Re Martin Engineering Company and ESS Engineering Services & Supplies Pty Limited v Trison Holdings Pty Limited and Giangregorio Massarotto [1988] FCA 109 (15 April 1988)

FEDERAL COURT OF AUSTRALIA

Re: MARTIN ENGINEERING COMPANY and E.S.S. ENGINEERING SERVICES & SUPPLIES PTY.
LIMITED
And: TRISON HOLDINGS PTY LIMITED and GIANGREGORIO MASSAROTTO
No. 212 of 1988
Patents - Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Gummow J(1).

CATCHWORDS

Patents - application for interlocutory injunction to restrain infringement of standard patent - validity put in issue - injunction nevertheless granted.

Practice and procedure - interlocutory injunctions - principles applicable to patent cases - desirability of consistent approach between courts of concurrent federal first instance jurisdiction.

Patents Designs & Trademarks Act 1883 U.K. 46 and 47 Vict. c. 57.

Patents & Designs Act 1907 U.K. 7 Edw. VII, c. 29.

Patents & Designs Act 1932 U.K. 22 and 23 Geo. V, c. 32.

Patents Act 1952 s. 40.

Trade Practices Act 1974 s. 80.

Supreme Court Act (NSW) 1970 sub-s. 66 (4).

Companies Code 1981 ss. 573, 574.

Polaroid Corporation v Sole N. Pty. Ltd. (1981) NSWLR 491 followed.

Appleton Papers Inc. v Tomasetti Paper Pty. Ltd. (1983) 3 NSWLR 208 followed.

Bayer AG v Alphapharm Pty. Ltd. (1987) 8 IPR 559 referred to.

Martin Engineering Co. v Matflo Engineering Ltd., Federal Court, 29 October 1987 referred to.

American Cyanamid Co. v Ethicon Ltd. [1975] UKHL 1; (1975) AC 396 considered.

Kolback Securities Ltd. v Epoch Mining NL (1987) 8 NSWLR 533 approved.

State of Queensland v Australian Telecommunications Commission (1985) 59 ALJR 562 referred to.

Midland Milk v Victorian Dairy Industry Authority, Federal Court of Australia, 24 December 1987 (unreported) referred to.

Films Rover International Ltd. v Cannon Film Sales Ltd. (1986) 3 All ER 772 referred to.

Murphy v Lush [1986] HCA 37; (1986) 60 ALJR 523 referred to.

Beecham Group Ltd. v Bristol Laboratories Ltd. [1968] HCA 1; (1968) 118 CLR 618 considered.

Castlemaine Tooheys Ltd. v South Australia [1986] HCA 58; (1986) 161 CLR 148 referred to.

Ricegrowers' Co-operative Ltd. v Howling Success Australia Pty. Ltd. (1987) ATPR 40-778 referred to.

Carlton & United Breweries (NSW) Pty. Ltd. v Bond Brewing (NSW) Ltd. (1988) 76 ALR 633 referred to.

Peter Pan Electrics Pty. Ltd. v Newton Grace Pty. Ltd. (1985) 8 FCR 557 followed.

Smith v Grigg Ltd. (1924) 1 KB 655 referred to.

Dudgeon v Thomson (1874) 30 LT 244 considered.

Lister v Norton Brothers & Co. (1884) 1 RPC 114 considered.

Jackson v Needle (1884) 1 RPC 174 referred to.

Trautner v Patmore (1911) 29 RPC 60 referred to.

The Linotype Co. Ltd. v Mounsey [1909] HCA 39; (1909) 9 CLR 194 considered.

George C. Warner Laboratories v Chemspray Pty. Ltd. (1967) 37 AOJP 2513 considered.

Van der Lely NV v Bamfords Ltd. (1963) RPC 61 referred to.

Sharpe and Dohme Inc. v Boots Pure Drugs Co. Ltd. (1928) 45 RPC 153 referred to.

Meyers Taylor Pty. Ltd. v Vicarr Industries Ltd. [1977] HCA 19; (1977) 137 CLR 228 followed.

Graham Hart (1971) Pty. Ltd. v S.W. Hart & Co. Pty. Ltd. [1978] HCA 61; (1977) 141 CLR 305 followed.

Minnesota Mining and Manufacturing Co. v Beiersdorf (Australia) Ltd. [1980] HCA 9; (1980) 144 CLR 253 followed.

The Wellcome Foundation Ltd. v V.R. Laboratories (Australia) Pty. Ltd. [1981] HCA 12; (1981) 148 CLR 262 followed.

Windsurfing International Inc. v Borsimex Pty. Ltd. (1984) 2 NSWLR 196 considered.

Walker v Alemite Corporation [1933] HCA 39; (1933) 49 CLR 643 considered.

Griffin v Isaacs (1942) 12 AOJP 739 considered.

Commonwealth Industrial Gases Ltd. v MWA Holdings Pty. Ltd. (1970) 44 ALJR 358 at 387 referred to.

Welch Perrin & Co. Pty. Ltd. v Worrel [1961] HCA 91; (1961) 106 CLR 588 referred to.

