2.6 Judicial patent proceedings and case management
2.6.1 Venue, jurisdiction and case assignment rules
The Federal Court of Australia and the state and territory supreme courts have jurisdiction to hear patent infringement matters. The Federal Court is granted jurisdiction directly from the Patents Act 1990 (Cth).53 In addition, state and territory supreme courts, as “prescribed courts,” are also granted jurisdiction directly from the Patents Act 1990 (Cth) in respect of a number of discrete matters (this relevantly includes infringement proceedings).54
Patent infringement proceedings are typically commenced in the Federal Court. This is a national jurisdiction with numerous judges who have extensive patent litigation expertise, often including practice at the bar prior to being appointed. First-instance proceedings in the Federal Court are heard and determined by a single judge. There are no jury trials for patent cases in Australia.
A party can commence patent proceedings before the Federal Court sitting in any Australian state or territory. The procedural rules and processes are standardized across Australia. Typically, a party will choose to commence a proceeding in the Federal Court registry that is in the state or territory in which they operate or where their legal representatives are located. Due to the standardized procedural rules and depth of experience of the Federal Court judiciary across the national Federal Court jurisdiction, there is no perceived benefit or disadvantage in commencing a proceeding in any particular venue.
Post-grant patent revocation proceedings can also be initiated in the federal (most commonly) or supreme courts. These can be commenced by a party seeking to “clear the path” ahead of the commercialization of a technology. However, in most instances, post-grant revocation is brought as a cross-claim to an infringement proceeding.
In the Federal Court, there are a number of NPAs, one of which is Intellectual Property, which includes the subarea of Patents and Associated Statutes.55 This subarea includes:
- patent disputes – essentially infringement and validity disputes; and
- appeals from the Commissioner of Patents – for example, refusal by the Commissioner to grant a patent application.
There are approximately 54 Federal Court judges across the Federal Court. All Federal Court judges sit in multiple national practice areas although only 15 sit in the Patents and Associated Statutes subarea, as noted on the Federal Court portal.56
The Federal Court operates an individual docket system, under which a case is allocated to a judge from filing to final hearing. Proceedings relating to patents are subject to the Intellectual Property Practice Note (IP-1).57 This practice note provides guidelines for how patent proceedings – both validity and infringement – must be case-managed, including the use of agreed primers and position statements on infringement.
Federal Court judges actively manage cases in their docket, and parties are required by Federal Court legislation to conduct proceedings as quickly, inexpensively and efficiently as possible.58 Consistent with its drive for efficiency, the Federal Court is increasingly limiting the scope of pre-trial processes, in particular discovery. The docket judge sets a timetable for steps such as discovery, evidence and pre-trial steps and will seek to minimize the extent of interlocutory disputes about these procedural steps. Although it varies depending on the nature of the case, the docket judge will often, at an early stage, set the matter down for a final hearing, which then provides a practical end point to the timetable for the steps of discovery, evidence and pre-trial matters.
Parties may be represented by lawyers, being either barristers, solicitors or, as is often the case, a combination of both. If a party is a natural person, they may also choose to represent themselves. Corporate parties must be represented by lawyers; however, with the leave of the court, they may be represented by a nonlawyer.
2.6.2 Statements of case
In order to commence proceedings in the Federal Court of Australia for patent infringement or for the revocation of a patent on the grounds of invalidity, a party must file an originating application setting out the form of relief sought.59 Generally, the originating application will be accompanied by a statement of claim or affidavit, setting out further information regarding the basis of the claim.60 The applicant must also file a “genuine steps statement” specifying the steps taken to resolve the issues in dispute prior to instituting proceedings.61 Generally, this is satisfied by a patentee sending a letter of demand before commencement and allowing an appropriate period (which may be only a short period for urgent matters) for the other party to respond. These documents must be served on the other party in accordance with the court rules.62
A respondent in patent infringement proceedings must file a defense to the claim within 28 days of service of the statement of claim.63 However, the timing of the filing of the defense may, in some cases, be varied by order of the court. For example, a respondent may require further time to respond, particularly if they require further particulars of infringement from the applicant prior to being able to respond to the claim.
Alternatively, in certain circumstances, the Federal Court also allows parties to file a concise statement, which is limited to a statement of five pages, setting out the key facts giving rise to the claim, the relief sought, the primary legal grounds and the alleged harm suffered by the applicant.64
Importantly, in Australia, it is possible for an applicant to seek an interim and interlocutory injunction in relation to potential patent infringement. The applicant may approach the duty judge of the Federal Court for orders expediting the filing and service of the originating application and pleadings to facilitate an urgent hearing of the application for interlocutory relief.
2.6.3 Early case management
Specific rules of the Federal Court of Australia govern the conduct of intellectual property cases. Those rules are supplemented by the Intellectual Property Practice Note (IP-1), which, when read with the Central Practice Note: National Court Framework and Case Management (CPN-1), sets out the key principles of case management procedure applied by the court.
The rules concerning the management of patent cases are structured to have a strong emphasis on the quick, efficient and as-inexpensive-as-practicable disposition of each matter. The key objective of case management is to reduce costs and delay so that there are fewer issues in contest, promote the effective use of expert evidence and ensure both that there is no greater factual investigation than justice requires and that there are as few interlocutory applications as necessary for the just and efficient disposition of cases.
The court recognizes that proceedings in the Patents and Associated Statutes subarea of the Intellectual Property NPA will vary in complexity, and so a flexible approach is taken to the conduct of proceedings, which enables practitioners to tailor the conduct of the case according to need. Case management hearings are integral to case management; they are conducted by the docket judge, and one of their aims is to identify the genuine issues in dispute between the parties at the earliest stage. At the first case management hearing, the parties’ legal representatives are expected to have an understanding of the case such that they can assist in developing directions for the conduct of the matter to ensure that it is swiftly and economically brought to trial.
