Fina Research SA v Halliburton Energy Services Inc [2003] FCA 55 (7 February 2003)

Last Updated: 12 February 2003

FEDERAL COURT OF AUSTRALIA

Fina Research SA v Halliburton Energy Services Inc [2003] FCA 55

PRACTICE & PROCEDURE - evidence in patents opposition appeal - concept of notional skilled addressee - relevance of evidence - where questions relating to level of expertise at priority date - where leave required to call evidence in proceedings generally.

Patents Act 1952 (Cth), s 59

Evidence Act 1995 (Cth), ss 56, 57, 135

El Dupont de Nemours & Co v Imperial Chemical Industries PLC (2002) 54 IPR 304 referred to

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 considered

Minnesota Mining and Manufacturing Company v Tyco Electronics Pty Ltd [2002] FCAFC 315 considered

Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 considered

Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 49 IPR 225 referred to

Firebelt Pty Ltd v Brambles Australia Ltd [2002] HCA 21; (2002) 76 ALJR 816 approved

Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59 approved

Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742; (1999) 92 FCR 106 approved

FINA RESEARCH SA v HALLIBURTON ENERGY SERVICES INC & COGNIS DEUTSCHLAND GmbH & HENKEL KOMMANDITGESELLSCHAFT AUF AKTIEN & BAROID DRILLING FLUIDS INC & COGNIS DEUTSCHLAND GMBH & CO KG

N 552 OF 2000

MOORE J

7 FEBRUARY 2003

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 552 OF 2000

BETWEEN:	FINA RESEARCH SA APPLICANT
AND:	HALLIBURTON ENERGY SERVICES INC FIRST RESPONDENT COGNIS DEUTSCHLAND GmbH SECOND RESPONDENT HENKEL KOMMANDITGESELLSCHAFT AUF AKTIEN THIRD RESPONDENT BAROID DRILLING FLUIDS INC FOURTH RESPONDENT COGNIS DEUTSCHLAND GMBH & CO KG FIFTH RESPONDENT
JUDGE:	MOORE J
DATE:	7 FEBRUARY 2003
PLACE:	SYDNEY

REASONS FOR RULING ON EVIDENCE

The following is a ruling on evidence made during the hearing on 7 February 2003:

1 The applicant in these proceedings maintains an objection to the grant of a patent relating to the composition of drilling mud. Senior counsel for the applicant has opened at length about many issues, including what functions a drilling mud performs. I have been shown a video of some length concerning the use of drilling muds when drilling for oil and gas. It is common ground that for the applicant to succeed it must make good a ground specified in s 59 of the Patents Act 1952 (Cth) ("the 1952 Act"), notwithstanding the repeal of that act by the Patents Act 1990 (Cth) ("the 1990 Act"). In issue in these proceedings is, amongst other things, what is meant by the patent application, whether the invention was obvious and did not involve an inventive step (the ground specified in s 59(1)(g)) and whether the invention was not novel (a ground specified in s 59(1)(h)). Both those grounds raise for consideration, under the 1952 Act, what was known or used in, or circumstances in, Australia. The latter ground is based on a US patent published in Australia before the priority date (19 December 1988) known in these proceedings as Barthel.

2 The applicant now seeks to call evidence from Professor Kagi. I earlier expressed the view that leave was necessary to call the evidence having regard to the terms of s 160 of the 1990 Act in a judgment I gave on 3 December 2002. However the issue raised concerning the evidence of Professor Kagi would arise, in any event, even if leave was not necessary. It is said by the applicant that Professor Kagi's evidence is relevant in three respects. He is said to be a skilled addressee (or at least a person whose evidence will, together with the evidence of another witness, create the construct of the notional skilled addressee) who can give evidence about the meaning of both the patent application and Barthel. Secondly, he can give evidence about what Barthel would have disclosed in 1988 to a person skilled in the art, in support of the lack of novelty ground. Lastly, he can give evidence about what he would have done immediately before the priority date to formulate a drilling mud of a type comprehended by the patent application in support of a ground that the invention was obvious and did not involve an inventive step.