Coopers Animal Health Australia Ltd. v Western Stock

Distributors Pty. Ltd. (1986) 67 ALR 390 referred to.

Washex Machinery Corp. v Roy Burton and Co. Pty. Ltd. (1974) 49 ALJR 12 referred to.

HEARING

SYDNEY
15:4:1988

Counsel for the Applicants: Mr. D.K. Catterns instructed by Messrs. Williams Niblett.

Counsel for the Respondents: Mr. J. Allsop instructed by Messrs. Phillips Fox.

ORDER

Upon the applicants by their counsel giving to the Court the usual undertaking as to damages, THAT until the determination of these proceedings or earlier further Order, the respondents and each of them be restrained by themselves, their servants and agents and the servants and agents of each of them from making and selling the Dyna-Trac conveyor belt cleaning equipment an example of which is Exhibit 13 PROVIDED THAT the making, advertising for sale, offering for sale and selling as individual items of conveyor belt scrapers, examples of which are depicted in Exhibits Q and R, shall not be restrained by this Order.

THAT costs be costs in the cause.

THAT exhibits Q and R remain in Court.

Note: Settlement and entry of orders is dealt with by Order

36 of the Federal Court Rules.

DECISION

Introduction

The applicants in these proceedings seek an interlocutory injunction restraining the respondents and each of them from infringing Claim 1 of the complete specification of Letters Patent No. 512902 for a standard patent granted pursuant to the Patents Act 1952 ("the Patents Act"). In particular, the applicants seek to have the respondents restrained from making or selling what is described in the evidence as the "Dyna Trac" conveyor belt cleaning system or any components thereof. There are other issues in dispute between the parties but by arrangement between them it has become necessary on an interlocutory level to deal only with this particular allegation of patent infringement.

2. The invention is entitled "Belt Cleaner Mounting Arrangement" and the first applicant, a United States corporation, is the registered proprietor of the patent. The patent has a priority date of 30 December 1977. The second applicant has its principal seat of business in Queensland and relies for its standing in these proceedings upon exclusive rights conferred on it under written license agreements with the first applicant. No issue is taken at this stage to contest the second applicant's standing.

3. The invention concerns an apparatus for cleaning conveyor belts (used particularly to convey coal, ores and like substances) by scraping them clean of dirt and fragments adhering to them after delivery of their loads. The complete specification commences with the following passage:

This invention relates to a belt cleaner
mounting arrangement.

Many varied arrangements have been provided
in the prior art for mounting conveyor belt
cleaners on a support member mounted
transverse to the direction of conveyor belt
travel. All of these arrangements have
presented certain problems with respect to
repair or replacement of individual blade
elements.

Sometimes the wiper blades are carried on
one end of a torsion spring. The other end
of the spring is affixed to a transverse
support. Such an arrangement is illustrated
in U.S. patent 3,342,312. As the wiper
blades wear, periodic replacement is
required. Occasionally a wiper blade
becomes damaged during regular use and the
individual blade must be replaced. In
either of these situations the conveyor belt
must be shut down and one of two
alternatives is presented to the belt
operator. If access permits, the operator
may be able to disconnect the individual
wiper blades from the support shaft and
replace them as needed. In the majority of
situations however, access to the underside
of the conveyor belt is limited and the
entire support shaft must be removed from
the side of the conveyor housing. This is
often difficult to accomplish because of
limited space. The time lost for conveyor
shutdown due to wiper blade replacement is a
critical factor to be considered.

It is therefore an object of the present
invention to provide a belt cleaner mounting
arrangement which will obviate or minimise
the foregoing disadvantages in a simple yet
effective manner or which will at least
provide the public with a useful choice.

Accordingly the invention consists in
apparatus for cleaning a conveyor belt
comprising a linearly extending support
member adapted to be positioned beneath the
conveyor belt in use and generally
transverse to the direction of the conveyor
belt travel; at least one sleeve member
mounted on the support member for a sliding
movement there along, the sleeve member
being arranged to cooperate with the support
member to prevent rotation of the sleeve
about the support member when mounted
thereon, mounting means on the sleeve
members, one or more belt cleaning elements
mounted on the mounting means, and an
adjusting element operable on the support
shaft for bringing the belt cleaning
elements into engagement or out of
engagement with the conveyor belt.

4. The first respondent has its seat of business in Western Australia. The second respondent is a director of the first respondent and has over 15 years of engineering experience in the capacity of consulting engineer, contract engineering and project engineering. The evidence shows he is the guiding spirit of the first respondent and any interlocutory injunctive relief that was to be granted should run against both respondents: Polaroid Corporation v Sole N. Pty. Ltd. (1981) 1 NSWLR 491 at 498.

5. From about September 1984 until October 1987, certain products manufactured by the second applicant under licence of the first applicant were sold in Western Australia by the first respondent (or by a related corporation for part of the period) as exclusive distributor of those products in that State. The product made by the second applicant pursuant to its licence in respect of Patent No. 512902 is known as the "Trac-Mount Cleaning System". For some time prior to October 1987, the first respondent was manufacturing some of the equipment itself; it is a matter of dispute between the parties whether the first respondent had the necessary authority of the applicants for those operations.