The following matters routinely arise in discussion during the course of the initial and any subsequent case management hearings:
- the size and scope of the claim and any cross-claim, including the likely areas of dispute in relation to infringement and the likely grounds of any cross-claim seeking revocation of the patent;
- whether the patentee intends to seek leave to amend the patent claims;
- how the patentee intends to prove infringement (if in dispute) and how to limit the disputes to those central to the determination of the issues, such as by requiring the accused infringer to provide a product, method or process description;
- where it is alleged that there are multiple types of allegedly infringing activity, how the infringement case can be organized by reference to agreed representative examples of infringing conduct;
- whether it is expected that either party will seek leave to adduce evidence of experiments conducted for the purpose of the proceedings;
- the expertise of any expert witnesses, including whether it is proposed that more than one expert witness will be called by each party and, if so, why;
- pre-trial discovery of documents. The court does not permit discovery as of right, and it is incumbent on parties to establish the appropriateness of discovery;
- the early preparation of an agreed primer that sets out undisputed matters going to the CGK, including aspects of the technology relevant for the court to understand the patent, the case advanced in relation to the allegations of infringement and any cross-claim seeking revocation of the patent;
- the timetable for the preparation of lay and expert evidence;
- typically, it will be agreed between the parties that it is efficient for questions of liability to be considered separately and before questions of quantum of any damages or account of profits. Orders are made early for the separation of these issues in the appropriate case; and
- whether and when it is appropriate for the proceedings to be referred to mediation. Frequently, the parties agree – or the court orders – that, after the pleadings are closed, the parties should attend a mediation conducted either by a registrar of the court or an external mediator, who will facilitate settlement negotiations.
The court will seek to set down the proceedings for a final hearing as soon as it becomes apparent when the parties will be in a position to complete the necessary pre-trial steps.
Practitioners are encouraged to discuss the proceedings from an early stage to determine whether alternative procedures that will facilitate the efficient disposition of proceedings can be adopted by the court. The court has the power to appoint:
- a court expert to inquire into and report on any question or facts relevant to the proceedings;
- a referee to consider and determine specific matters before the final hearing; or
- an assessor to assist in the hearing and trial or in the determination of the proceedings.
As a matter of practice, these steps are rarely taken in patent cases during the liability phase of the proceedings.
A regular topic for discussion at case management hearings is whether, having regard to the manner in which the dispute between the parties has developed, the proceedings can be more efficiently conducted by either or both:
- the patentee reducing the number of claims that it sues on or the number of patents upon which the proceedings are advanced; or
- the party seeking revocation limiting the number of prior art documents relied upon in its case based on lack of inventive step or lack of novelty.
After any expert evidence in chief has been filed and answered, the court will frequently direct that the experts meet and prepare a joint expert report. This process facilitates the commencement of a direct dialogue between the experts that is intended to ensure that the subject matter of their oral evidence is confined to relevant matters that are genuinely in dispute. Experience has demonstrated that the process of preparing the joint expert report frequently eliminates semantic or peripheral disputes that otherwise appear significant in written reports.
After most of the preparatory steps have been taken, the docket judge will conduct a more detailed pre-trial case management hearing, wherein the conduct of the hearing will be considered. During this hearing, the parties discuss the timetable for the hearing, whether witnesses can appear by video link or in person, the conduct of the joint expert evidence by the giving of concurrent evidence (as to which, see Section 18.104.22.168), the order of submissions and other practical matters.
When a proceeding for patent infringement or revocation is filed in the Federal Court of Australia, it will typically be allocated by the court to a docket judge, who will conduct all case management hearings of the proceedings and will also conduct the final hearing. There are a number of advantages of this docket system, including that the trial judge is familiar with the matter by the time of the final hearing. It is also a useful discipline for the parties that the judge hearing their procedural applications throughout the proceedings is the same judge who will be conducting the final hearing.
Generally, a judge from the Patents and Associated Statutes subarea (that is, a judge with experience in patent cases) will be allocated to the patent infringement or revocation proceeding as the docket judge.
The docket judge will determine when to set the hearing date for the final trial in the proceedings. In some cases, this may be done at an early stage of the proceeding. However, it is not uncommon for a hearing date to be set later in the proceedings, such as after the pleadings or after evidence has been filed.
2.6.4 Provisional measures and preliminary injunctive relief
The Federal Court of Australia has equitable jurisdiction to grant temporary injunctions restraining an alleged infringer from engaging in certain conduct until the substantive merits of a proceeding can be determined.65 Such injunctions are referred to as interlocutory injunctions or, if they are granted pending an application for an interlocutory injunction, interim injunctions.
Such injunctions can be a useful tool for patentee applicants to preserve the status quo in the market during the preparation period for trial and hearing and while judgment is reserved. It is important to bear in mind that the “price” of an interlocutory or interim injunction is the applicant’s giving of the “usual undertaking as to damages” to the court – a matter which is discussed in Section 22.214.171.124 of this chapter. Another matter for practitioners to bear in mind is that, in lieu of granting an interlocutory injunction, the court may be willing to grant an early final hearing. Such a course may benefit either or both parties, and it removes the need for the patentee applicant to give the usual undertaking as to damages. It is also likely to hasten the final determination of the dispute, including by removing the potential for delay arising from any appeal of the court’s decision to grant or refuse an interlocutory injunction.
Applications for interlocutory injunctions should be brought as quickly as reasonably practicable after an applicant becomes aware of allegedly infringing conduct. The granting of interlocutory injunctions is at the court’s discretion. Factors that militate against the grant of equitable relief generally apply equally with respect to interlocutory injunctions, such as laches (delay). Further, the failure of an applicant to move with haste to seek an interim or interlocutory injunction tends to undercut any submission by the applicant that an interim or interlocutory injunction is urgently required to maintain the status quo to protect the applicant’s position prior to the substantive determination of the rights of the parties.
In circumstances where interlocutory injunctive relief needs to be sought urgently (subject to the practicalities of obtaining evidence to establish a prima facie case of patent infringement), practitioners should be familiar with paragraphs 3.1–3.5 of the Intellectual Property Practice Note (IP-1). It provides that, where urgent relief is sought, once appropriate documentation has been prepared in support of such an application, the associate (or “clerk”) of the duty judge should be contacted in order to allocate a hearing time for such an application. The allocated Federal Court duty judge changes from time to time, and they are identified on the Federal Court daily list on the Federal Court’s website.
