ResMed Ltd v Fisher & Paykel Healthcare Ltd

High Court of New Zealand, Gilbert J, 2 June 2017, 29 September 2017, [2017] NZHC 2384

 

ResMed Ltd v Fisher & Paykel Healthcare Ltd

High Court of New Zealand, Edwards J, 16 October 2017, 30 November 2017, [2017] NZHC 2954

 

Patents – revocation action – obviousness challenge – “secondary evidence of obviousness” – discovery – proportionality – ss 41(e), 41(f) Patents Act 1953

 

Patents – revocation action – obviousness and novelty challenges – further and better particulars – particulars of common general knowledge – particulars of integers relied on in prior art for obviousness and novelty challenges – ss 41(e), 41(f) Patents Act 1953

Facts:

Background to the interlocutory applications

ResMed Ltd (ResMed or the plaintiff), and Fisher & Paykel Healthcare Ltd, (FPH or the defendant), were competitors in the field of developing and selling medical treatment for diagnosing, treating and managing sleep-disordered breathing and other respiratory disorders. The plaintiff alleged that the defendant had infringed four of its patents by manufacturing, distributing and selling four products, known as the Simplus, Eson and Eson 2 continuous positive airway pressure masks, and the Icon fixed pressure machine. It sought permanent injunctive relief restraining the manufacture, distribution or sale of those products, and an inquiry into damages.

The defendant denied infringement and counterclaimed for revocation on the grounds that the four patents were invalid. It claimed, inter alia, that each of the patents were invalid on the grounds of lack of novelty and obviousness under ss 41(e) and (f) respectively of the Patents Act 1953 (NZ).

Each of the parties made interlocutory applications which were dealt with in two separate judgments. The first, issued by Gilbert J, related to both parties’ application for discovery against one another. The second, issued by Edwards J, related to the plaintiff’s application for further and better particulars from the defendant of its novelty and obviousness counterclaims. This update will first detail the discovery applications and the Court’s holdings, before turning to the particulars application.

The discovery applications

Before Gilbert J, the plaintiff sought discovery from the defendant of evidence relating to the development and sale of the defendant’s Simplus, Eson, Eson 2 and Icon products. The plaintiff argued this evidence was relevant to infringement and the question of whether the plaintiff’s patents were obvious. This was because, assuming the defendant’s products incorporated inventive features of the plaintiff’s patents, evidence showing commercial success of the defendant’s allegedly infringing products would demonstrate recognition by the market of the plaintiff’s patents’ inventiveness. The documents sought from the defendant by the plaintiff  broadly fit within six categories, namely:

“(a)         documents recording the commercial success of FPH's allegedly infringing products;

(b)           documents indicating that there was a long-standing problem that was solved by the invention — ‘long-felt want’;

(c)           documents recording contemporaneous reaction by FPH or others to the claimed inventive features in ResMed's patents

(d)           documents recording contemporaneous reaction by FPH or other parties to features of FPH's allegedly infringing products which correspond to the inventive features claimed in ResMed's patents; and

(e)           FPH's patent applications to the extent that these address the novelty or advantage of the same features claimed by ResMed in its patents.”

The defendant sought discovery of documents relating to the steps taken by the plaintiff in the development and design of the patents in suit, insofar as those documents were relevant to infringement and obviousness. For the sake of brevity, the defendant’s 22 categories of discovery are not summarised in this update.

Both parties’ opposed one another’s discovery applications. The grounds of opposition were the same, namely that the documents sought were irrelevant, the requested discovery was unjustifiably broad, and providing the documents would be disproportionate and burdensome.

Held, partially granting both parties’ applications for discovery:

Relevance of “secondary evidence of obviousness

  1. The appropriate legal test for obviousness is whether the alleged inventive step would be obvious to the person skilled in the art having regard to any matter which forms part of the state of the art at the relevant times [8]. The primary evidence that would be relevant to this legal test would be from properly qualified expert witnesses [8]. Any other evidence is secondary and only useful as an aid to the assessment of the expert evidence [8].