6. The distributorship arrangements between these parties came to an end in October 1987 in circumstances which are the subject of dispute but which, quite properly, were not debated on this application.

7. As I have said, at this stage the applicants allege infringement by the respondents only of the first claim of the Patent No. 512902. Claim 1 was, for the purposes of submissions, divided by counsel into six integers, the claim being for the combination. When this is done, Claim 1 reads as follows:

Apparatus for cleaning a conveyor belt
comprising (1) a linearly extending support
member adapted to be positioned beneath the
conveyor belt in use and generally
transverse to the direction of the conveyor
belt travel; (2) at least one sleeve member
mounted on the support member for sliding
movement therealong, (3) the sleeve member
being arranged to cooperate with the support
member to prevent rotation of the sleeve
about the support member when mounted
thereon, (4) mounting means on the sleeve
members, (5) one or more belt cleaning
elements mounted on the mounting means, and
(6) an adjusting element operable on the
support member for bringing the belt
cleaning elements into engagement or out of
engagement with the conveyor belt.

8. The applicants seek interlocutory injunctive relief not only in respect of the manufacture and supply of the Dyna-Trac apparatus, in an assembled or unassembled form, but also against the manufacture and sale (for use with existing Dyna-Trac systems) of two components of the Dyna-Trac apparatus. The first of these is known as the Dyna-Trac T-Type scalper scraper or pre-cleaner, and the second as the Dyna-Trac N-Type torsion arm scraper or secondary cleaner. The respective functions of the two scrapers is described as follows in the first respondent's publicity material:

The Dyna-Trac T-Type Cleaner provides
efficient cleaning and is mounted on the
face of the head pulley. Its purpose is to
remove carry back material on the conveyor
belt at the front of the head pulley or for
very sticky wet or difficult material to
operate as a pre-cleaner to the secondary
Dyna-Trac N-Type Tosion (sic) Arm Cleaner.
The blades are moulded of resilient urethane
that tend to form themselves to the radius
of the head pulley for more efficient
cleaning. The blades are moulded to
corrosion-resistant stainless steel
carriers, providing long service life.

Although long life is expected, when
replacement is necessary, the System makes
it a simple task. For replacement, the
Tensioner is released and the blades are
lowered away from the belt. The individual
blades slide out quickly and easily for
replacement or repair. The corrosion
resistant stainless steel construction
ensures the unit will slide time after time.
The entire operation of changing a set of
blades is conducted by one worker in a few
minutes without shutting down operations.
The Dyna-Trac T-Type cleaner is the most
efficient and reliable cleaner on the market
today. Dyna Engineering's commitment to
research and product improvement ensures
state of the art in conveyor belt cleaning.

9. I should add that it is a feature of both systems, the
Dyna-Trac and the applicants' Trac-Mount, that in a given situation a customer may wish to have for its plant operations two units, on one of which there will be assembled a plurality of pre-cleaning scrapers, and on the other a plurality of secondary cleaning scrapers. The number of scrapers or blades in use on each unit will vary with the width of the conveyor belt to which the blades or scrapers are to be applied. Each of these units will be operated individually. The present case has been conducted on the footing that the patent in suit would, on its face, have a distinct operation in respect of each unit as an apparatus for cleaning a conveyor belt.

10. The respondents concede manufacture and sale by the first respondent of equipment under the name "Dyna-Trac System" but say that there is no infringement by such equipment of Claim 1. Further, the respondents say that the claim is liable to be revoked by reason of (a) lack of novelty, (b) obviousness, (c) lack of utility and (d) failure to comply with s. 40 of the Patents Act in respect of the requirements of fair basing, clarity and succinctness, and definition of the invention.

11. I turn first to consider the principles properly applicable to the practice of the Court in dealing with interlocutory injunction applications of this kind.

Applicable Principles

12. I accept the submission that the principles applicable to an application for interlocutory injunctive relief for alleged infringement of standard patents where validity is put in issue are as explained by McLelland J. in Appleton Papers Inc. v Tomasetti Paper Pty. Ltd. (1983) 3 NSWLR 208 at 216-219. That decision has been followed by Waddell CJ in Eq. in Bayer AG v Alphapharm Pty. Ltd. (1987) 8 IPR 559 at 569, and in this Court by Burchett J. in Martin Engineering Company v Matflo Engineering Ltd. (29/10/87, unrep.). Quite apart from what, with respect, is the strength of the reasoning in Appleton Papers, there are the strongest reasons for adopting in such matters a uniform practice amongst courts of concurrent first instance federal jurisdiction. The particular importance of Appleton Papers for present purposes lies in the significance attached therein to the observations by Lord Diplock in American Cyanamid Co. v Ethicon Ltd. [1975] UKHL 1; (1975) AC 396 at 405-406. His Lordship stressed that changes in the patent law over the last century had meant that the grant of a patent had become a good prima facie reason for supposing the patent to be valid.