When deciding whether to grant an interlocutory injunction, the court will consider whether the applicant has established a prima facie case (often framed by asking whether there is a serious question to be tried) and whether the balance of convenience favors granting the interlocutory injunction).66 Almost invariably, the applicant will also be required to give an undertaking to the court as to damages. These concepts are outlined in more detail below.
126.96.36.199 Prima facie case (or serious question to be tried)
When hearing an application for an interlocutory injunction, the court is not making a final determination as to the parties’ rights and the merits of the case. Instead, the court will seek to determine, on a preliminary basis, the strength of the applicant’s case. The applicant does not have to prove that it is more probable than not that it will make out a claim of infringement at a trial of the proceeding – merely that it has a sufficiently strong case in the circumstances to justify the grant of the interlocutory injunction to preserve the status quo pending trial. As in any substantive proceeding, evidence – and often expert evidence – will be required to make out a prima facie case. However, given the often urgent circumstances in which relief will need to be sought, the evidence may be less detailed and expressed in a more contingent way than would be the case at trial.
While a patentee need only establish a prima facie case, or that there is a serious question to be tried, the stronger the case of the applicant, the more likely it is that the balance of convenience will favor the granting of an interlocutory injunction, as discussed further in Section 188.8.131.52.
As in all patent proceedings, when defending against an application for an interlocutory injunction based on a claim of patent infringement, an alleged infringer may seek to challenge the validity of the patent. However, if all that a respondent can establish is that it has an arguable case that the patent is invalid, that will be insufficient to displace the applicant’s prima facie case of patent infringement. The respondent will need to establish a sufficiently strong case that the patent is invalid with the result that it cannot be said that the applicant has made out a prima facie case, given that an invalid patent cannot be infringed.
184.108.40.206 Balance of convenience
When considering whether the balance of convenience is in favor or against the granting of an interlocutory injunction, the court considers the respective impacts of an interlocutory injunction on the applicant, the respondent and third parties. As referred to at Section 220.127.116.11, the balance of convenience is considered in light of the strength of the applicant’s case. All other matters being equal, a stronger case will suggest the balance of convenience lies in favor of granting an injunction than a weaker case.
As a starting point, a key factor to consider in determining where the balance of convenience lies is whether damages would be an adequate remedy for the applicant. That is to say, determining whether, if an interlocutory injunction were not granted and the respondent carried out the actions of which the applicant complains, the applicant would be adequately compensated for that conduct by an order for damages if the matter is ultimately determined in the applicant’s favor. If damages are an adequate remedy, an interlocutory injunction will not be granted because there is no need to preserve the status quo pending trial.
Factors that militate against such a finding include (a) the respondent not being in a financial position to pay any damages awarded, (b) the likely difficulty in quantifying damage, (c) whether some of the damage likely to be suffered by the patentee is unlikely to be recoverable as damages for patent infringement, and (d) the irreversibility of the effect on the applicant of the respondent’s conduct even if the respondent is ultimately injuncted at trial (e.g., if the respondent’s entry into a market will irrevocably change the nature of the market).
In respect of pharmaceutical patents, the operation of the Pharmaceutical Benefits Scheme, being the vehicle by which the Australian Government subsidizes the purchase of pharmaceutical products in Australia, has important effects on the balance of convenience. Under the Pharmaceutical Benefits Scheme legislation, the entry of a second brand of pharmaceutical product into the Australian market has the effect of reducing the price at which the first brand of pharmaceutical product may be sold by the patentee in Australia and, therefore, the quantum of the subsidies paid by the Australian Government under the Pharmaceutical Benefits Scheme. The court may be willing to grant an interlocutory injunction to restrain the exploitation of the second brand on the basis that, if the second brand enters the market, the patentee will suffer irrevocable damage because the price at which the patentee may sell the first brand will be reduced.67
As well as considering how the applicant will be affected if an interlocutory injunction is not granted, the court will also consider the effect upon the respondent and third parties if the interlocutory injunction is granted. In so doing, the court will bear in mind that the respondent and third parties may have the benefit of the usual undertaking as to damages given by the applicant to the court. If the interlocutory injunction would, in practical effect, bring the dispute to an end (e.g., because the respondent’s business would be irreversibly affected, or the fast- moving nature of the market is such that, by the time the dispute is ultimately determined, the respondent’s product will no longer be commercially valuable), then this is a matter that can weigh against granting the injunction or at least suggest that the applicant has to make out a stronger prima facie case. Equally, if third parties would be adversely affected in a way that is unlikely to be compensated by the usual undertaking as to damages, then this can also be a matter weighing against an interlocutory injunction.
Ultimately, the balancing exercise is a discretionary one and an exercise that depends on the particular circumstances of each case.
18.104.22.168 Undertaking as to damages
If an applicant seeks an interlocutory injunction, it will almost always be required to give an undertaking as to damages. The form of the undertaking is as set out in the Usual Undertaking as to Damages Practice Note (GPN-UNDR).68 In essence, the undertaking requires the applicant to undertake to the court to submit to such order as the court may consider to be “just” for the payment of compensation to any person (whether or not that person is a party) affected by the operation of the interlocutory injunction and to pay such compensation. That is, if at the final hearing (and after exhausting appeals) the applicant is unsuccessful in establishing an entitlement to a final injunction for patent infringement, it will be required to compensate those who have been adversely affected by the interlocutory injunction, which may be the respondent and any third parties, in the period in which it operated.
In pharmaceutical patent matters, the Australian Government has adopted a practice of making substantial claims on the usual undertaking as to damages in circumstances where a patentee applicant has succeeded in obtaining an interlocutory injunction to restrain exploitation in Australia of a second brand of the patentee’s product but has ultimately failed (whether at trial or on appeal) to secure a final injunction.
