Long-running mining systems dispute reaches the merits phase – Globaltech still infringing

Australian Mud Company Pty Ltd v Globaltech Corporation Pty Ltd & Ors (No 3) [2022] FCA 1189

6 October 2022

Federal Court of Australia

Rofe J

Background

We report on three interlocutory decisions arising out of two long-running proceedings (commenced in 2016 and 2019 respectively) brought by Australian Mud Company Pty Ltd (AMC) against Globaltech Corporation Pty Ltd and others (GT) on page 50. Here we report on Rofe J’s decision on the merits (infringement and validity) the proceedings commenced in 2019. 

Both proceedings relate to AMC’s Australian Patent No 2010200162 entitled “Core Sample Orientation” (the Patent).  These proceedings relate to a version of GT’s Orifinder device known as ‘V6’.  In the 2016 proceedings, GT was found to infringe the Patent by offering for sale and selling in Australia earlier versions of the Orifinder, including one known as V5.¹  Separate proceedings for another version (V4) were resolved by consent.

The Patent is directed to a method and system for identifying the orientation of a drilling core during operation.  As drilling usually occurs at an angle to the vertical, the orientation is relevant to obtaining accurate rock strata information from the core sample. 

Key Issues

Construction

The infringement dispute centred one claim integer, “predetermined time intervals” and its construction.  The specification refers to mechanical orientation devices installed within an inner tube in the drill.  The Patent is directed to a method of orientation of the drill and core sample including recording the orientation of the inner tube at “predetermined time intervals, the time intervals being referable to an initial reference step” and then inputting the specific time beyond the reference time at which the sample was separated from the rock strata, and relating the two.   The Patent specification included what was described by the Court in earlier proceedings as a description of a non-limiting but preferred embodiment, involving the use of two timers (one in the drill and one above ground) started contemporaneously from a common initial reference time.  It was undisputed that the claimed method required two timers, and that the step of inputting the specific reference time was carried out by an operator at the surface.  GT asserted in the 2016 proceedings that the claims were limited to the two timers being synchronised, as in started at the same time.   AMC argued that a contemporaneous start was not required by the claims, essentially because the differences could be reconciled afterwards.  The Court in both proceedings took AMC’s view on this issue.

GT submitted that the term “predetermined time intervals” means that the intervals had a known duration and were sequential.  AMC submitted that nothing in that term required them to be the same or known with precision in advance.  In the 2016 proceedings Besanko J held that it was sufficient that the intervals were known to fall within an acceptable range, rather than being unconstrained.  The GT V5 product time intervals were determined by the operation of a timer, which counted intervals of approximately 25 seconds plus or minus 10%.  Within a drilling period of around an hour such intervals were workable, so that despite the degree of variation the V5 product was held to infringe.   Rofe J held that the addition of an algorithm to the V6 product to produce cycles which were multiple of the V5 timer cycles as determined by a random number generator did not alter this.  In particular, once it was determined that the claim was not limited to the use of synchronised timers, there was no need for the time intervals to be of pre-known duration or predictable by the operator, given they were not truly random and fell within an acceptable range in terms of operation of the invention.

Infringement – s 117, authorisation, joint tortfeasorship

Four related companies were respondents in the proceeding.  AMC argued that in addition to GT, other respondents were liable for infringement either under s117 of the Patents Act 1990 (Cth) (Act) by virtue of supply of the V6, or by virtue of authorising the infringing acts or as joint tortfeasors.  In relation to the former, RofeJ found that GT and its majority shareholder Boart Longyear Limited were liable under s117 as the V6 product had only one reasonable use, that they would reasonably expect it to be put to that use, and provided instructions to put it to an infringing use.  As regarding authorisation and joint tortfeasorship, Rofe J noted that close association between companies, even in the case of overall financial and voting control will be insufficient to establish the necessary control or common design.  Rofe J found that the majority of the respondents were liable given the lack of real distinction between the role of directors of each company, and the tendency between the companies to present themselves as operating as a single entity, and having more than a mere supplier/distributor relationship.

Additional damages

AMC sought orders for additional damages.  Matters that may be taken into consideration for such a claim include flagrancy of the infringement and the conduct of the infringer.   AMC had been unsuccessful in its claim for additional damages in the 2016 proceedings given the then outstanding issues on construction of the term “synchronous” and novelty of the claims.  In these proceedings Rofe J ordered additional damages, noting that the V6 product was the sixth iteration of GT’s attempts at a workaround of the Patent, and that V5 had been found to infringe.  In this case it was not unjust to treat GT, as the alleged infringer, as the party at risk on this issue.  She also noted that the final injunction issued in the 2016 proceedings was not merely limited to the versions the subject of that proceedings, and the evidence established that the Boart Longyear Limited, while not a party to those proceedings, was aware of the final orders. 

Validity – external fair basis

The validity cross claim was confined to a challenge to the priority date of the claims, and associated lack of fair basis on the provisional application.   As examination of the patent was requested before 15 April 2013 the Patents Act 1990 (Cth) in its pre-Raising the Bar form applied.  A similar fair basis challenge was unsuccessful in the 2016 proceedings.  If successful AMC would have prior published itself before the adjusted priority date with its own device.  GT asserted that the claims, which included the step of inputting the specific time beyond the reference time, was not fairly based as the relevant part of the provisional application (before amendment) disclosed only recording the specific time interval beyond the reference time.  Rofe J agreed with Besanko’s finding in the 2016 proceedings that this aspect of the provisional was describing the invention in broad terms.  Having held that the invention was not limited to a synchronised method,  this difference was not significant.

Outcome

Rofe J made final orders including an injunction and for delivery up of infringing tools.  GT filed an application for leave to appeal the decision in these proceedings in November 2022, following which the injunction was stayed pending the outcome  of the appeal, and the delivery up order was amended to permit dissambly of the tools as an alternative subject to an undertaking to retain them pending the outcome of the appeal.

In her summary of the expert evidence, Rofe J noted that GT called three experts who gave overlapping evidence.  She noted that this expert evidence was filed before the decision in Novartis AG v Pharmacor Pty Ltd [2022] FCAFC 58, which we report on at page 52.  She stated that the Court would expect parties to “be guided by the comments of Beach J” in that case as regards multiple expert witnesses from the same discipline.

Implications

This case again highlights the difficult of fair basis challenges to patents under the pre-Raising the Bar changes and the risks associated with repeated design-around strategies dependent on claim construction arguments.

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¹ Australian Mud Company Pty Ltd v Globaltech Corporation Pty Ltd (2019) 138 IPR 33.

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