13. The statement of general principle in Appleton Papers was expanded, with reference to later High Court authority, in Kolback Securities Ltd. v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536. McLelland J. there said:

Where a plaintiff's entitlement to ultimate
relief is uncertain, the Court, in deciding
to grant or refuse an interlocutory
injunction, must consider what course is
best calculated to achieve justice between
the parties in the circumstances of the
particular case, pending the resolution of
the uncertainty, bearing in mind the
consequences to the defendant of the grant
of an injunction in support of relief to
which the plaintiff may ultimately be held
not to be entitled, and the consequences to
the plaintiff of the refusal of an
injunction in support of relief to which the
plaintiff may ultimately be held to be
entitled: see, eg, Appleton Papers Inc v
Tomasetti Paper Pty Ltd (1983) 3 NSWLR
208 at 216; A v Hayden (No 1) (1984) 59 ALJR
1 at 4-5; 56 ALR 73 at 79. Where the
uncertainty depends in whole or in part on a
contested question of fact it is not
appropriate for the Court to decide that
question on the interlocutory application.
Where the uncertainty depends in whole or in
part on a contested question of law, it may
or may not be appropriate for the Court to
decide that question on the interlocutory
application, depending on circumstances, eg,
whether the question is novel or difficult,
or is susceptible of resolution on the
present state of the evidence, or whether
the urgency of the matter renders it
impracticable to give proper consideration
to the question: see, eg, A v Hayden (No 1)
(at 4; 78); Cohen v Peko-Wallsend [1986] HCA 70; (1986) 61
ALJR 57 at 59; [1986] HCA 70; 68 ALR 394 at 397. If the
Court does decide the question of law the
uncertainty is to that extent removed.

Unless the plaintiff shows that there is
at least a serious question to be tried
which if resolved in its favour would
entitle it to final relief, then the
requirements of justice as between the
parties will dictate that an interlocutory
injunction should be refused: Australian
Coarse Grain Pool Pty Ltd v Barley Marketing
Board of Queensland (1982) 57 ALJR 425; 46
ALR 398; Tableland Peanuts Pty Ltd v Peanut
Marketing Board (1984) 58 ALJR 283; 52 ALR
651; A v Hayden (No 1); Castlemaine-Tooheys
Ltd v South Australia [1986] HCA 58; (1986) 60 ALJR 679; 67
ALR 553 and Cohen v Peko-Wallsend Ltd.

Apart from this, although normally the
Court "does not undertake a preliminary
trial, and give or withhold interlocutory
relief upon a forecast as to the ultimate
result of the case" (Beecham Group Ltd v
Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR
618 at 622), there are some kinds of case in
which for the purpose of seeing where lies
the balance of convenience (or more
specifically "the balance of the risk of
doing an injustice" - see per May LJ in
Cayne v Global Natural Resources plc (1984)
1 All ER 225 at 237, cf per Brennan J in
Brayson Motors Pty Ltd v Federal
Commissioner of Taxation (1983) 57 ALJR 288
at 292; 46 ALR 279 at 285), it is desirable
for the Court to evaluate the strength of
the plaintiff's case for final relief: see,
eg, Brayson Motors Pty Ltd v Federal
Commissioner of Taxation (at 292; 285);
Castlemaine-Tooheys Ltd v South Australia at
682; 559. One class of case to which this
applies is where the decision to grant or
refuse an interlocutory injunction will in a
practical sense determine the substance of
the matter in issue: see, eg, NWL Ltd v
Woods (1979) 1 WLR 1294 at 1306-1307; (1979)
3 All ER 614 at 625-626 per Lord Diplock;
Cayne v Global Natural Resources plc.

14. To what is said in that passage, I would add the following. First, it may be that interlocutory mandatory injunctions are in a special position; there is disagreement between the authorities on the necessity for there to be a "high degree of assurance" that it is appropriate to give such relief: State of Queensland v Australian Telecommunications Commission (1985) 59 ALJR 562 at 563 per Gibbs J; Midland Milk v Victorian Dairy Industry Authority (M.L. Foster J, 24/12/87, unrep.); Films Rover International Ltd. v Cannon Film Sales Ltd. (1986) 3 All ER 772 at 780-782 per Hoffmann J. Secondly, in Murphy v Lush [1986] HCA 37; (1986) 60 ALJR 523 at 524, Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ, expressed the question before them on the application for interlocutory injunctive relief (to restrain the pursuit of enquiries under the Parliamentary Commission of Inquiry Act 1986) as "whether there is a triable issue and, if so, whether the balance of convenience favours the grant of an injunction"; that indicates, sub silentio, a turning away from the standard indicated by Beecham Group Ltd. v Bristol Laboratories Ltd. [1968] HCA 1; (1968) 118 CLR 618. Thirdly, whilst the principles governing the award of interlocutory injunctions in aid of a general jurisdiction inherited from the Court of Chancery may often be translated intact to the administration of injunctive powers conferred by the Constitution or by statute, this will not always be so. One example may be provided by the observations of Mason J. in Castlemaine Tooheys Ltd. v South Australia [1986] HCA 58; (1986) 161 CLR 148 at 154, as to cases involving public rather than private rights; and see Matthews "Injunctions, Interim Relief and Proceedings Against the Crown" (1988) 8 Ox. J.L.S. 154 at 163 ff. Another is found in s. 80 of the Trade Practices Act 1974: Ricegrowers' Co-operative Ltd. v Howling Success Australia Pty. Ltd. (1987) ATPR 40-778; Carlton & United Breweries (NSW) Pty. Ltd. v Bond Brewing NSW Ltd. (1988) 76 ALR 633 at 638. A further example is provided by the modification of general principles by ss. 573 and 574 of the uniform Companies Codes in respect of injunctions to restrain contraventions of the Codes and the commission of offences against the Codes. Fourthly, the source of power upon which McLelland J. relied in Appleton Papers was found in the general provisions of sub-s. 66 (4) of the Supreme Court Act 1970 (NSW). However, proceedings to restrain patent infringement plainly involve the exercise of federal jurisdiction; the Patents Act provides in s. 118 that the relief which a Court may grant in an action or proceeding for infringement of a patent includes an injunction. That reference embraces both interlocutory and final injunctive relief. Accordingly, I read the statements of principle in Appleton Papers as directed to s. 118. Fifthly, the foregoing is applicable to infringement suits in respect of standard patents. Petty patents involve a somewhat different emphasis, given, as Lockhart J. pointed out in Peter Pan Electrics Pty. Ltd. v Newton Grace Pty. Ltd. (1985) 8 FCR 557 at 566-567, the markedly different degree of stringency in the administrative procedures under the Patents Act between applications for petty patents and standard patents.