Claims on the usual undertaking as to damages in the context of pharmaceutical patent cases have tended to become protracted and difficult, with the result that it cannot be assumed that claims on the usual undertaking as to damages will be successful. This is relevant to assessing the balance of convenience.
22.214.171.124 Quia timet injunctions
It may be the case that a patentee applicant becomes aware that a respondent is taking preliminary steps toward undertaking actions that would infringe a patent, but the respondent has not yet undertaken any act that infringes the patent. In that case, an applicant can seek an interlocutory injunction on a quia timet basis – that is, an injunction to stop threatened patent infringement. The same principles as outlined above apply, but, in this case, the applicant will also have to establish with some degree of probability that a respondent intends to ultimately do something that will infringe the patent. Quia timet injunctions are often sought in the context of pharmaceutical patents, where the highly regulated nature of the market is such that certain public steps have to be undertaken before a product can be launched on the market.
2.6.5 Discovery and gathering of information
This section focuses on discovery processes in the Federal Court of Australia, given that patent matters are primarily conducted in that jurisdiction. Discovery is one type of court-mandated process that requires one party to litigation to disclose documents (or the existence of documents) to another.69 Three other court-mandated document disclosure processes are: notices to produce and subpoenas, which are addressed briefly in Section 126.96.36.199, and preliminary discovery, which is addressed in 188.8.131.52.
Discovery in the Federal Court is governed by Part 20 of the Federal Court Rules 2011 (Cth) as elucidated in the Federal Court’s Central Practice Note: National Court Framework and Case Management (CPN-1) Part 10, the Intellectual Property Practice Note (IP-1) paragraphs 6.14–6.16 and 9.1, and the Technology and the Court Practice Note (GPN-TECH) Part 3, which all also relate to the court’s processes regarding discovery.
184.108.40.206 Circumstances in which discovery will be ordered
Discovery may only occur by order of the court.70 An order for discovery will only be made if it would “facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible.”71 That is, there is no right to discovery, and the court is not bound by any agreement between the parties regarding discovery. A court may refuse to order discovery, amend its scope or defer consideration of it until a later point in the proceeding. If a party seeks discovery in advance of all parties filing and serving their affidavit evidence, it is likely that the party will need to justify to the court why discovery should be ordered at that stage of the proceeding. The court may consider that the goals in Rule 20.11 of the Federal Court Rules 2011 (Cth) are more likely to be achieved if discovery is ordered after all parties have filed and served their affidavit evidence. By adopting such a course, the burden of discovery may be minimized on the basis that any specific gaps in the evidence that need to be filled by way of discovery are more likely to be known.72
“Standard discovery” refers to a party being ordered to produce all documents that are directly relevant to the issues raised on the pleadings that can be located after a reasonable search. The burden of such discovery can be significant. Central Practice Note paragraph 10.7 states that discovery should be proportionate to the nature, size and complexity of the case. However, the usual course in patent matters is for parties to negotiate “categories” of discovery, in which documents answering certain specific descriptions are sought. This is known as “nonstandard discovery” and is dealt with in Rule 20.15. For example, a category might seek documents recording or evidencing the steps undertaken in a particular manufacturing process where that would be relevant to proving infringement of a method or process claim.
There is no formal process for negotiating discovery categories. Usually, at a suitable stage of the litigation, parties will exchange correspondence outlining the categories they seek and then negotiate to reach agreement, for example, on the wording of those categories and the timing of document production. If agreement cannot be reached on some issues, the matter is usually brought before the docket judge by way of an interlocutory application, supported by an affidavit or a list of correspondence or undisputed documents under Rule 17.02. A judge will expect parties to have attempted to resolve differences regarding the categories as far as possible before ruling on the categories to be ordered. The judge will also expect the parties to have determined a suitable timetable for production – that is, to have considered how long the discovery process is likely to take given the scope of searches, investigations and reviews of the documents that need to be undertaken.
A party may oppose categories of discovery sought by another party on various bases. Grounds often include that (a) the documents sought are not directly relevant to an issue in the proceedings, (b) the documents are not necessary for a party to prove its case or impugn the case of its opponent, (c) the request is “fishing” (e.g., a speculative attempt to locate documents that would allow the requesting party to plead a new case), (d) the category is unnecessarily broad or is oppressive in that it would be unreasonably burdensome for the receiving party to comply with the category, and (e) the category would only produce documents that would be privileged, and there is no reasonable submission that such privilege has been waived. These matters are usually resolved at a hearing by reference to the pleadings; however, in contending that a category is oppressive, parties tend to file affidavit evidence from a solicitor outlining the scope of searches, investigations and reviews of documents required to satisfy the category. Notwithstanding such evidence, the court may order discovery in the category on the basis that the party need only conduct a reasonable search for documents as set out in Rule 20.14(3).
220.127.116.11 Process of giving discovery
Unless otherwise ordered, a party must undertake a reasonable search for documents falling within the scope of any discovery categories ordered that are in its possession, power or control. Rule 20.14(3) of the Federal Court Rules 2011 (Cth) outlines matters to consider when determining what constitutes a “reasonable” search in the particular circumstances of a proceeding.
There are two distinct steps in giving discovery: (a) the provision of a list of documents and (b) the production of the documents themselves. Rule 20.17(1) provides that a party “gives discovery” to another by providing a list of documents in accordance with Rule 20.18. A list of documents is prepared in the form of Federal Court Form 38, which is available from the Federal Court website. The list of documents must be sworn or affirmed by a suitable representative of a party: that is, someone with sufficient knowledge regarding the documents to which the list of documents relates.73 Rule 20.17 provides that a list of documents must outline, in some degree of detail, the documents falling within the categories that are or were in a party’s possession or control. Where a document is no longer, but once was, in the party’s possession or control, an explanation must be given as to when and how the document left the party’s possession. The list of documents must also set out documents over which a party claims privilege.