Mölnlycke AB v Procter & Gamble Ltd [1994] RPC 49 (EWCA) referred to; Lucas v Peterson Portable Sawing Systems Ltd [2006] NZSC 20, [2006] 3 NZLR 721 applied.

  1. Secondary evidence is useful as a ward against hindsight reconstruction in the expert evidence [8]-[9]. Contemporary events can be of evidential assistance, especially in cases where the inventions in issue long pre-date the preparation of the expert evidence [9].

Mölnlycke AB v Procter & Gamble Ltd [1994] RPC 49 (EWCA) referred to.

Relevance to obviousness issue of evidence of commercial success or “long-felt want” of either products created under the patent or products that allegedly infringe the patent

  1. Evidence of commercial success of products created under a patent by the patentee, or which are created by the alleged infringer, can be discovered in particular cases where appropriate as being relevant to the question of the obviousness of the patent in suit [16].

Haberman v Jackel International Ltd [1999] FSR 683 (EWHC) referred to; Schlumberger Holdings Ltd v Electromagnet Geoservices AS
[2010] EWCA Civ 819, [2010] RPC 33 referred to; Nichia Corporation v Argos Ltd [2007] EWCA Civ 741 referred to.

Relevance to obviousness issue of evidence of contemporaneous reaction by the defendant’s employees to the claims in the patent

  1. Evidence of contemporaneous real reactions of real experts in the field to the patent claims can be important to deciding the question of obviousness in particular cases [17]. This is because such reactions do not suffer from the risks associated with expert evidence written for trial, which is usually selected and tailored for trial many years after the event and may suffer from hindsight [17]. The relevant reactions are those of experts at the time when the issues of obviousness and inventiveness of the claimed invention must be assessed [17].

Schlumberger Holdings Ltd v Electromagnet Geoservices AS [2010] EWCA Civ 819, [2010] RPC 33 referred to; Unilever Plc v Chefaro Proprietaries Ltd [1994] RPC 567 referred to.

Relevance of another party’s patent applications covering the features of the patentee’s earlier claimed invention

  1. Evidence showing that the alleged infringer or third parties have also applied to patent the development covered by the patent in suit is relevant to that patent’s alleged obviousness [18].

Schlumberger Holdings Ltd v Electromagnet Geoservices AS [2010] EWCA Civ 819, [2010] RPC 33 referred to.

Proportionality

  1. Proportionality is an important consideration when determining the scope of discovery, particularly following the amendments to the High Court Rules (NZ) in 2012 [19].
  2. The United Kingdom has adopted a practice of only requiring disclosure of documents relevant to a patent’s validity that came into existence two years prior to and two years subsequent from the patent’s earliest claimed priority date [19]. Although not in place in New Zealand, the practice provides useful guidance on what might be considered a reasonable time limitation for discovery of these types of documents in cases where the validity of a patent is challenged [19].
  3. Proportionality will depend on many factors including the nature, significance and complexity of the proceeding [19].

The plaintiff’s discovery application

  1. The defendant was ordered to discover evidence of material generated by its employees during the development and sale of the Simplus, Eson, Eson 2 and Icon products, insofar as that material related to the integers of claims in the patents in suit [24]-[33]. The materials to be provided included:

“(a)    Development file(s) and notes of members of the development team;

(b)    Email correspondence, meeting notes, or internal memoranda concerning the development process;

(c)    Documents received from, sent to, or drafted to send to design firms, consultants, toolmakers or other third parties involved in design and development;

(d)    Detailed design and manufacturing drawings sufficient to disclose the design and assembly of the [product in question] and/or any design variations since launch;

(e)    Reports to the Board concerning the development of the [product in question] in New Zealand;

 …

(g)    Patent filings, internal communications, memoranda, marketing material or correspondence with any patent office specifically addressing the novelty or advantage of [the product in question].”

