their filing.
The Court reasoned that the earliest filing date available for the third patent is then the filing date of the first patent, if fairly based upon that specification. However, the Court found that the class of devices of the third patent was "wider than or, put another way, the invention as claimed in the third patent travels beyond, the disclosures and description of the specification of the first patent" and that as a consequence, the earliest priority date of the third patent was the date of its own filing (20 December 1988).
Law on novelty
MDS attacked claims of the third and fourth patents on the ground of lack of novelty.
The Court stated that for a claim to lack novelty, a prior publication must disclose all of the essential integers of the relevant claim. It must supply enough information to enable a person of proper skill in the art to apply the discovery without the need to conduct further experiments, other than ordinary methods of trial and error which involve no inventive step (Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 at 530 per Gummow J; H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 at [173] per Bennett J, Middleton J agreeing).
For the purposes of practical utility, the information given in the prior publication must also be equal to that given by the subsequent patent (Nicaro at 530 per Gummow J). Commonly, the only question is whether the prior publication describes the claimed invention with sufficient clarity and something less than a full description may be sufficient to establish want of novelty (Lundbeck at [173]).
Novelty - third patent
Inverness accepted that if the third patent takes priority from its filing date, Australian Patent No 619231 (the Abbott patent) was relevant prior art for the purposes of novelty of the third patent. MDS contended that the Abbott patent anticipated claims 1 to 4 of the third patent.
Inverness did not contend that claims 1 to 4 of the third patent where novel over the Abbott Patent. The Court held that those claims should be revoked for want of novelty. Inverness submits that claim 9 is novel over the Abbott Patent but MDS did not have the opportunity to address the validity of this claim as Inverness only alleged infringement of claim 9 at the hearing. I have found above that claim 9 (and its dependent claim 10) is not infringed by the MDS devices.
Novelty - fourth patent
MDS alleged that claims 1 and 22 of the fourth patent were invalid for lack of novelty in light of the prior art information contained in the first patent. It was agreed that the validity of the fourth patent is governed by the Patents Act 1952 (Cth). In the amended particulars of invalidity filed on the last day of the hearing, MDS amended its particulars to rely only on anticipation by the first patent, which was fully argued, including in rounds of written submissions after the hearing. Inverness accepted that, in considering anticipation, the specification of the first patent is available under the 1952 Act to cite against the fourth patent on novelty.
The Court concluded that the first patent disclosed a device with all of the integers of claim 1 and of claim 22 of the fourth patent and therefore deprived those claims of novelty.
INFRINGEMENT BY DR APPANNA
Dr Appanna, is a director of both MDS NZ and MDS Aus and was described on the MDS website as the “Managing Director” and “Founder” of MDS, having founded MDS NZ in 1999.
At issue was whether Dr Appanna was personally liable for the infringement by MDS:
1. on the basis of being a joint tortfeasor; or
2. under s 13(1) of the 1990 Act on the basis that he “authorised” the conduct of MDS.
Joint tortfeasance
MDS accepted that if Dr Appanna was liable as a joint tortfeasor or pursuant to s 13(1) for the infringing acts of MDS NZ, it follows that similar findings should be made in respect of his role as a director of MDS Australia.
The parties referred to the three tests from the authorities which may be applied in determining whether a director is liable as a joint tortfeasor for acts committed by the company:
1. The test propounded by Lindgren J in Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231; FCA 1069 (6 December 1996), namely whether the director ‘directed or procured the infringing act’ (the Auschina test) (applying Performing Right Society Ltd v Cyril Theatrical Syndicate Ltd [1924] 1 KB 1 at 15 per Lord Atkin).
2. The test first suggested by Finkelstein J in an obiter remark in Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231; [2000] FCA 980 (1 August 2000 at [146], namely whether the director’s conduct is ‘such that it can be said of him that he was so personally involved in the commission of the unlawful act that it is just that he should be rendered liable’ (the Root Quality test).
3. The test propounded in the Canadian case Mentmore Manufacturing Co Limited v National Merchandising Manufacturing Co In (1978) 89 DLR (ED) 195, namely whether ‘the director made the infringing conduct his own in the sense that the director deliberately, wilfully or knowingly pursue[d] a course of conduct that was likely to constitute infringement or that reflected indifference to the risk of infringement’ (the Mentmore test).
At [180], the Court observed:
The Full Court has considered these tests but has not found it necessary to determine which test is the correct one (Allen Manufacturing Co Pty Limited v McCallum & Co Pty Limited (2001) 53 IPR 400 where both the Auschina and Mentmore tests were satisfied; Cooper v Universal Music Australia Pty Limited (2006) (2006) 156 FCR 380 where none of the three tests were satisfied). In Allen, the Full Court commented that the difference between the Auschina test and the Mentmore test may be more apparent than real as it was not aware of any cases in which the Auschina test was met but the Mentmore test was not met (at [43]). Justice Sundberg noted in Pioneer Electronics Australia Pty Ltd v Lee (2001) 108 FCR 216 at [46] that the ‘clear preponderance of authority’ favoured the Auschina test. After discussing the authorities at length, Redlich J of the Supreme Court of Victoria decided in favour of the Auschina test in Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd (2003) 9 VR 171 at [200]-[201].