15. The present degree of stringency which the Australian statute specifies in respect of standard patents has not always obtained in this country or in the United Kingdom. In Beecham's Case (supra), the High Court, in support of a view it took as to the standard set for plaintiffs seeking interlocutory injunctive relief in patent suits, referred principally to Smith v Grigg Ltd. (1924) 1 KB 655 and Dudgeon v Thomson (1874) 30 LT 244. The latter case concerned a patent granted in 1866. The former case was one of alleged infringement of a registered design. The administrative procedures in respect of the registration of designs have remained at a more rudimentary level than has come to pass with standard patents, but in Smith v Grigg Ltd. (supra) counsel persuaded Scrutton and Atkin LJJ. that the practice of the English High Court, developed with patents, should apply also to registered designs. As to the practice in patent cases, reliance was placed on Lister v Norton Brothers & Co. (1884) 1 RPC 114, Jackson v Needle (1884) 1 RPC 174 and Trautner v Patmore (1911) 29 RPC 60. The patents in suit in the first two cases had been granted even before the commencement of the Patents Designs & Trade Marks Act 1883 (U.K.) (46 and 47 Vict. c. 57), and the patent in the third case had been granted shortly after the commencement of the Patents & Designs Act 1907 (U.K.) (7 Edw. VII, c. 29).

16. The significance of this chronology lies in the very different status of a patent grant under the previous British legislation to that of a grant of a standard patent under the present Australian statute. The weight to be given to the contention of a defendant that there is an issue as to validity and that no interlocutory injunction should go to restrain infringement, was much greater in an age when the modern patent system was in its infancy. The curiosity is that Beecham showed that this reluctance to grant interlocutory relief had been carried forward into suits in respect of patents granted under the Australian Patents Act 1955, a statute, like the British Acts of 1949 and 1977, much removed from the patent system in force in the United Kingdom under the statutes of 80 or more years ago. Once this is appreciated, the force of Lord Diplock's statement that the former rule of practice concerning interlocutory relief had become obsolete (American Cyanamid Co. v Ethicon Ltd. [1975] UKHL 1; (1975) AC 396 at 405-406) becomes apparent. Thus, the shift in judicial attitude to interlocutory relief in patent cases, culminating in the recent Australian decisions to which I have referred, may be seen as bringing practice at last into step with changes in the underlying substantive law.

17. Mr. Blanco-White QC, in the 4th edition of his work "Patents for Inventions", summed up the position this way (at 1-202):

The modern practice really dates from the
Act of 1852, when it was first laid down
that a specification must be filed upon
application for the patent. (The same Act
set up the Patent Office and the Register of
Patents.) The idea was then introduced of
the "Provisional Specification", which was
to set out only the general nature of the
invention; the inventor might still, if he
wished, delay filing his "Complete
Specification" with its detailed description
until the six months after grant of his
patent. But this was only the germ of our
application system. The delay of grant
until after both specifications had been
filed, and the examination of the Complete
Specification by the Patent Office before
grant, date only from 1883; while the
official search through prior
specifications, to determine whether the
invention has already been published, dates
only from 1905.