Rule 20.32 provides that a party may seek an order from the court for the production of documents referred to in a list of documents. Such an order is usually made prospectively at the same time as other orders regarding discovery. The usual course is for copies of documents to be produced electronically from one party to another unless there is some particular reason for some other order (e.g., if the authenticity of a document is disputed, it may be necessary to produce the original version of the document).
A party’s discovery obligations are ongoing.74 That is, after the provision of the list of documents occurs, a party is under an ongoing obligation to notify the other party if it uncovers a document that is within the discovery categories ordered but which is not in the list of documents. This may be due to oversight or because the document was created after the list of documents was created. However, a party does not have to produce privileged documents that are created after the proceeding commenced.75
18.104.22.168 Refusal to produce documents
There are two bases on which a party can seek to restrict production of a document, whether in whole or in part (i.e., by masking parts of the document).
First, a party may refuse to produce a document on the grounds of legal professional privilege or public interest privilege.76 Procedurally, the usual course in relation to disputed claims of privilege involves (a) a party, in its list of documents, asserting that a document is privileged from production; (b) if there is a dispute about the claim of privilege (e.g., on the basis that such a document could not be privileged, or that privilege in the document has been waived either expressly or implicitly), the other party filing an interlocutory application seeking an order compelling production of the document, for example, under Rule 20.32 of the Federal Court Rules 2011 (Cth), supported by an affidavit or a list of correspondence or undisputed documents under Rule 17.02; and (c) the court deciding whether to grant the order compelling production of the document at a hearing.
Second, a party may seek to restrict production of a document on the basis of commercial confidentiality. Often, in patent proceedings, the litigants will be competitors. Documents produced may disclose commercially confidential matters. The usual course is for parties to negotiate a suitable protocol for dealing with such documents prior to production. For example, the parties may agree that the documents are only to be produced to external lawyers and counsel and to expert witnesses, but not to representatives of the party themselves. If the parties are unable to agree on a suitable protocol for dealing with confidentiality, it may be necessary to seek orders dealing with such issue from the docket judge.
22.214.171.124 Alternative procedures to discovery
The Federal Court of Australia encourages flexible and alternative ways of obtaining evidence that a party may otherwise seek by way of discovery. Examples of this in a patent context are product and process descriptions. In the context of proving infringement of a product or process claim, it may often be difficult for a party to know which documents to seek from the other or to prove from documents alone whether such a process infringes all the integers of a claim. Intellectual Property Practice Note (IP-1) paragraphs 6.14–6.16 state that, in such a situation, a court may order an alleged infringer to prepare and serve a sworn statement from a suitably knowledgeable person as to the nature of the alleged infringer’s product or process to allow the other party to make out its case on infringement or to seek documents in a more targeted manner.
Notices to produce are another process by which a party can seek documents from another party. While the precise boundaries between a notice to produce and discovery by way of categories can appear unclear, the primary difference is that notices to produce are a more targeted process and must be directed to the production of specifically identified documents. There are two kinds of notices to produce. The first is requests for documents referred to in a party’s pleading or affidavit, which occurs without the supervision of the court unless there is a dispute as to the notice (e.g., a dispute as to whether the pleading or affidavit in fact “refers to” the document sought in the notice).77 The second is orders for the production to the court of certain documents.78 Production under Rule 30.28 of the Federal Court Rules 2011 (Cth) is not limited to during trials, and a practice has developed of parties seeking production of documents before the registrar under Rule 30.28 at any time in a proceeding. Documents sought under this rule are not only limited to documents referred to in an affidavit or pleading.79
Finally, documents may be sought from nonparties by way of subpoenas for the production of documents.80 Subpoenas are governed by Part 24 of the Federal Court Rules 2011 (Cth) and are also addressed in Parts 1–10 of the Subpoenas and Notices to Produce Practice Note (GPN-SUBP). Subpoenas are a substantial topic in their own right, and it is beyond the scope of this section to deal with them in any detail. Like discovery, there is not a “right” to a subpoena. Subpoenas may only be issued with leave of the court.81 Subpoenas are issued by the court, not a party, so compliance is owed to the court, not the party seeking the subpoena. Given that a failure to comply with a subpoena constitutes contempt of court,82 and subpoenas impose burdens on nonparties to the litigation, there are detailed and strict rules regarding the form and service of subpoenas.83 Like discovery, subpoenas will usually seek the production of categories of documents. However, those categories will usually need to be more confined and prescriptive than categories sought on discovery, owing to the fact that the subpoena recipient is a nonparty and will not be familiar with the issues in a proceeding.
A further difference between discovery on the one hand and notices to produce and subpoenas on the other is that a category for discovery may be more broadly described and a party giving discovery has the obligation to search for and produce all documents relevant to the proceedings within that category. A notice to produce and a subpoena generally require greater specificity of description of the documents sought and the recipient is entitled to read the described category sought narrowly and produce only documents strictly within that category.
126.96.36.199 Pre-action or preliminary discovery
Rules 7.22 and 7.23 of the Federal Court Rules 2011 (Cth) provide for two types of pre-action discovery. Rule 7.22 allows a prospective applicant to obtain discovery from a third party to ascertain the description of a prospective respondent, subject to satisfying the jurisdictional prerequisites set out in Rule 7.22(1) and the court’s discretion in Rule 7.22(2). Rule 7.23 allows a prospective applicant to obtain discovery from a prospective respondent of documents directly relevant to the question of whether the prospective applicant has a right to obtain relief, subject to satisfying the jurisdictional prerequisites in Rule 7.23(1) and the court’s discretion in Rule 7.23(2). That is, subject to those matters, Rule 7.23 allows a prospective applicant to “fish” for a case against a prospective respondent.
Each of the jurisdictional prerequisites in Rule 7.23(1) must be satisfied. A prospective applicant must satisfy the court that it reasonably believes that it “may” have the right to obtain relief in the court from a prospective respondent and that, after making reasonable inquiries, it does not have sufficient information to decide whether to start a proceeding in circumstances where the documents sought by discovery would assist in making the decision.
The mechanism under Rule 7.23 can be useful for obtaining documents to determine whether a product being sold in Australia is being made using a patented process.
