Full Court dismisses Garford’s appeal and upholds decision that patent claims are invalid

Full Court dismisses Garford’s appeal and upholds decision that patent claims are invalid

Full Court dismisses  Garford’s appeal  and upholds decision that patent claims are invalid

Garford Pty Ltd v Dywidag Systems International Pty Ltd & Anor [2015] FCAFC 6

The Full Federal Court has dismissed an appeal by Garford against the decision by Yates J that claims of its patent were invalid, and that it made unjustified threats of infringement against the Respondents (DSI) in respect of those claims.  We reported on the first instance decision here.

Garford’s patent claimed an apparatus and method for manufacturing continuous bulbed cable for use as rock bolts.  Garford threatened to sue DSI for patent infringement and DSI then commenced proceedings against Garford for unjustified threats of infringement.  Garford filed a cross claim for infringement of various claims, and DSI sought to have those claims revoked.

At first instance, Justice Yates found that the threats of infringement were unjustified because claims of the Garford patent in issue were invalid for secret use, lack of novelty and obviousness.  The Full Court (Dowsett, McKerracher and Nicholas JJ) has now upheld the trial judge’s findings on each of these grounds.

Trial judge’s approach to inventive step accepted

(a)    Assessment of the claimed combination of integers

In relation to inventive step, Garford argued that the trial judge had incorrectly focused on the individual integers of each claim, without considering whether the combinations of integers as claimed were obvious.  The Full Court rejected this argument, affirming that the question to be addressed is directed to the combination made up of known integers which were asserted to interact to produce a new product. The Court found that the trial judge had correctly considered each integer individually, and had then determined the question of obviousness based on the claimed combinations.

(b)    The starting point for inventive step

The Full Court addressed the “problem and solution” approach to the question of obviousness.  In this context, the Full Court referred to the High Court decision in Doric No. 2 and stated that it would not always be appropriate to confine the question of obviousness to a problem and solution analysis, and if this analysis is applied, it is important that the “problem” not be formulated in a manner that is unfair to the inventor.

Garford submitted that the trial judge’s decision was affected by hindsight because the starting point for the assessment of obviousness was taken to be the invention as claimed. The Full Court rejected this submission, holding that this was a case where it was appropriate to apply a “problem and solution” analysis.  While the patent did not describe any problem to which the invention provided a solution, the described apparatus in the specification and claims was properly seen as a solution to the problem of how to manufacture continuous bulbed cable.  The Court determined that there could not be anything inventive in perceiving that it might be useful or desirable to design such an apparatus.  It also did not see any unfairness in formulating the problem in such terms.

(c)    A two step approach to considering inventive step

The Full Court held that the trial judge had followed a correct two-step approach, namely:

(i)    First, to consider whether there was any inventive step in  conceiving the idea of designing an apparatus to make continuous bulbed cable (being a known product); and

(ii)    Second, even if there was no inventive step in the idea, whether it would have been obvious to the skilled worker in the field who wanted to construct an apparatus to make continuous bulbed cable to design an apparatus within each of the relevant claims.

The Full Court agreed with Yates J that there was no inventive step involved in conceiving the idea of an apparatus to manufacture continuous bulbed cable (where the cable itself formed part of common general knowledge).  There could not be any inventive step merely in conceiving the idea of designing a machine to make it.  The Full Court also agreed that it would have been obvious for the skilled worker to construct an apparatus within the scope of the claims.

(d)    Secondary indicia of inventiveness

Garford argued that the primary judge had given insufficient weight to the evidence of secondary indicia of inventiveness, including evidence of copying by DSI, the commercial success of the claimed invention and the fulfilment of an unfelt want.

The Full Court reiterated that a patentee who relies on secondary considerations such as copying or commercial success as an indicator of inventive merit bears the evidentiary burden in relation to this issue.

(i)    Copying

On the question of copying, the Full Court noted that although copying may provide some evidence of inventiveness, the weight of the evidence of copying will depend on the circumstances in which the copying occurred and other evidence relevant to the issue of obviousness.  In this case, the Full Court found that the evidence of “copying” did not advance Garford’s case on inventive step.  The Full Court distinguished the case from one where a trade rival had unsuccessfully sought to solve a problem, and upon the publication of the patent or release of the patented product, had copied and produced an infringing article.  Here, they agreed with the trial judge’s assessment that the evidence led by Garford as to the activities of a previously licensed Canadian related DSI entity was of little probative value.

(ii)    Commercial success

In relation to commercial success, the Full Court agreed with the trial judge’s reasoning that the commercial success of Garford’s continuous bulbed cable could not be used to infer that the claimed apparatus used to make it had inventive merit.  The bulbed cable was common general knowledge at the priority date.  As the Court pointed out, commercial success is often difficult to prove because it is necessary to show that such success was due to the success of the claimed invention as opposed to other factors which have nothing to do with the technical contribution that justified the patent grant.

(iii)    Unfelt want

Garford also argued that the trial judge had given insufficient weight to a strong case of “unfelt want”.  The Full Court noted that evidence of “unfelt want” is directed to showing that skilled workers in the field had, before the priority date, tried and failed to solve the problem to which the claimed invention provides a solution.  The Full Court commented that this issue is very closely tied to the commercial success that comes with creating and satisfying the demand for a product the usefulness or desirability of which was not generally appreciated before its conception. The Court found that Garford’s case on “unfelt want” was closely tied to its case on commercial success and there was insufficient evidence to support an inference of that the claimed invention satisfied an “unfelt want”.

The Full Court agreed that if valid, claims were infringed

The Full Court rejected arguments by DSI and held that the trial judge was correct in holding that, had the claims been valid, they would have been infringed by DSI’s apparatus for manufacturing bulbed cable bolts.

Other claims also invalid for secret use and lack of novelty

DSI also contended that the trial judge was incorrect in dismissing its challenge to the validity of other claims on the grounds of lack of novelty and secret use.  The Full Court was satisfied that the relevant other claims were anticipated by the cited prior art and that Garford had used an old apparatus before the priority date which included the features of the claims.

Costs of the Garford appeal

The Full Court ordered Garford to pay 80% of DSI’s costs of the appeal, on the basis that Garford had been wholly unsuccessful on appeal, but that DSI had only had mixed results on its notice of contention.

Lessons for patent holders

As we noted in relation to the first instance decision, this case demonstrates that a patentee should carefully assess the validity of its patent before threatening infringement.  
In relation to inventive step, the Full Court’s decision is useful in setting out the preferred approach to the “problem and solution” analysis and also to evidence of secondary indicia.  Such evidence is likely to be probative only where it is compelling and the patentee has also adduced strong primary evidence on the question of inventive step.