  1.  The materials to be discovered were limited to those generated up to the date of the launch of the product in question [26].
  2.  Discovery was refused of third party commentary or reviews held by the defendant relating to the defendant’s products [28], [31], [32], [33]. This was because the relevant dates by which the defendant had commercialised the allegedly infringing products dated from a number of years after the patents in suit were granted [28]. The time lapse was too great for the evidence to be of material assistance in assessing the primary evidence of inventiveness at the relevant dates [28].
  3. Discovery was also refused of documents generated by the defendant in the course of studying known problems with existing mask designs, and the plaintiff’s mask designs [35], [37]. The categories of documents sought were extraordinarily wide and could not legitimately fall within the scope of a tailored discovery order [35]. [37].
  4. The defendant was ordered to discover analyses, commentary and reviews held or created by the defendant’s employees of ResMed's patented claims in issue, or the inventive concepts underlying those claims, as those documents related to a series of issues in the state of the art [38], [39]. The evidence was directed at obtaining relevant secondary evidence, being contemporaneous reaction by the defendant or third parties to the patent claims under attack by the defendant [38].
  5. The defendant was ordered to discover high level documents (such as project reviews or documents that collated or summarised research for the purpose of reporting to superiors) relating to a series of problems existing in the state of the art [44]. The date range for the documents was restricted to those created up to two years after the relevant priority date [45].
  6.  The defendant was ordered to discover documents it held within its prior art documents which addressed or related to eight problems in the state of the art [46]. The documents discoverable were again restricted to those created up to two years after the relevant priority date [46].
  7.  Discovery was refused of high level financial documents illustrating the financial performance within New Zealand and internationally of the Simplus, Eson, Eson 2 and Icon products [48]. The lengthy time lapse between the launch of the defendant’s allegedly infringing products and the deemed filing dates for the plaintiff’s patents was too long [48].

The particulars application

The plaintiff sought further and better particulars of the defendant’s statement of defence and counterclaim. The particulars sought related to the defendant’s obviousness and novelty allegations, and its defence to the infringement claim, and fell into three broad categories:

“(a)         Category 1: FPH’s reliance [as part of its obviousness allegation] on specific features of commonly available masks said to form part of the “common general knowledge”;

(b)           Category 2: FPH’s failure to identify where in the cited prior art each integer of the claims relied on is said to reside;

(c)           Category 3: Positive allegations made by FPH in support of its statement of defence to the infringement claim.”

Again for the sake of brevity, the application with respect to category 3 is not summarised by this update.

The defendant resisted the application, on the grounds that it had already provided particulars of its pleading which went beyond what was required, and that providing further particulars would have required it to plead evidence or matters of law.

Held, declining the plaintiff’s application for further and better particulars:

 

General principles applying to particulars of objections to a patent’s validity

  1. Particulars illuminate a pleading and ensure that the opposite party is fairly informed of the case to be met at trial [12]. They operate to isolate the issues in dispute, and assist in determining the scope of the evidence required to be called at trial [12]. However, insisting on excessively refined pleadings should be avoided, as they are wasteful of costs and court time, especially in complex cases where a party’s case will inevitably develop over time [13]. Whether a particulars request is oppressive or an unreasonable burden upon the recipient is relevant to whether or not an application for further and better particulars will be granted [13].

Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 referred to; Ayers v LexisNexis NZ Ltd [2012] NZHC 3055, (2012) 21 PRNZ 313 applied; Platt v Porirua City Council [2012] NZHC 2445 applied; BNZ Investments Ltd v Commissioner of Inland Revenue (2008) 23 NZTC 21,821 (HC) referred to; Body Corporate 74246 v QBE Insurance (International) Ltd [2015] NZHC 1360 applied.

  1. Part 22 of the High Court Rules (NZ) sets out rules regulating proceedings and appeals under the Patents Act 2013 [14]. Subpart 4 deals with objections to the validity of a patent [14]. Under r 22.19, particulars of an objection to the validity of a patent must include the grounds on which the validity of the patent is disputed and “include particulars clearly stating issues intended to be raised” [15].