Further, the provision for opposition to grant, introduced by s. 11 of the 1907 British Act, did not give obviousness as a ground. Lack of novelty was a ground but only in a narrow sense of that term: sub-s. 11 (1) (a). Obviousness was introduced as a ground only by s. 3 of the Patents & Designs Act 1932 (U.K.) (22 and 23 Geo. V, c. 32) and then only as a ground of revocation after grant, not of opposition to grant. Australian legislation in this field was in some respects in advance of that in Britain. Thus, when dealing with s. 56 of the Patents Act 1903 in The Linotype Co. Ltd. v Mounsey [1909] HCA 39; (1909) 9 CLR 194 at 202, Griffith CJ said:

Under the English patent law opposition to
the grant of patent on the ground of want of
novelty is not allowed. In other countries
e.g., the United States of America, novelty
is a question to be investigated before the
grant. The same rule was adopted in
Queensland before the establishment of the
Commonwealth, and is adopted in the
Commonwealth Patents Act 1903.

18. The present Australian system of examination and opposition is dealt with by Mr. C.J. Bannon QC in his book "Australian Patent Law", Chapters 6 and 7. At para. 78 thereof, reference is made to the modified examination system introduced in 1969 in respect of applications for patents in respect of inventions for which patents have already been granted in a prescribed Convention country. The only Convention countries prescribed to date by regulation 10A of the Patent Regulations are the United Kingdom and the United States of America. The result is not to detract from the general propositions that by 1968 (the date of Beecham) the practice there indicated as the correct practice in cases of infringement of standard patents was out of step with other developments in the patent law, and that the more recent decisions have put practice in step with that law.

The Questions for Trial

19. I turn to consider the strength of the respective cases on infringement and validity. In deciding the seriousness of the questions to be tried, it is not desirable, in advance of a final hearing, that I express detailed views, especially upon the question of validity: Peter Pan Electrics Pty. Ltd. v Newton Grace Pty. Ltd. (1985) 8 FCR 557 at 565.

20. In particular, there are several significant issues of patent law which arise and these should not be decided on an interlocutory hearing and without the benefit of full argument.

21. First, there is the question (an affirmative answer to which would favour the respondents) of the extent to which in determining an issue as to novelty it is permissible to have regard to the internal cross-reference between two alleged paper anticipations, the United States Matson Patents (Nos. 3,504,786 and 3,674,131). The respondents rely on the otherwise unreported decision of McTiernan J. in George C. Warner Laboratories v Chemspray Pty. Ltd. (1967) 37 AOJP 2513 at 2516. Contrary to what was contended by the applicants, what his Honour says does appear to support the respondents. On the other hand, the proposition relied on was propounded without any discussion of authority or of basic principle. That principle suggests that there may be anticipation by publication of a document, the terms of which are not self-explanatory: Van der Lely NV v Bamfords Ltd. (1963) RPC 61 at 71-72 per Lord Reid. Some support for the respondents may also be supplied by Sharpe and Dohme Inc. v Boots Pure Drugs Co. Ltd. (1928) 45 RPC 153 at 180, but this speaks at a time when the line between anticipation and obviousness was not as well understood as it has become in the light of the very important series of judgments in this field of Aickin J: Meyers Taylor Pty. Ltd. v Vicarr Industries Ltd. [1977] HCA 19; (1977) 137 CLR 228; Graham Hart (1971) Pty. Ltd. v S.W. Hart & Co. Pty. Ltd. [1978] HCA 61; (1977) 141 CLR 305; Minnesota Mining and Manufacturing Co. v Beiersdorf (Australia) Ltd. [1980] HCA 9; (1980) 144 CLR 253; The Wellcome Foundation Ltd. v V.R. Laboratories (Aust.) Pty. Ltd. [1981] HCA 12; (1981) 148 CLR 262. As the argument on this issue stood at the interlocutory hearing, my view is that the balance inclined towards the applicants.

22. The second issue of law is one in which, in my view, the balance at this stage is inclined against the applicants. I have referred to the character of Claim 1 as one for a combination of integers. The respondents' product includes two species of scraper, which I have described. The question is whether an injunction may go to restrain the sale of these items as spare parts to replace scrapers in existing Dyna-Trac apparatus. To answer this question affirmatively would appear to require going beyond what was said in Windsurfing International Inc. v Borsimex Pty. Ltd. (1984) 2 NSWLR 196 at 204-207 as to the effect of Walker v Alemite Corporation [1933] HCA 39; (1933) 49 CLR 643 at 658, namely that a sale in kit form of a set of parts which, when assembled, will fall within any claim in the patent in question is an infringement, if sale in kit form is the ordinary means by which the invention is exploited commercially. The applicants respond to the limitations in this formulation by putting the submission rather differently. It is that the combined activity of selling the original apparatus followed by sale of the spare parts at a later stage, together constitutes a vending of the invention within the meaning of s. 69 of the Patents Act and thus infringes. The applicants do not suggest that there is any authority for this proposition. I do not mean to deny that it may, on fuller examination, be sustainable, but I would not grant interlocutory relief using it as a basis.

