Collins v Northern Territory

• Jurisdiction: Australia Federal only
• Judge: Gummow ACJ,Kirby J
• Judgment Date: 16 October 2008
• Neutral Citation: [2008] HCA 49,2008-1016 HCA B
• Court: High Court
• Docket Number: D2/2008
• Date: 16 October 2008

[2008] HCA 49

HIGH COURT OF AUSTRALIA

Gummow, Kirby, Hayne, Heydon And Crennan JJ

D2/2008

Northern Territory Of Australia

Appellant

and

Vincent Collins & Anor

Respondents

Representation

S J Gageler SC with G R Nicholson for the appellant (instructed by Clayton Utz Lawyers)

G O'L Reynolds SC with N R Murray and R C A Higgins for the respondents (instructed by De Silva Hebron)

Patents Act 1990 (Cth), ss 13, 117 and Sched 1.

Northern Territory v Collins

Intellectual property — Patents — Infringement — Contributory infringement — Respondents owned patent for methods of producing oils from species of a particular genus of tree — Appellant Territory licensed third party (‘ACOC’) to enter Crown land and remove timber from trees of this species — Patents Act 1990 (Cth), s 117(1) provided that, if ‘use of a product by a person’ would infringe a patent, ‘supply’ of that product by one person to another was an infringement by supplier — Respondents alleged Territory infringed patent by supply of timber to ACOC — Relationship between exclusive rights to exploit patent and s 117 — Meaning of ‘product’ in s 117 where patent said to be infringed is for method or process — Whether ‘product’ confined to product that itself results from use of a patented method or process.

Intellectual property — Patents — Infringement — Contributory infringement — Meaning of ‘supply’ in s 117 — Whether grant of licences to sever and take timber from Crown land constituted ‘supply’ of timber by Territory for purposes of s 117(1) — Relevance of classification of interest of ACOC as realty or personalty.

Intellectual property — Patents — Infringement — Contributory infringement — Section 117(2)(b) provided that ‘use of a product by a person’ in s 117(1) meant ‘any use’ if product was not a ‘staple commercial product’ — Meaning of ‘staple commercial product’ — Whether timber taken by ACOC under licences a ‘staple commercial product’.

Words and phrases — ‘exploit’, ‘method or process’, ‘product’, ‘staple commercial product’, ‘supply’, ‘use of a product by a person’.

ORDER

1. Appeal allowed with costs.

2. SSet aside the order of the Full Court of the Federal Court of Australia made on 20 September 2007 and in its place order that the appeal to that Court be dismissed with costs.

1 Gummow ACJ And Kirby J. To assist in appreciation of the issues which arise on this appeal from the Full Court of the Federal Court of Australia (Branson and Sundberg JJ; French J dissenting) 1 it is appropriate first to describe the structure and conduct of the litigation which gave rise to the appeal to the Full Court.

The structure and conduct of the litigation

2 By their amended statement of claim in the Federal Court Mr and Mrs Collins (‘the respondents’) sued the Northern Territory of Australia (‘the Territory’) alleging infringement by the Territory of Australian Standard Patent No 742711 (‘the Patent’) granted pursuant to the Patents Act 1990 (Cth) (‘the Act’). The respondents are the registered owners of the Patent.

3 The respondents alleged that the Territory had ‘supplied’ to Australian Cypress Oil Company Pty Ltd (‘ACOC’) certain timber from trees of species of the genus Callitris and that ACOC had used that timber to produce an oil called ‘blue cypress oil’ by means of a process claimed by the Patent. The alleged ‘supply’ was said to be found in statutory licences granted to ACOC to take timber from certain Crown lands in the Territory. The terms of the licences and the circumstances in which they were granted are explained in the reasons of Crennan J.

4 The respondents did not join ACOC as a party in the action although against the Territory they pleaded in general terms that the activities of ACOC had amounted to infringement. However, the respondents alleged that the supply by the Territory of the timber to ACOC was an infringement by reason of s 117 of the Act.

5 Section 117 is headed ‘Infringement by supply of products’ and deals with what is known as ‘contributory infringement’, although that expression is not used in the section or elsewhere in the Act.

6 Section 117(1) states:

‘If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent.’