Unnecessary to show knowledge of infringement
The Court stated that for patent infringement, there is no necessary mental element. It is not necessary to show that a director, to be liable, knows that the acts which he or she procures or directs constitute patent infringement, as such a condition does not exist for patent infringement generally.
The parties agreed that even under the Mentmore test there is no requirement that the director knows or has reason to know that the acts which he or she directed or procured constituted infringement of another party’s patent (Allen at [43]).
The Court was satisfied that Dr Appanna’s position as the Managing Director of MDS NZ and his participation in the procurement and distribution of the MDS devices in New Zealand and Australia were sufficient to establish that he deliberately, wilfully or knowingly pursued a course of conduct that resulted in MDS selling products that infringed the Inverness patents. Further, he was aware of competing products on the market and was indifferent as to whether or not those products were protected by patents. In taking part in the activities of MDS NZ and MDS Aus as a director and in the management of those companies, Dr Appanna directed or procured the obtaining of and the selling of the products that infringed Inverness’ patents.
On this basis, The Court then held than Dr Appanna was liable a a joint tortfeasor under both the Mentmore test and the Auschina test.
Liability under s 13(1) - “authorised” the conduct of MDS
Section 13 of the Patents Act 1990 provides:
Exclusive rights given by patent
(1) Subject to this Act, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention.
(2) The exclusive rights are personal property and are capable of assignment and of devolution by law.
(3) A patent has effect throughout the patent area.
MDS submitted that the word “authorise” in s 13(1) is not relevant to the alleged liability of a director for infringing acts by a company and is not a concept that defines any infringing act by a third party. MDS submitted that the different contexts of s 13(1) of the 1990 Act and s 101 of the Copyright Act have not been argued before and so were not properly considered by Gummow J in Rescare, by Burchett J in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (1998) 42 IPR 111 or by the Full Court in Bristol-Myers Squibb Company v F H Faulding & Co Ltd [2000] FCA 316; (2000) 97 FCR 524 .
However, the Court was not convinced [199]:
I do not accept MDS’ argument that the different statutory contexts justify different meanings for the word “authorise” in patent and copyright law. As Inverness points out, the 1990 Act, unlike the Copyright Act, does not separately define the exclusive rights of the intellectual property owner and the acts which constitute infringement of those rights. Those acts which trespass on the patentee’s exclusive rights under s 13 of the 1990 Act constitute infringement. Further, s 13(2) of the Copyright Act uses the word “authorise” in a similar way to s 13 of the 1990 Act to describe the exclusive right of the copyright owner to authorise a person to do particular acts.
MDS further contended that a director can never be held liable for patent infringement on the “authorisation” ground because only the company can give the requisite warrant to invoke liability. MDS submitted that a director cannot give such warrant to the company because of the distinction between the company as a separate, distinct entity and its directors who have an internal role in the management of the company.
Again, MDS was unsuccessful in convincing the Court [201]:
Put together, MDS’ submissions amount to saying that there can be no infringement by authorisation unless the authoriser is in such a position or such a relationship with the person being authorised that the authoriser has formal authority, in a technical sense, to authorise that person to do the infringing act. If that submission is that only the patentee has the right to authorise exploitation of a patent, it would follow that no person or company other than the patentee can grant the legal right to another to exploit the invention. This construction of “authorise” does not accord, in my view, with s 13 or the scheme of the 1990 Act, including s 117, or the meaning of “authorise”. To the extent that MDS is arguing that Dr Appanna could not have authorised MDS NZ or MDS Aus to infringe as he was a director without proper authority formally to authorise actions of the company, I reject such a submission. Section 13 does not carry that limitation.
The Court was of the opinion that there could be no dispute that Dr Appanna knew that the infringing act of the sale of the MDS devices would occur. He had the power to prevent those acts and some duty to interfere. Express or formal permission is not essential and inactivity or indifference may reach a degree from which authorisation or permission may be inferred (Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 61 IPR 575; [2004] FCA 1123 (31 August 2004) at [19] per Bennett J).
The Court held that Dr Appanna authorised MDS to sell the infringing products. It was satisfied that he had the power to prevent the companies from committing the acts of exploitation (Metro on George at [18]). The Court found that Dr Appanna arranged for the sourcing of the products and personally participated in the distribution of those products. Dr Appanna sanctioned, approved and countenanced the sale of products that infringed Inverness’ exclusive right to exploit the invention of the first patent and the second patent.
In summary, the Court held:
- Claim 1 of the first patent were infringed by QuickStream and QuickCard.
- Claim 1 of the second patent were infringed by QuickStream.
- Claims 1 to 4 of the third patent where invalid for lack of novelty. The third patent had expired.
- Claims 1 and 22 of the fourth patent were invalid for lack of novelty and should be revoked.
- Dr Appanna was personally liable for the infringement of MDS Aus and MDS NZ as a joint tortfeasor.
- Dr Appanna was liable under s 13(1) of the 1990 Act for authorising the infringement of MDS Aus and MDS NZ.
