Full Federal Court Upholds Patent Infringement Finding

OUTCOME: Dismissed

FEDERAL COURT OF AUSTRALIA

[NAME] v [COMPANY] [2014] FCAFC 117 Citation: [NAME] v [COMPANY] [2014] FCAFC 117

Appeal from: [COMPANY] v [NAME] (No 3) [2013] FCA 187

Parties: [NAME], [NAME], [COMPANY] [PHONE], [NAME] [COMPANY] [COMPANY] 104 149 484, [COMPANY] AS [NAME] [PHONE] and [COMPANY] 133 541 563 v [COMPANY] [PHONE], [COMPANY] 102 760 234, [COMPANY] [PHONE] and [COMPANY] 146 670 706

File number: NSD 977 of 2013

Judges: [NAME], MIDDLETON AND ROBERTSON JJ

Date of judgment: 10 September 2014

Catchwords: INTELLECTUAL PROPERTY – Patents – Construction of claims – Construction of integers – Whether error made by [NAME] judge by not construing integers independently – Novelty – Whether error made by [NAME] judge in finding that foreign patents did not anticipate claim. INTELLECTUAL PROPERTY – Patents – Infringement – Infringement by supply – [NAME]' product a staple commercial product – Whether instructions for use of [NAME]' product directed infringement.

Legislation: Patents Act 1990 (Cth) ss 7, 18, 40, 117, 138

Cases cited: [COMPANY] v [NAME] Company Limited [1972] RPC 457 cited [NAME]'s [COMPANY] [COMPANY] v [NAME] (1894) 11 RPC 519 cited Northern Territory v Collins (2008) 235 CLR 619 cited [COMPANY] v [COMPANY] (1994) 30 IPR 479 cited [NAME] v [COMPANY] (2001) 113 FCR 110 cited [COMPANY] v [COMPANY] (No 2) [2001] FCA 785 cited

Date of hearing: 20 November 2013

Date of last submissions: 20 November 2013

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 90

Counsel for [NAME]: [NAME] [COUNSEL] [NAME] with [NAME] [COUNSEL] and [NAME] [COUNSEL]

Solicitor for [NAME]: [NAME]

Counsel for the Respondents: [redacted]

Solicitor for the Respondents: [redacted]

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 977 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN: [NAME]

First Appellant

[NAME]

[NAME] [COMPANY] [PHONE]

[NAME] Appellant

[COMPANY] 104 149 484

[COMPANY] AS [NAME] [PHONE]

[COMPANY] 133 541 563

[NAME]

AND: [COMPANY] [PHONE]

First Respondent

[COMPANY] 102 760 234

[NAME] Respondent

[COMPANY] [PHONE]

[COMPANY] 146 670 706

Fourth Respondent

JUDGES: [RESPONDENT] AND [RESPONDENT] JJ DATE OF ORDER: 10 SEPTEMBER 2014 WHERE MADE: MELBOURNE (HEARD IN SYDNEY)

THE COURT ORDERS THAT:

1. The appeal be dismissed. 2. The parties exchange submissions as to costs and file same within 14 days after the delivery of these reasons. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN: [NAME]

First Appellant

[NAME]

[NAME] [COMPANY] [PHONE]

[NAME] Appellant

[COMPANY] 104 149 484

[COMPANY] AS [NAME] [PHONE]

[COMPANY] 133 541 563

[NAME]

AND: [COMPANY] [PHONE]

First Respondent

[COMPANY] 102 760 234

[NAME] Respondent

[COMPANY] [PHONE]

[COMPANY] 146 670 706

Fourth Respondent

JUDGES: [RESPONDENT] AND [RESPONDENT] JJ DATE: 10 SEPTEMBER 2014 PLACE: MELBOURNE (HEARD IN SYDNEY)