The extent to which particulars must be given of the allegation that the invention was obvious having regard to the common general knowledge

  1. The High Court of New Zealand held in Amarillo Cell Culture Co Inc v Fernz Corp Ltd that a party seeking revocation of a patent for obviousness by reference to the common general knowledge must particularise any document relied upon as part of that challenge [24]. However the common general knowledge itself was a matter of evidence for trial given by persons knowledgeable in the art [24].

Amarillo Cell Culture Co Inc v Fernz Court Ltd HC Auckland CL52/93, 3 October 1994 referred to.

  1. This approach was “softened somewhat” by the High Court of New Zealand’s subsequent decision in Stallion Plastics Ltd v McInnes [25]. In that case, the Court cited with approval the England and Wales Court of Appeal’s decision in Ratiopharm v Napp, where Floyd LJ held that “matter which is said to be common general knowledge ought to receive some more formal exposition in advance of the expert evidence stage” [25]. These statements however needed to be read in context, given that Floyd LJ’s statement was made by reference to the English practice of “includ[ing] a plea [of obviousness] founded on nothing more than ‘common general knowledge’”.

Stallion Plastics Ltd v McInnes HC Wellington CIV-2008-485-2250, 29 April 2009 referred to; Ratiopharm GmbH v Napp Pharmaceutical Holdings Ltd [2008] EWHC 3070 (Pat) referred to.

  1.  The Stallion approach requires a party to commit to an outline of the respects in which common general knowledge will be claimed to be relevant [28]. It is not necessary or helpful to establish a bright line rule to apply to pleadings of “common general knowledge” [29]. Just where the line between evidence and pleading is to be drawn will differ from case to case depending on the application of the rules and principles to the nature of the particular case and pleading in issue [29].

Stallion Plastics Ltd v McInnes HC Wellington CIV-2008-485-2250, 29 April 2009 applied.

Application to the facts

  1.  The particulars given by the defendant of the common general knowledge that it relied on for its obviousness challenge were adequate [30]. The defendant had given notice of what it contended to comprise the common general knowledge, namely the known features, together with the masks [30]. These details were sufficient to enable the preparation of the plaintiff’s evidence [30], [31]. To require further particulars would amount to ordering the defendant to provide evidence in its pleadings before discovery is finished and pleadings are closed [30], [31].

The extent to which particulars must be given of the allegation that the invention was not novel having regard to the prior art

  1.   The principles concerning the scope of pleading required in respect of prior art documents was summarised in Terrell on the Law of Patents as follows:

“Whether or not a defendant will be required to give particulars of the exact passages of the prior documents relied on, or to point out specifically what part or parts of the claimant’s specification they allege to be affected thereby, will depend upon the circumstances of the case and the nature of the documents. Where it appeared that the defendant had, figuratively speaking, “thrown at the head” of the claimant a large number of complicated specifications without any attempt at discrimination, further particulars were required. If, however, the defendant bona fide relies on the whole of one or more documents, and the subject matter is simple, the particulars of objections will not be interfered with.”

  1.  That passage was applied by the High Court of New Zealand in Alfa-Laval Cheddar Systems Ltd v Silver Dawson Industries Ltd, where it was held that where the whole publication is referred to, the defendants will be taken to be relying upon every claim which appears in the publication [40]

Alfa-Laval Cheddar Systems Ltd v Silver Dawson Industries Ltd HC Christchurch A20/82, 1 September 1982.

Application to the facts

  1.  The defendant had discriminated between pleading prior art by reference to specifications in their entirety, and on other occasions pleading certain passages and figures from complete specifications [41]. The present case was not an instance of the defendant “throwing at the head” of the plaintiff a large number of complicated specifications where the whole of the document was not relied upon by FPH in good faith [41].
  2. The plaintiff had not provided in evidence the prior art documents pleaded by the defendant that it alleged to be too long for it to determine where each of the integers relied on the defendant for its novelty and obviousness challenges were located [42]. It could reasonably be expected that the plaintiff would be sufficiently familiar with the prior art documents that were the plaintiff’s own patents, so no further particulars were required [42]. The other prior art documents were sufficiently particularised for the plaintiff to instruct its experts in the lead-up to trial [42].
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