3 Objection is taken by the respondents to evidence being given by Professor Kagi. A fundamental objection concerns his expertise. I have given consideration to the objection overnight. It is an objection determinative, in my opinion, of the question of whether Professor Kagi can give evidence at all (for the purposes just stated). Is he a skilled addressee and in a position to give expert evidence of assistance to the court, or a person whose evidence, together with other evidence, creates the construct of a skilled addressee? If he is, then relevant evidence can probably be given as to the first matter (the meaning of the two documents): see El Dupont de Nemours & Co v Imperial Chemical Industries PLC (2002) 54 IPR 304, though subsidiary issues raised in the objections of the respondents would need to be resolved concerning whether he can give relevant evidence concerning the other two matters. They included that as to the question of obviousness, his evidence was tainted by having been shown the patent application (and the evidence should be excluded under s 135 of the Evidence Act 1995 (Cth)) and that the evidence generally is not directed only to his state of knowledge in 1988.

4 It is tolerably clear from the patent application that it concerns the formulation of a drilling mud in a manner identified in the application with certain chemical characteristics designed to create both physical and chemical properties in the mud that, amongst other things, deal with known and anticipated problems associated with the use of the mud, including minimising its impact on the environment and creating a mud which is flowable and pumpable and not corrosive. In my opinion, the appropriate characterisation of the attributes of a notional addressee is a person with a requisite specialised knowledge in formulating drilling mud. The question that immediately arises is whether Professor Kagi is such a person or can give evidence which, together with other evidence, creates the construct of such a person.

5 I should note that at one point in his opening, Senior Counsel for the applicants submitted that the notional addressee was an industrial chemist in a drilling mud laboratory or mud company laboratory formulating muds. This is consistent with my view of the notional addressee and the notional addressee propounded by the respondents. However, the applicant had earlier relied on and later reverted to a characterisation of the notional addressee set out in written submissions prepared for the opening. That characterisation in my opinion, is fairly plainly tailored to meet the evidence the applicant is able to lead and to accommodate the limitations of that evidence.

6 In his affidavit of 1 February 2001 Professor Kagi describes his qualifications and experience in the following way (paragraphs [5] - [12]):

"Academic

I obtained a Bachelor of Science with First Class Honours in Chemistry from the University of Western Australia ("UWA") in 1967. I subsequently completed by PHD on nuclear magnetic resonance spectrometry and organic chemistry in 1971, through the Chemistry Department of the UWA. I completed my Masters of Business Administration in 1977 through the UWA.

Experience

Upon completion of my PhD I became an academic. In or about 1971, I commenced employment in the Chemistry Department of the Western Australian Institute of Technology, which became Curtin University of Technology in 1987.

In or about 1985 I was promoted to Associate Professor of Chemistry. I was awarded a personal Chair, as Professor of Applied Chemistry, in 1995.

I became the Head of School, Applied Chemistry, in 1997 and as of January 2001 I became the Dean of Science, Curtin University.

I was appointed a director of the Centre for Petroleum and Environmental Organic Geochemistry (PEOG) in 1988.

I established Geotech in 1990.

Professional Association Memberships

I am a Fellow of the Royal Australian Chemical Institute and currently a member of the following professional associations:

1. the American Chemical Society;

2. the Society of Petroleum Engineers;

3. the Formation Evaluation Society of WA;

4. the Australian Institute of Energy (formerly Petroleum); and

5. the Petroleum Exploration Society of Australia.

Research Focus and Projects

My research focus over the past 30 years, in order of the amount of time dedicated to the area, has been:

1. organic geochemistry and petroleum chemistry;

2. water chemistry;

3. analytical organic chemistry;

4. environmental organic chemistry, including biodegradability of petroleum components; and

5. applied chemistry and chemical technology".

7 Annexed to his affidavit is a list compiled by Professor Kagi of all articles written by him which are of relevance to the petroleum industry. The list includes publications from 1980 to the present. He says the list of reports covers the periods germane to the present issue, and includes only his academic output over this period. He says his company, Geotech, generated a vast number of reports and studies each year. The list of publications totals 218.