2.6.6 Summary proceedings (summary adjudication)
188.8.131.52 Availability of summary adjudication
In the Federal Court of Australia summary adjudication is available both to applicants (i.e., the party alleging infringement of a patent) and respondents (i.e., the party defending an allegation of infringement of a patent).
The procedural rules relating to summary adjudication are set out in Rule 26.01 of the Federal Court Rules 2011 (Cth). An application for summary adjudication requires an affidavit stating the grounds of the application and the facts and circumstances relied on to support those grounds.84
184.108.40.206 Basis for summary adjudication – “no reasonable prospect” of success
The power of the court to give summary adjudication is provided by Section 31A of the Federal Court of Australia Act 1976 (Cth). The court may give summary judgment in favor of an applicant if the court is satisfied that the respondent “has no reasonable prospect of successfully defending the proceeding,”85 and it may summarily dismiss a proceeding if it is satisfied that the applicant “has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.”86
Section 31A(3) specifies that a defense or proceeding need not be “hopeless” or “bound to fail” for it to have “no reasonable prospect of success.” This is because the “no reasonable prospect of success” standard was adopted in Section 31A to make it easier for a party to obtain summary adjudication, in comparison with the common-law standard that previously applied, which required a proceeding or defense to be “hopeless” or “bound to fail” before summary judgment or summary dismissal could be ordered. A “reasonable prospect of success” is a “real,” rather than “fanciful,” prospect.87
The court’s power to make orders for summary judgment or summary dismissal is discretionary.88 The court will exercise its powers in relation to summary adjudication with caution.89 This is particularly so where an application for summary judgment or summary dismissal requires consideration of apparently complex questions of fact, law, or mixed law and fact.90 Where there are factual issues capable of being disputed and in dispute, the summary disposition of the proceeding would not be appropriate.91 A proceeding will not be determined summarily unless it is clear that there is no real question to be tried.
The party bringing the application for summary determination bears the onus of persuading the court that the proceedings should be determined summarily prior to a full hearing (and prior to other court processes that may not yet have occurred, such as discovery). That onus is “heavy.”92 If a prima facie case in support of summary determination is established, the onus shifts to the opposing party to point to some issue that makes a trial necessary.93
220.127.116.11 Summary adjudication in patent litigation
A summary judgment application could be brought by a patentee on the basis that the respondent has “no reasonable prospect” of defending the allegation that its product or method infringes the patent. For example, the respondent may admit to the factual allegations of making, using or selling the relevant product or method, with the only issue needing to be determined by the court being whether that product or method infringes the patent. In these circumstances, the applicant could consider its case on infringement to be so clear that the respondent has “no reasonable prospect of successfully defending” the allegations of infringement.
By the same token, a respondent who is alleged to have infringed a patent could bring a summary dismissal application on the basis that its product or method plainly does not infringe the patent such that the applicant has “no reasonable prospect of successfully prosecuting the proceeding.”
A respondent could also bring a summary dismissal application on the basis that the patent is invalid. For example, if there is a publication that disclosed all of the integers of the invention claimed in the patent, but there is a dispute about the priority date of the patent and therefore a dispute about whether the publication is relevant prior art, then the respondent may decide to make an application for summary dismissal on the basis that the priority date issue can be determined without extensive evidence.94 In such a case, determination of the priority date issue would effectively determine the issue of patent validity.
In practice, however, summary adjudication is rarely sought in patent litigation in Australia, either by applicants or by respondents. This is likely due to the fact that patent proceedings generally involve complex questions of fact and law, which are generally not appropriate for summary determination.95
Patent litigation proceedings are typically commenced by a patentee alleging infringement, with the respondent denying infringement and cross-claiming for revocation of the patent. The court typically hears and determines infringement and invalidity simultaneously.
Once initial procedural steps, including the filing of pleadings, are completed, each party prepares evidence in accordance with a timetable set by the court. Evidence in patent cases is usually provided in the form of written and verified affidavits. Documents can be annexed or exhibited to affidavits, which are then tendered in court and admitted as evidence. Prior to trial, there will usually be one or more case management conferences and procedural steps to identify which affidavit evidence will be relied on at trial. Each party also notifies which of the opposing parties’ witnesses it will call for cross-examination.
At the trial, any affidavit evidence upon which a party intends to rely will be formally “read” by the party relying on it and admitted into evidence. A person that has given evidence in affidavit form may be required to appear for oral cross-examination by the opposing party. Cross-examination of the witness is not confined solely to matters in the witness’s affidavit: any issue relevant to the proceedings can be canvased. After cross-examination is completed, the party calling the witness has the right to reexamine the witness in relation to matters arising out of cross-examination.
18.104.22.168 Expert evidence
Issues of patent construction and, consequently, infringement and validity are considered through the lens of a notional addressee of the patent specification – a person skilled in the art. The background and experience of the person skilled in the art will differ depending on the subject matter of the specification. Of course, ultimately, these issues are determined by the court. While the Federal Court judges who hear patent cases are generally highly experienced and often former patent counsel themselves, they do not always have technical qualifications. Consequently, in almost all patent cases, independent expert evidence is called to assist the court in placing itself in the position of the person skilled in the art.
While the Federal Court of Australia can appoint its own expert or assessor (technical assistant), these powers are rarely used, and, in the majority of cases, competing experts are engaged by the parties themselves. The purpose of expert evidence is for the court to receive the benefit of the objective and impartial assessment of an issue using the specialized knowledge of the expert.96
Where an expert witness is retained for the purpose of preparing a report or giving evidence as to an opinion held by the expert based on their specialized knowledge, the expert is provided with the Federal Court’s Expert Evidence Practice Note (GPN-EXPT) and all relevant information so as to enable the expert to prepare an independent report. The expert’s ultimate obligation is to assist the court rather than act as an advocate for a party. The parties and their legal representatives have obligations to maintain the independence of the expert witness and must not pressure or influence the expert into conforming their views with the parties’ interests.