REASONS FOR JUDGMENT

BACKGROUND 1 In the specification for Australian Patent No. 733668 (the "patent"), under the heading "Field of Invention", it is said that: The present invention relates to surface finishes for pathways, walls; swimming [NAME] and other structures and more particularly relates to a surface finish which is of a cementitious nature and which includes least (sic) one aggregate type comprising glass beads. More particularly, the invention relates to a mix forming and to a method of producing the finishes. 2 As the [NAME] Judge observed, there are many typographical errors in the patent. We will neither draw attention to them nor correct them further, unless we deem it necessary in order that our reasoning be comprehensible. 3 The specification discloses that aggregate mixes include stones and pebbles, mixed in a matrix of cementitious material, either cement or resin. The selection of pebbles and stones will affect the appearance of the finish, particularly its colour and texture. Difficulty has been experienced in using glass beads, either alone or with other aggregate materials such as precious or semi-precious stones, sands, quartz, marble and granites. One such problem is that the glass is not sufficiently porous, or tough enough to establish an effective bond with the matrix material. Another problem is caused by alkalinity bleeding out of the glass beads. The specification refers to three patents which involve the use of glass beads, balls or spheres as aggregate material. One such patent involves the use of "crystal balls" of uniform particle size within the range 0.2 – 0.6 mm. Another patent utilizes small and large glass beads, with the smaller beads being present in a greater quantity than the larger beads. The [NAME] patent utilizes glass "spheres" of "relatively smaller particle sizes", coated with water-repellent material. 4 At p 3 of the specification the present invention is summarized as follows: The present invention comprises a surface finish for application to a vertical, horizontal, or sloping surface/s of a structure or object which provides a substrate for said surface finish, the surface finish comprising a matrix formed from a combination of at least a cementitious material, water, and glass beads. The surface finish comprises a blended matrix of cementitious mortar, an aggregate of glass beads used alone or in conjunction with other aggregates … and liquid adhesive which comprise a combination of a siliconiser and polymeriserer for enhancing the bond between the cementitious mortar and glass beads. The finish may be applied to the surface of a structure, such as a building facade as a paving surface, or to other suitable objects formed from a material capable of forming a bond with the finish. 5 Other parts of the specification demonstrate that the glass beads are to be of varying size, the greater proportion being larger beads rather than smaller beads. At p 5 of the specification it is said that: The glass beads have particle sizes within the range of 1-5 millimeters and a weight average particle size within the range of 1.5-4.5 millimeters. The beads are employed in a particle-size distribution defining a major component within a relatively large incremental size range and a minor component within a smaller incremental size range. The weight of the beads within the large incremental size range is greater than the weight within the smaller incremental size range. Preferably, this weight ratio is in the range of 2-3 and more preferably within the range of about 2-2.6. The reference to "the range of 2 – 3" apparently means "2:1 to 3:1". The specification contains much more detail to which we will refer when necessary. 6 Claims 1 to 12 are for a structure which includes a "substrate material" and a reflective surface. Claims 13 to 22 are for a product. Claims 23 to 26 are for a method. The claimed invention seems to be a surface material to be used on pathways, walls, swimming [NAME] and other structures. We are primarily concerned with claim 1. 7 The first respondent ("[NAME]") is the [NAME]. The [NAME] respondent manufactures the relevant product under licence from [NAME]. The [NAME] are distributors of the product. [NAME] supply a product known as "[NAME]" which, as the respondents allege, infringes the patent. At trial [NAME] denied infringement. The [NAME] alleged that claim 1 was invalid on various grounds. The [NAME] Judge upheld the validity of claim 1, found infringement and made consequential orders. The cross-claim was dismissed. In the [NAME] Judge's reasons [NAME] set out lengthy extracts from the specification and the claims. We need not include all of that material in these reasons.

THE CLAIMS 8 Claim 1 is as follows: In a structure having a reflective Surface finish, the combination comprising: (a) a substrate material having an interface surface; (b) a reflective material disposed on the interface surface of said substrate and comprising a plurality of glass beads and a cementitious material providing a matrix for said glass beads, at least a portion of said glass beads at the surface of said matrix projecting out of the exposed surface of said matrix providing an exposed surface area of said glass beads and being at least partially encapsulated within said matrix to provide an encapsulated surface area of said glass beads; and (c) at least a portion of said glass beads having a boundary layer of a barrier material interposed between the head surfaces encapsulated within said matrix and being free of said boundary material on bead surfaces projecting upwardly from said matrix, said beads having an average Particle size within the range of 1.5-4.5 millimeters and a particle size distribution defining, major component of said beads within a relatively large incremental size range and a minor component of said beads within a smaller incremental size range wherein the weight of beads in the large incremental size range is greater than the weight of beads within the small incremental size range. 9 Claims 10 and 13 may be relevant to the construction of claim 1. They are as follows: 10 The combination of claim 1 wherein said glass beads having a particle size distribution ranging from a lower value to an upper value having a magnitude no more than three times the magnitude of said lower value, said particle size distribution defining a major component of said beads within a relatively large incremental size range having an average value greater than the midpoint of said upper and lower values and a minor component of said beads within a smaller incremental size range having an average size below said midpoint wherein the weight of beads in the large incremental size range is greater than the weight of beads within the smaller incremental size range. … 13 In a dry cement formulation adapted to be hydrated and applied to a substrate surface to provide a reflective surface, the composition comprising: (a) portand cement in an amount within the range of 1/3-2/3 of the total weight of said formulation; (b) glass beads having particle sizes between lower and upper values within the range of 1-5 millimeters and a weight average particle size within the range of 1.5-4,5 millimeters, said beads having a particle size distribution defusing a major component of said beads within a relatively large incremental size range having a an average value greater than the midpoint of said upper and lower values and a minor component of said beads within a smaller incremental size range having an average value below said midpoint wherein the weight of beads in the large incremental size range is greater than the weight of beads within the small incremental size range; and (c) a latex polymer present in an amount within the range of at least 2 wt.% of the glass beads in said formulation but less than 8 wt.% of the total amount of cement and glass beads in said formulation.

