Merial Limited & Merial New Zealand Limited v Bayer New Zealand Limited and University of Otago
High Court Auckland
28 August 2013
This successful strike-out application provides a clear warning against parties seeking to take matters to the High Court which are already properly before the Commissioner of Patents in opposition proceedings.
The plaintiffs (both part of the Merial group) claimed that they had acquired the intellectual property in a teat seal developed in 2000 in the course of a research project involving the second defendant (Otago University) and a third party (the 2000 research project).
In 2006, a company associated with the first defendant (Bayer) conducted a separate research project, also directed in part to developing a new teat seal. In 2008, Bayer filed an application in respect of a claim to a teat seal developed in the course of the second project (the patent application).
In 2010, Merial brought opposition proceedings before the Commissioner of Patents opposing the Bayer application on various grounds including obtaining, prior publication, prior claiming and obviousness (the opposition proceedings).
In 2011, Merial commenced this High Court proceeding, initially pleading three causes of action namely breach of contract, breach of duty of confidence and proprietary constructive trust. Each related to allegations that Otago University wrongly conveyed, and Bayer knowingly received, the intellectual property from the 2000 research project. The opposition proceedings were stayed pending the outcome of the High Court proceeding.
The focus of the strikeout application was a fourth course of action, added by Merial in an Amended Statement of Claim headed “Lack of Entitlement” and pleaded (in broad summary) that:
(a) Bayer’s claim to ownership of and/or entitlement to the patent application was erroneous, invalid and contrary to law;
(b) Bayer was not entitled to make the patent application (being neither the first inventor nor assignee);
(c) In the alternative, claim 1 of the invention was obvious and clearly did not involve any inventive step having regard to what was published, known or used in New Zealand before the priority date of the claim.
The relief sought included:
• A declaration that Merial was the true and rightful owner of the patent application.
• An order directing the Commissioner of Patents to enter Merial on the register of patents as co-owner and for declarations that the patent application was not new, was obvious, and did not involve any inventive step.
Merial sought to strike the fourth cause of action out on the basis that it was vexatious and/or an abuse of process because it:
(a) Sought to bring proceedings in the High Court when there was a relevant statutory procedure provided under the Patents Act 1953 (the Act) to resolve the issues raised in the fourth cause of action; and/or
(b) Effectively amounted to a second proceeding which duplicated the opposition proceeding before the Commissioner.
Venning J struck out the fourth cause of action and made strong statements as to the appropriate jurisdictional approach to the orders sought. In particular, Venning J observed that:
(a) Where there is an established statutory framework, it will generally be inappropriate to seek to involve the jurisdiction of the Court to obtain a declaratory judgment addressing the same issues. Where there is a statutory process which provides resolution of the particular issue and from which there are rights of appeal (as in this case) then the Court will ensure that process is followed and reject the use of alternative processes including declaratory judgments or orders. 
(b) It is for the Commissioner, rather than the High Court, to deal with oppositions to applications in the first instance. In the event a party is dissatisfied with the Commissioner’s decision, a right of appeal exists to the High Court. Further, in the event a patent is granted, a party can apply to the High Court for revocation of the patent, again in accordance with the statutory procedure. 
(c) The pleading in the fourth cause of action sought to invoke the original jurisdiction of the High Court in relation to issues that were expressly provided for in the opposition and/or revocation proceedings in the Act. 
(d) Specific rules are provided in the High Court Rules for pleading requirements in revocation proceedings, consistent with the requirement that the issues sought to be raised by the plaintiffs proceed by way of revocation proceedings, rather than in separate proceedings such as the fourth cause of action. 
Venning J did not accept the plaintiff’s argument that the matter could be corrected with repleading. A claim based on lack of entitlement to obtain a patent could not be reformulated in a way that did not engage the Act. He also did not accept an argument that the matters ought to be resolved by the High Court out of convenience. 
Other factors relevant to the decision to strike out were that Pfizer (a third party) had also filed opposition proceedings against the same patent. It had a right to be heard on validity of the Bayer patent application but was not a party to the High Court proceedings. A ruling on the issues in the High Court proceeding would exclude Pfizer. Further still, declarations as to novelty and obviousness would not prevent Bayer from amending its claims before the Commissioner. Venning J emphasised that the Court “would not make vain declarations”.  – .