Expert evidence can assist the court on a number of issues arising in a patent case. Importantly, in relation to patent construction, expert evidence can assist the court in understanding the context of a patent and the meaning of any technical terms or “terms of art.”97 On infringement, expert evidence can assist the court in understanding the functionality and features of an alleged infringing product or process and how it may map to the patent claims in issue. In relation to validity, expert evidence can assist the court in understanding the extent and nature of disclosures in the prior art to assist in a novelty assessment. Further, expert evidence is often relied on to establish the state of the CGK in the relevant field before the priority date. This is an important step in assessing whether the claimed invention would have been “obvious” to a person skilled in the art.
The court will hear and assess the evidence from the competing persons skilled in the art called by the parties, but, ultimately, all these issues are for determination by the court.
22.214.171.124 Position statements, product descriptions and “primers”
In appropriate cases, the party alleging patent infringement may be required to provide a position statement on infringement. This is a document that supplements an infringement pleading and provides more detail on how the patentee alleges the impugned product takes the features of the patent claims. It concisely states the facts and matters relied upon in support of the infringement allegation, including reference to the integers of any claim alleged to have been infringed. While it does not constitute evidence in the case, it will often be prepared with input from an expert.
The respondent is often required to provide a position statement on (non)infringement in response. In some cases, the respondent may also be required to provide a product description. This is a detailed description of the product or process alleged to be infringed. This procedure has been developed in an attempt to avoid time-consuming and costly discovery or experimental procedures for establishing the form and functionality of the alleged infringement. The product description is generally verified by an officer of the respondent with knowledge of the product.
In an appropriate case, the court may require the parties to produce an agreed primer. This identifies the agreed technical background to the invention claimed in the patent. The primer typically includes an agreed description of the CGK at the priority date. In an appropriate case, the primer may be accompanied by an agreed glossary of key terms. The primer provides a starting point for the court in addressing the state of the art, particularly in relation to validity.
126.96.36.199 Conference of experts and joint report
Where multiple experts are retained to provide evidence to the court, the court increasingly requires that experts meet in a conference ahead of the trial to attempt to narrow the issues between them. There is often a lot of background information in the experts’ affidavit evidence in relation to the technology in issue and the CGK that is not controversial. The parties and their legal representatives do not participate in the expert conference, but, often, a court officer such as a registrar will be called on to facilitate.
At the conclusion of the conference, the experts prepare a joint report, which identifies the issues in respect of which they agree or disagree. The joint report typically contains a succinct explanation for any differences of opinion. This procedure enables the court and the parties to focus on the issues that are genuinely in dispute at the trial.
188.8.131.52 Concurrent evidence
In most patent cases, the Federal Court of Australia has adopted the practice of concurrent expert evidence (also colloquially known as “hot-tubbing”). At the trial, after being sworn in, the experts engaged by each party are questioned together. Prior to a hearing at which concurrent expert evidence is to be given, the parties and their legal representatives confer and consider an agenda, an order and manner in which questions are to be asked, and whether cross-examination will take place during concurrent with evidence, or after its conclusion.
Concurrent expert evidence typically involves the following process:
- 1. The parties’ experts prepare a joint report, identifying their areas of agreement and disagreement.
- 2. The experts are called into the witness box together.
- 3. Each expert takes turns in giving evidence.
- 4. An expert can comment on another expert’s evidence.
- 5. The parties’ representatives cross-examine the experts, with each expert being able to give evidence and comment on another expert’s evidence.
This practice allows an expert to consider and comment on another expert’s opinion in real time and allows the court and the parties to focus on the real issues in dispute. The objective is to facilitate an environment whereby the experts, the parties and the court can engage in a dialogue that enables a thorough and frank examination of the issues.
184.108.40.206 Expert evidence in infringement proceedings
Expert evidence relating to infringement claims is prepared and presented in a similar fashion to invalidity evidence.
The infringement issues on which expert evidence is commonly received include:
- technical matters bearing on the proper construction of the specification and claims;
- evaluation of whether a product or process possesses the integers of relevant claims (e.g., by an engineer, clinician, industry expert or patent attorney);
- matters of industry knowledge relevant to infringement (e.g., the uses to which a particular product may be put or the characteristics of a market in which the product is supplied); and
- calculations bearing on the quantum of relief to which an applicant may be entitled on an account of profits or by way of compensatory damages.
Although infringement issues may, to an extent, be separated from invalidity issues in joint report and concurrent evidence processes, there is a significant degree of overlap between the issues (particularly in relation to construction and CGK) such that a party will often have one or more experts giving evidence on infringement and invalidity issues in the proceeding.
2.6.8 Case-specific education of decision-makers
In patent cases, there are a number of tools used by the court to familiarize the judges with the technology of the patent(s) in issue. These tools have been outlined earlier in this section and include the use of expert affidavits, product and process descriptions, agreed primers, joint expert reports and concurrent evidence.
In complex matters, the court may direct opposing experts to commence their oral evidence by each presenting a short tutorial addressing the background technology to the dispute. This may be accompanied by such PowerPoint or other presentation material as the expert thinks fit. To the extent necessary, the opposing expert may point out areas of disagreement or expand on the subjects addressed by the other expert. The purpose of doing so is to allow for the court to be educated in the relevant background material to the dispute in a way that permits the judge to engage with the presentation and develop an introductory understanding of the subject matter. The transcript of the tutorial and any supporting material stands as evidence, and the legal representatives are permitted to cross-examine on its contents.
The Federal Court employs a number of processes which facilitate the case specific education of decision-makers.
Once the case has proceeded to trial, the Court regularly employs a number of innovative processes aimed toward educating trial judges in the specifics of the case. Most notably, in patent cases involving several expert witnesses it is common for the Court to order the preparation of a joint expert report following the filing of expert affidavits. This will involve a meeting being convened between the experts, often facilitated by a registrar of the Court, aimed at synthesizing the issues in respect of which the experts agree and disagree. During this meeting, the experts are encouraged to reach agreement on the issues relevant to the case and, where that is not possible, provide a brief explanation of the reasons for their disagreement. This meeting will culminate in the production of a joint expert report to be tendered in evidence. At the hearing, it is likely that the evidence of the experts who contributed to the preparation of the joint expert report will be given concurrently. This means that the experts will be questioned together, promoting a frank dialogue between the experts and enabling the further clarification of any differences of opinion.