23. I turn now to the question of infringement. The debate between counsel focused on the second element in Claim 1, viz. "at least one sleeve member mounted on the support member for sliding movement therealong", with particular attention to the words I have underlined. The sleeve members in the Dyna-Trac apparatus are mounted on the support member but is this "for sliding movement therealong"? The applicants say this expression encompasses sliding the sleeve member along the support member so that it may, with or without other sleeve members, be fixed in place for operation of the apparatus and, when required, slid off the support member. In the Dyna-Trac system, this affixture is accomplished by the introduction onto either end of the support members of what were described as locking sleeves, stopper plates or restraining bolts. These plates are not claimed by Claim 1. The applicants submit that the Dyna-Trac system infringes and that to add integers to a claimed combination is not to escape infringement. The respondents respond that the expression in question encompasses not only the sliding of sleeves on and off the sleeve member, but the sleeves being slideable during operation of the apparatus. If that were so, the respondents submit, the apparatus would not function and the claim would be bad for inutility or want of fair basing within the meaning of s. 40 of the Patents Act.

24. My view at this branch of the case is that the applicants have shown at least that there is a serious question to be tried on the issue of infringement.

25. That brings me to the issues concerning invalidity. Evidence was given as to the state of the art in Australia at the priority date and it included expression of the views of the second respondent on the subject. The task of a respondent setting up a challenge to validity on the ground of obviousness at an interlocutory stage is a difficult one, particularly since the clarification of the law in Australia as to obviousness: Minnesota Mining and Manufacturing Co. v Beiersdorf (Australia) Ltd. [1980] HCA 9; (1980) 144 CLR 253; The Wellcome Foundation Ltd. v V.R. Laboratories (Aust.) Pty. Ltd. [1981] HCA 12; (1981) 148 CLR 262 at 284-287. It may very well be that with time for further preparation of their case, the respondents will present at the trial a formidable case on this issue. But as matters now stand, I do not regard their case on obviousness as a strong one. There is, however, a triable issue.

26. I turn now to the case on novelty. The respondents rely on a number of alleged anticipations. They accept the general principle propounded by Aickin J. in Meyers Taylor Pty. Ltd. v Vicarr Industries Ltd. [1977] HCA 19; (1977) 137 CLR 228 at 235. They rely also on Griffin v Isaacs (1942) 12 AOJP 739, as explained in Windsurfing International Inc. v Petit (1984) 2 NSWLR 196 at 225-226. I will proceed in the same fashion, although I should note that at the trial it may become necessary to decide whether Griffin v Isaacs does indeed stand for any distinct principle or whether it is the product of an age predating the clarification, in the decisions on the present Patents Act, of the distinction between novelty and obviousness.

27. First, the respondents rely on apparatus in use in Australia prior to December 1977, including what was identified as the Jerry Rigg System, the Hosch System and the Belle Banne System, rather than purely on paper anticipations. Reliance, at this stage, is nevertheless placed upon recollection, verbal and diagramatic description, not directly upon evidence of the equipment itself. That presents a difficulty for the respondents on this aspect of the case, of the character illustrated by Commonwealth Industrial Gases Ltd. v MWA Holdings Pty. Ltd. [1970] HCA 38; (1970) 44 ALJR 385 at 387, though certainly not as serious as appeared on the facts of that case.

28. The principal paper anticipation relied on is that said to be provided by the Matson patents. I have already referred to the issue of law to which this gives rise.

29. Assuming that issue in the favour of the respondents, and assuming in the favour of the respondents that they will overcome the present evidentiary weaknesses in precise identification of the systems relied on as being in use in Australia prior to the priority date in 1977, I believe there is a serious question as to whether any prior object or any object according to a prior document involved or incorporated all the integers of Claim 1. But the assumptions I have made also have to be placed in the scales.

30. The respondents, as I have indicated, also attack Claim 1 for inutility and for failure to comply with several branches of s. 40 of the Patents Act. The thrust of the argument concerning s. 40 was, I believe, directed to a lack of fair basing, which is linked to the argument as to inutility. The applicants responded by submitting that any competent workman would perceive the necessity for attachment of locking sleeves to prevent any movement along the support member of the sleeves whilst the apparatus was in operation; they relied on Welch Perrin & Co. Pty. Ltd. v Worrel [1961] HCA 91; (1961) 106 CLR 588 at 601-602; Coopers Animal Health Australia Ltd. v Western Stock Distributors Pty. Ltd. (1986) 67 ALR 390 at 417-420 (affd. 76 ALR 429, on other grounds); "Terrell on the Law of Patents", 13th Ed., 2'5.06- 2'5.07, 2'5.43- 2'5.44. See also Washex Machinery Corp. v Roy Burton and Co. Pty. Ltd. (1974) 49 ALJR 12 at 18-19; Blanco White, "Patents for Inventions", 4th Ed., 2'4,405; Fox, "Canadian Patent Law and Practice", 4th Ed., pp. 150-154. On this branch of the case, there are, in my view, plainly triable issues.

31. When all the considerations I have mentioned are taken into account, the result is that first, there is a case for trial on infringement of Claim 1 by manufacture and sale of the Dyna-Trac System (but I would not grant interlocutory relief in respect of sale of the scrapers as spare parts for existing systems that have already been sold) and secondly, on invalidity there is a case for trial on all the grounds urged; my overall evaluation at this stage is that the case for infringement is stronger than that for invalidity.