The reference in s 117(1) to ‘the use of a product by a person’ is, among other things, a reference to ‘any use of the product, if the supplier had reason to believe

that the person would put it to that use’; but this is so only ‘if the product is not a staple commercial product’. That is the effect of par (b) of s 117(2).

7 The title given to the invention in the Patent is ‘Methods of producing essential oils from species of the genus callitris’ and there are 20 claims. All but claim 12 are claims to a method; claim 12 is a claim to a blue oil containing guaiazulene when produced by a method according to any of claims 1–11. The statement of claim did not identify any particular claim or claims which ACOC was said to have infringed.

8 The primary judge (Mansfield J) on 6 February 2006 directed that there be a separate trial on certain issues. His Honour later explained that the order was made to deal with the alleged contributory infringement by the Territory without extending the hearing into issues of validity of the Patent and infringement by ACOC. The validity of the Patent and infringement by the alleged actions of ACOC were assumed at the separate trial.

9 In many cases the formulation of specific questions to be tried separately from, and in advance of, other issues assists in the more efficient resolution of litigation, but where, as appears to have been the case here, preliminary questions are of mixed fact and law there is a particular need for precision both in formulating the questions and in specifying the facts upon which they are to be decided 2.

10 At the trial of the separate issues the parties agreed to a reformulation of issues on the footing that, if Mansfield J decided any of the issues adversely to the interests of the respondents, the action itself must be dismissed. His Honour proceeded accordingly and the upshot was that the action was dismissed on 8 December 2006.

11 The respondents' appeal to the Full Court was successful. The decisive holding by the majority was that there was no ‘staple commercial product’ within the meaning of par (b) of s 117(2); French J was of the contrary view. The order of the Full Court set aside the order of the primary judge dismissing the action and remitted the matter to his Honour for such further hearing as was necessary in the light of the joint reasons of the majority of the Full Court.

12 In this Court the ultimate issue must be whether the decision of the Full Court is shown to be erroneous. However, the Territory, as appellant, in its

written submissions and their development in oral argument, tended to obscure the matter by identifying the ultimate issue as being:

‘[W]hether the grant of a statutory licence to “go upon Crown lands and take … timber” can amount by force of s 117 of [the Act] to an infringement of a patent for a method or process (or a product resulting from a method or process) into which the timber is to be used by the licensee as an input.’

13 The Territory submits that, in addressing that ultimate issue, three questions arise. They are said to be:

‘(1) Is the supply of an input for a patented method or process (or resulting product) capable of attracting the operation of s 117(1) of the Act?

(2) Is the grant of such a statutory licence the “supply” of a “product” within the meaning [of] s 117(1) of the Act?

(3) Is the timber to be taken under the statutory licence a “staple commercial product” within the meaning of s 117(2)(b) of the Act?’

The first question

14 With respect to the first question identified by the Territory, we agree with Hayne J that the variety of quite different cases that may arise for consideration under s 117 provides a powerful reason not to attempt some singular answer to a general question as framed by the Territory.

15 In the Full Court, the majority emphasised, correctly, that there fell outside the scope of the separate questions any enquiry as to infringement of claims of the Patent 3 by ACOC. The primary judge had decided the issues as follows 4:

‘[T]he grant of the licences to ACOC in their terms, and in their context, did not amount to the supply of the timber to ACOC so as to expose [the Territory] to liability as a contributory infringer of the patent under s 117(1) of the Act, even if — contrary to my conclusion — the conduct amounted to the use of the timber within s 117(2)(b) of the Act, and even

assuming on the Collins' favour that the timber was used by ACOC so as to infringe the patent’.

16 We would elaborate the analysis in the reasons of Hayne J with four observations. The first stresses what has been said in this Court on several occasions in recent years, to the effect that the fundamental duty of the Court is to give meaning to the legislative command according to the terms in which it has been expressed; legislative history and references to the pre-existing law should not deflect the Court from its duty in resolving an issue of statutory construction which ultimately is always a text based activity 5.

17 The second observation is that in numerous and significant provisions of the Act, which operate in a wide range of circumstances, a distinction is drawn between an invention which is a product and an invention which is a method or process. Examples include s 13 and the definition of ‘exploit’ (content of patent monopoly), s 16 (co-ownership of patents), s 18(4) (microbiological processes and products), s 70 (pharmaceutical substance claims), s 119 (prior...