Australian courts operate under a principle of open justice. However, open justice is not an absolute concept, and, on occasion, it must be balanced with other considerations, including commercial confidentiality.
During patent-related court proceedings, the first stage at which issues concerning confidentiality are likely to arise is during either disclosure processes (e.g., discovery) or the service of evidence. At these stages, the confidentiality issues that arise are more likely to concern the disclosure of confidential information to the opposing party (who is often a commercial competitor) rather than to the public at large. Generally, a party that receives documents that have been served for the purposes of litigation will be under an obligation to use those documents only for the purposes of the proceedings in respect of which the documents were served (i.e., not for the purposes of other proceedings or for other commercial or noncommercial purposes).98
Beyond that general obligation, it is common for parties serving documents containing confidential information to require the party receiving the documents to give an undertaking restricting the use and disclosure of those documents. The undertakings are given either inter partes, to the court, or to both. The form of such undertakings is often resolved between the parties without the intervention of the court; however, the court may become involved if a dispute about confidentiality arises that the parties are unable to resolve between themselves. For example, there may be a dispute about whether access to documents should be restricted to external legal representatives or whether it is necessary that the party or its employees also have access to the documents. In such circumstances, the court balances the competing considerations of the risk of inadvertent or accidental disclosure against the benefits of a party having access to relevant information so that appropriate advice can be given to the client and informed instructions may be received from the client.99
In accordance with the principle of open justice, hearings of court proceedings in Australia are conducted in public, and evidence adduced in proceedings at a hearing becomes public. Any agreement between the parties to keep information confidential will not keep evidence given in open court from becoming public. Any party wishing to rely on evidence at trial while keeping that evidence confidential will need to seek suppression or nonpublication orders from the court. Such orders may also be sought from the court at earlier stages of the proceedings if the parties are unable to agree on a confidentiality regime between themselves.
In the Federal Court of Australia, the power to make these orders is provided by Section 37AF of the Federal Court of Australia Act 1976 (Cth). The most relevant ground for making such orders is that the order is necessary to prevent prejudice to the proper administration of justice.100 In deciding whether to make an order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice. Commercial disadvantage that may arise from the disclosure of confidential information may be a basis for the making of a suppression or nonpublication order because the occasioning of such disadvantage may prejudice the proper administration of justice.101 Such orders are not made in perpetuity, and the Court is to ensure that the order operates for no longer than is reasonably necessary to achieve the purpose for which it is made.102 Interim confidentiality orders may also be made under Section 37AI, pending the Court’s determination of whether an order should be made under Section 37AF.
2.6.10 Alternative dispute resolution
Under the legislation and court rules of the Federal Court, there are mechanisms by which parties may elect to participate in, or be referred by the Court to, a number of alternative dispute resolution (ADR) processes. Further, under the court rules, the parties are required to “consider options for alternative dispute resolution, including mediation, as early as is reasonably practicable.”103
The court may refer the entire proceedings or part of a proceeding to mediation (or arbitration).104 In patent litigation in Australia, mediation is far more common than arbitration. This may reflect the fact that an arbitrator cannot revoke a patent. Alternatively, the parties to the proceedings may also make an application to the court for an order to be referred to mediation or arbitration.105 Parties may also arrange for ADR processes to be initiated with a private mediator outside of the court proceedings, although if this is the case, the parties are obliged to seek directions regarding the case management of the proceedings from the court.106
In some cases, the entire patent infringement or validity case may be referred to a form of ADR early in the proceedings. However, parts of the proceedings may be referred to ADR. For example, an interlocutory dispute between the parties regarding the scope of discovery or the quantum of costs may be referred to mediation, to be conducted by a registrar of the court acting as mediator.
If a proceeding is referred to mediation or arbitration, and the parties do not nominate a mediator or arbitrator, a registrar of the Federal Court may be nominated to conduct the ADR process.107 The registrars are trained in ADR processes and regularly act as mediators in court–facilitated mediations, including in patent matters. The Federal Court’s Central Practice Note explains:
Where appropriate, the ADR skills of registrars will be drawn on by the Court to help parties resolve issues (whether substantive or procedural) at the earliest and most effective stage of the proceeding and the Court will utilise its technology and innovative meeting arrangements to help to conduct ADR processes in an efficient and cost-effective manner.108
As a result of the COVID-19 pandemic, there has been increasing use of videoconferencing platforms by the Federal Court, and this technology has been used to facilitate mediations conducted by registrars of the court. Generally, these mediations are conducted on the Microsoft Teams videoconferencing platform, and parties are given access to a joint meeting room (where all parties and the registrar will meet concurrently) as well as individual party meeting rooms (which are used by individual parties to confer during the course of the mediation).
Where mediation is to be conducted by a registrar of the court, the parties may be asked to prepare a nonconfidential position statement (which is exchanged between the parties) and a confidential report (which is shared only with the registrar, on a confidential and without-prejudice basis). Generally, the nonconfidential position statement will set out, at a high level, the parties’ arguments on the disputed issue, and the confidential report to the registrar will set out confidential information regarding the parties’ assessments of their prospects, costs and other objectives that may be relevant to the mediation.
Mediations conducted by registrars of the court are typically listed for one day, although if the dispute is not resolved, the registrar may extend that period. The parties may be represented by their legal representatives (including their solicitors and barristers). The party will generally also need to have an officer or employee of the party present at the mediation who has authority to agree to any settlement during the mediation. The Central Practice Note of the Federal Court explains:
When attending mediation, parties and their legal representatives must attend for the purpose of participating in good faith negotiations and must have the ability, in a practical way and with flexible instructions, to participate meaningfully in negotiations with a view to narrowing the issues in dispute and reaching a mutually acceptable resolution between them by way of compromise.109