The Balance of Convenience

32. The respondents knew that certain patent rights existed in respect of the goods of which the first respondent was distributor until October 1987. The second respondent "did some research" and by the end of October he had obtained a copy of the patent in suit. He obtained advice concerning the patent. What he described as the "actual basic tooling" was completed by early December and the first Dyna-Trac products were sold in December. As I have said, the respondents are to be found in Western Australia. There are no plans in the immediate future to market Dyna-Trac outside that State. Mr. Law, a director of the second applicant, had told the second respondent that the applicants might sue for patent infringement if he set up his own product for marketing. The respondents did not institute proceedings to revoke the patent. These proceedings were commenced on 15 February 1988, very shortly after the second applicant became aware of the conduct of the respondents of which the applicants make complaint.

33. The respondents submit that any goodwill that may have been built up since December 1987 for the Dyna-Trac product would be destroyed or damaged by the grant of an injunction. But that was a risk taken by the respondents with their eyes open; see Beecham Group Ltd. v Bristol Laboratories Pty. Ltd. [1968] HCA 1; (1968) 118 CLR 618 at 626.

34. The evidence as to the loss of profits which the respondents submitted they apprehended if restrained pending a final hearing is less than satisfactory. In the course of brief cross-examination of the second respondent, an estimate he had given of loss of profits over six months was established as having been based on the profit the first respondent was making prior to October 1987, that is to say in the period of the distributorship agreement with the second applicant. The assumption was that that rate of profit would continue, despite the radical change in the situation of the respondents and the continued presence in Western Australia of the second applicant which since February 1988 has operated its own sales office in Perth.

35. The shaft assembly for the Dyna-Trac product is made by the first respondent. The holes in the adjuster plate are drilled by it and other operations are performed to assemble the finished product. But in other significant respects, the respondent relies for manufacturing operations upon the efforts of sub-contractors. There was some evidence as to the financial arrangements between the first respondent and the sub-contractors. It appears that of the orders received by the first respondent and tenders submitted by it, the first respondent would disburse about 30 per cent of moneys received to sub-contractors.

36. The applicants complain of the marketing methods used by the first respondent with the Dyna-Trac equipment. When pressed to do so by a potential customer, the second respondent confirmed "that Dyna-Trac scrapers are fully compatible with Martin Trac-Mount". The force of this criticism is somewhat blunted by the applicants' indication to the Court that no interlocutory relief was sought in respect of the sale of spare parts for their Trac-Mount system.

37. The principal competition for the applicants' Trac-Mount system is provided by equipment either made in Australia or assembled in Australia by Australian licensees of German and Japanese owned Australian patents. The competing systems have been identified as the Hosch and Belle Banne systems. I have already referred to them when dealing with the case on invalidity. The German and Japanese products have between them about seventy per cent of the Australian market for conveyor belt cleaning systems. The applicants have about thirty per cent, a percentage which has increased significantly over the last three or four years. The respondents attribute this increase, at least in a large measure, to their efforts during the distributorship in Western Australia. That may well be so, but it does not detract from the applicants' point that the goodwill in question was so built up with exploitation of their patent rights, and that the applicants have a strong claim to the protection by the Court on an interim basis of their right to continue the building up of that goodwill, pending an early final hearing, under the umbrella of their patent.

38. Evidence was given as to the financial substance of both the second applicant and the first respondent. On the one hand, the first respondent's condition was said to be such as to throw doubt on the worth of an undertaking by it to keep accounts with a view to meeting any ultimate liability for damages or on an account of profits. The respondents attacked the worth of the second applicant's undertaking as to damages. In my view, neither adversary so wounded the other on these issues as to significantly advance its case. I would not penalise or advance the respective cases of the parties on these grounds. I should add that the first applicant, as a foreign corporation, was not put forward as the primary candidate for enforcement of an undertaking as to damages. It was submitted that the undertaking of the second applicant would be of sufficient substance and I accept that submission.

39. I turn to the state of the evidence. My impression is that the bulk of the preparation for a final hearing will concern the issues of invalidity, particularly novelty and obviousness. The initial burden here falls on the respondents. The Court will have sufficient time available for a prompt hearing, and a date may be allotted as soon as the necessary interlocutory steps are completed. I do not overlook the circumstance that at the final hearing there will be for determination issues going beyond the questions of infringement and validity of the patent presently in question.

40. I take also into account the respective strengths of the parties on the question of prima facie case, to use the old term, but in its current sense.

Conclusion

41. In all the circumstances, I believe it appropriate to restrain the respondents, until the determination of these proceedings or earlier further order from, by themselves, their servants and agents and the servants and agents of each of them, infringing Claim 1 of Patent No. 512,902 by making or selling the equipment, an example of which is Exhibit 13.

42. Components of this equipment include those depicted in Exhibit Q and Exhibit R. I have indicated that I do not consider interlocutory relief is appropriate with respect to the manufacture and sale of the two kinds of scraper, those depicted in Exhibits Q and R. The terms of the injunction should reflect this qualification.

43. I will hear the parties on the form of the injunction and on costs. The exhibits, with the exception of Exhibits Q and R should be returned. It will also be necessary to give directions for the preparation of the case for trial.