INTEGERS OF CLAIM 1 10 At first instance the case was conducted upon the basis that claim 1 contained nine integers as follows (the added integer numbers being in bold): (1) In a structure having a reflective Surface finish, the combination comprising: (2) (a) a substrate material having an interface surface; (3) (b) a reflective material disposed on the interface surface of said substrate and comprising a plurality of glass beads and (4) a cementitious material providing a matrix for said glass beads, (5) at least a portion of said glass beads at the surface of said matrix projecting out of the exposed surface of said matrix providing an exposed surface area of said glass beads and being at least partially encapsulated within said matrix to provide an encapsulated surface area of said glass beads; and (6) (c) at least a portion of said glass beads having a boundary layer of a barrier material interposed between the head surfaces encapsulated within said matrix and being free of said boundary material on bead surfaces projecting upward from the said matrix, (7) said beads having an average Particle size within the range of 1.5-4.5 millimeters and (8) a particle size distribution defining, major component of said beads within a relatively large incremental size range and a minor component of said beads within a smaller incremental size range (9) wherein the weight of beads in the large incremental size range is greater than the weight of beads within the small incremental size range.

THE ISSUES 11 At trial the major issues were: construction of the claims; clarity for the purposes of s 40(3) of the Patents Act 1990 (Cth) (the "Act"); inventiveness; want of novelty; whether the claimed invention satisfied the "manner of manufacture" requirement in s 18 of the Act; and alleged infringement. 12 On appeal, the issues are: the construction of claim 1; clarity for the purposes of ss 40(2)(b) and 40(3) of the Act; want of novelty; infringement; and the form of the injunctive relief.