8 It cannot be doubted for present purposes that Professor Kagi has general expertise as a chemist with considerable knowledge of, and experience with, the petroleum industry. However, he does not give evidence that he has in the past formulated drilling mud used in that industry, and thereby has addressed (or otherwise addressed) what might be or should be all the various components of a mud to create a useable mud with particular, and perhaps desirable, attributes. Without such an involvement and the acquisition of specialised knowledge (from that involvement or otherwise) to do so, he is not, in my opinion, in a position to give relevant evidence of assistance to the court concerning the formulation of drilling mud bearing on the meaning of a patent application and Barthel, the issue of novelty and the issue of obviousness: as to the desirability of approaching purportedly relevant expert evidence with some circumspection one has regard to the judgment of the Court of Appeal in New South Wales in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 and Minnesota Mining and Manufacturing Company v Tyco Electronics Pty Ltd [2002] FCAFC 315, though one must also have regard to the Full Court of this Court in Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354. Accordingly, were leave given to read his affidavit, I would reject it as containing evidence which did not satisfy the threshold requirement of s 56 of the Evidence Act.

9 The applicant also relied on s 57 and submitted that even if Professor Kagi could not be reviewed as having the attributes of a skilled addressee, his evidence is nonetheless admissible on the footing that other evidence to be called when taken together with his evidence, would establish the views of a notional skilled addressee of assistance to the court: reference was made to the observations of Finkelstein J in Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 49 IPR 225. The other evidence referred to was that of Mr de Jong who was mud engineer who has worked in Australia. His evidence includes evidence that he discussed the formulation of drilling muds with industrial chemists. However, this evidence does not in my opinion, ultimately assist the applicant. The import of his evidence, viewed as a whole, is that such discussions were with industrial chemists engaged in the formulation of drilling muds, not industrial chemists simpliciter or even industrial chemists more broadly involved in the petroleum industry like Professor Kagi. As was pointed out by the Full Court in Minnesota Mining and Manufacturing Company v Tyco Electronics Pty Ltd at [90]-[92], evidence of a notional skilled worker comprised of a team should demonstrate the necessary interaction between or amongst experts so that common general knowledge might have been jointly utilised. The evidence of Professor Kagi, when taken together with the evidence of Mr de Jong, does not establish the knowledge of a team which may have been engaged and expert in formulating drilling muds.

10 I am satisfied that Professor Kagi does not, because of his expertise, propose to give relevant evidence for the purposes of s 56 nor provisionally relevant evidence for the purposes of s 57. I do not consider it is necessary at this stage to express this conclusion in a context of either granting leave to call the evidence, on the one hand, or simply ruling on the admissibility of the evidence on the other. The result would be the same.

11 The applicants submitted that I should not rule on the admissibility of Professor Kagi's evidence at this stage. However, I am mindful of the recent observations of the High Court in both Firebelt Pty Ltd v Brambles Australia Ltd [2002] HCA 21; (2002) 76 ALJR 816 and Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59 about the need for trial judges in proceedings such as these to rule on objections and also, the observations of the Full Court in Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742; (1999) 92 FCR 106 at 112:

"....the purpose of a pre-grant opposition proceedings is to provide a swift and economical means of settling disputes that would otherwise need to be dealt with by the courts in more expensive and time consuming post-grant litigation; that is, to decrease the occasion for costly revocation proceedings by ensuring that bad patents do not proceed to grant."

12 It seems to me desirable to rule at an early stage on the admissibility of evidence sought to be led from expert witnesses which, if admitted, may well lead to extensive cross-examination, responsive evidence and further cross-examination. I appreciate that in reaching this conclusion about the admissibility of Professor Kagi's evidence I have also formed a view about the attributes of the notional skilled addressee. However, the applicant did not draw my attention to any evidence proposed to be called which suggested to me that the notional addressee should be characterised in some other way. I am satisfied it is appropriate to consider what are the attributes of the notional skilled addressee to deal with the objection raised by the respondents.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons herein of the Honourable Justice Moore.

Associate:

Dated: 12 February 2003

Counsel for the Applicant:	Mr J J Garnsey QC with Mr J V Nicholas SC & Mr C Dimitriadis
Solicitor for the Applicant	Phillips Fox
Counsel for the Respondent:	Dr A C Bennett SC with Mr S C G Burley
Solicitor for the Respondent	Sprusons Solicitors
Date of Hearing:	3 - 7 February 2003
Date of ruling:	7 February 2003