THE CONSTRUCTION POINT AT TRIAL 13 The [NAME] submitted that all claims other than claims 10 – 14, 20 and 21 were unintelligible, incapable of infringement and invalid, primarily because integer 8 of claim 1 did not identify a "specified midpoint". The term "midpoint" is used in claims 10 – 14, 20 and 21 in connection with the distinction drawn between larger and smaller glass beads. The [NAME] effectively submitted that such a midpoint did not appear in the other claims, and so they were invalid. [NAME] to trial, the respondents had asserted that the distinction between larger and smaller beads in integers 8 and 9 was to be determined by reference to a midpoint, as described in the other claims. However, from an early stage at the trial, the respondents adopted an approach to such distinction which depended upon the term "average particle size" in integer 7. They submitted that the meaning of the word "average" had to be determined, having regard to the circumstances identified in integer 8, in particular, that there were to be larger and smaller glass beads. The respondents advanced four "meanings" of the word, which "meanings" [NAME] described at [24]. That paragraph is set out below. Each "meaning" provides a possible method of assessing the average size of particles in a sample of aggregate. 14 The [NAME] Judge identified the word "average" as meaning, "the distribution of the aggregate inequalities … of a series of things among all the members of the series, so as to equalize them, and ascertain their common or mean quantity", or, "the determination or statement of an arithmetical mean". [NAME] then considered the four methods with a view to identifying that which produced the result in accordance with conventional principles. The relevant inequality was size. 15 At [21] – [27] [NAME] said: 21 Claims 1–9 and 23–26 all involve an integer of beads "having an average particle size within" a specified range and a "particle size distribution" where the major component of the beads is within a relatively large incremental size range and a minor component of the beads is within a smaller incremental size range wherein the weight of the beads in the large incremental size range is greater than the weight of the beads in the small incremental size range. 22 Claims 1–9 and 23–26 may be contrasted with claims 10, 11, 12, 13, 14, 20 and 21 which involves a combination of claim 1 where, among other things, the particle size distribution defining the major component of the beads with a relatively large incremental size range has an average value greater than the midpoint of the specified upper and lower values and a minor component of the beads within a smaller incremental size range has an average size below that midpoint and wherein the weight of the beads in the large incremental size range is greater than the weight of the beads in the small incremental size range. 23 The [[NAME]] submitted that the claims lacking any specified midpoint, claims 1 to 9 and 23 to 26, were thereby unintelligible and thus incapable of infringement (and invalid). In any group of beads there may be large and smaller beads resulting from an arbitrary definition of where the boundary between the two groups is to be drawn. 24 [NAME]] submitted that the [[NAME]'] approach gave no meaning to the phrase "average particle size" as it appears within the claims. [NAME]] identified four possible meanings of the phrase having regard to the ordinary meaning of "average" (which includes the "distribution of the aggregate inequalities … of a series of things among all the members of the series, so as to equalize them, and ascertain their common or mean quantity … " or "the determination or statement of an arithmetical mean" (Oxford English Dictionary). According to [NAME]] an "average particle size" can be ascertained by one of four methods as follows: (a) identify the particle size of every single particle represented, total all those values and divide that total by the number of particles; (b) identify every different particle size represented, total the value of all those different particle sizes and divide that total by the number of particle sizes represented; (c) identity [identify?] the largest and the smallest particle size represented, total those values and divide by two; or (d) identify the weighted average particle size based on the weight distribution of different sizes of particles (a weighted average, unlike an average, takes into account the frequency at which each size is represented). 25 [NAME]] contended that the phrase "average particle size" in claim 1 of the patent (and all other claims dependent on claim 1) means the weighted average particle size based on the weight distribution of different sizes of particles. As explained below, I agree with this construction. 26 The [[NAME]] emphasised that this construction had not been suggested by any expert and, indeed, was inconsistent with the approach to the claims taken by [NAME], a [NAME], who gave evidence for [NAME]]. [NAME] [NAME] treated the phrase "average particle size" in claim 1 as an outcome which should be determined by the method in (c) above (that is, identity [identify?] the largest and the smallest particle size represented, total those values and divide by two). The [[NAME]] also noted that this construction was inconsistent with the particulars of construction and infringement which [NAME]] served on the [[NAME]]. These particulars said that "average particle size" was to be mathematically determined by taking the size of the largest and the smallest beads in the sample and determining from those sizes the mean particle size. 27 Both aspects of the [[NAME]'] submissions may be accepted. However, they are not ultimately material to the issue of construction for three reasons. 16 The first of these reasons concerned the evidence of [NAME] [NAME]. [NAME] [NAME] had extensive experience in the use and application of cement in mixes for pool surface finishes, [NAME] was not satisfied that he had similar experience and expertise in respect of the methods of mixing and forming surface finishes, whether of swimming [NAME] or otherwise. [NAME] was unpersuaded that, "insofar as he gave evidence which assumed a particular meaning of 'average particle size' it should also be assumed that [NAME] [NAME] represents the hypothetical [NAME] of this patent." 17 The [NAME] reason for rejecting this aspect of [NAME]' submission was that although the respondents may have advanced a particular construction in correspondence with [NAME], they had also made it clear that they considered construction was, "a matter for the Court", although "expert evidence might be relevant to claim construction insofar as it concerned terms of art or common general knowledge." [NAME] considered that the respondents had qualified their particulars so that they were not bound by them. 18 The [NAME] reason was that, in any event, [NAME] had an appropriate opportunity, at trial, to deal with the construction proposed by the respondents, and that there was no unfairness arising from the way in which the case had been conducted. 19 [NAME] concluded that: the term "average particle size" is not a technical term; there are numerous ways of calculating an average; the [NAME] would read the words "average particle size", having regard to the purpose of the phrase in defining the scope of the invention; it would be apparent to the [NAME] that the patent "pre-supposed" the existence of a convenient method of determining size and weight distribution of the glass beads; such known method involved the use of sieves, which method was the subject of an Australian Standard; the relevant standard did not involve the counting of individual glass beads or identifying the sizes of the largest and smallest beads; and it was "inconceivable" that [NAME] [NAME] in the relevant art would address the total number of beads or the size of any particular bead. 20 [NAME] therefore concluded that methods (a), (b) and (c) did not yield the "average particle size" in the sense in which that expression is used in claim 1. The [NAME] Judge then considered whether method (d) should be accepted as producing a result which could be described as the "average particle size". [NAME] set out evidence concerning the standard methods for analysing aggregate, including particle size distribution. Broadly speaking, such evidence reflected the process described in method (d). [NAME] considered that such method would have been well-known to those [NAME] in the relevant art. [NAME] also concluded that such persons would have read the patent with that knowledge, and that the specification assumed that the size and weight distribution of particles in an aggregate, including glass beads, could be measured. 21 [NAME] noted the use of the term "average particle size" in claim 1 and its dependent claims, and the use of the term "weight average particle size" in claim 13 and its dependent claims. [NAME] accepted that in some circumstances, use of these different terms might lead to the conclusion that the expressions had different meanings. However she concluded that in this patent, such was not the case. 22 Finally, [NAME] noted that her construction of claim 1 did not describe the way in which a particle which was of "average particle size" was to be treated. That is, it did not indicate whether such a particle would be a "larger" or "smaller" particle. [NAME] considered that this problem would only be relevant in considering any alleged infringement. 23 The [NAME] Judge returned to the problem when considering clarity for the purposes of s 40(3). [NAME] concluded that the relevant claims did not lack clarity and said at [73], concerning beads which were of "average particle size": Only two options are open. Either those beads are part of the relatively large particle size range or they are part of the smaller particle size range. The integer does not permit the existence of such beads, if they exist, to be ignored. They must be allocated to one or other component. I do not consider that the lack of specificity about this issue renders the claims in question uncertain. It is possible that a sample of beads may be meaningfully tested and the test results show no beads of the average particle size or such a small proportion that the relative size of the major and minor components could never be affected. In other words, the issue is not so much one of construction (the construction issues can all be resolved, as set out above) but of proof of infringement if any material proportion of the sample happens to be of the average particle size. 24 It is always a little unsettling to find references to infringement in that part of a judgment which deals with construction. As Heerey J said in [NAME] v [COMPANY] (2001) 113 FCR 110 at [21]: All that needs be added is the perhaps trite observation that the alleged infringement is to be ignored when construing the patent. Although the forensic contest will throw up the particular construction issues to be resolved, a patent must, as the saying goes, be construed as if the infringer had never been born. 25 His [NAME] was paraphrasing the well-known observation by Lord [NAME] in [NAME]'s [COMPANY] [COMPANY] v [NAME] (1894) 11 RPC 519 at 523. That approach to construction is based upon the proposition that the claims must clearly identify the limits of the monopoly claimed. 26 In any calculation of average particle size, there would always be the possibility that some particles taken into account would be of average particle size. We do not immediately understand the problem to which the [NAME] Judge referred. It may have reflected a submission of one or both sides of the litigation. It seems to have been dealing with a claimed lack of clarity at a conceptual level. In any event, neither party appears to rely upon [NAME]'s concern, although it may be part of [NAME]' wider attack on her construction of claim 1.

THE CONSTRUCTION POINT ON APPEAL 27 The relevant grounds are as follows: 4. [NAME] erred (Reasons at [50]) in impliedly construing [integer 8] … as requiring a calculation of the weighted average particle size within the range of beads to determine the boundary between the major and minor components for the purpose of defining the major and minor components of beads within a relatively large incremental size range and a small incremental size range respectively when: (a) there is no reference in the integer to a weighted average particle size; (b) this construction is inconsistent with other claims of the Patent in which the boundary between the major and minor components is the midpoint between the upper and lower bead particle sizes; (c) this construction is contrary to the invention as described in the specification of the Patent and the admissions made by the [NAME] in the particulars of construction and infringement in the letter from [NAME] dated 2 May 2011; (d) this construction is contrary to the evidence of the Respondents' expert, [NAME] [NAME], which was relied on by the Respondents below. 5. [NAME] should have found that, to the extent that it was valid, the particle size distribution defining the major and minor components of beads for the purposes of claim 1 had to be characterised in terms of particle size values above and below a midpoint between the upper and lower particle sizes of beads in the range. 6. [NAME] erred in finding (Reasons at [28]) that [NAME], the expert witness called by the Respondents, was not the hypothetical [NAME] of the Patent and in rejecting his evidence, including that given in his cross-examination. … 10. [NAME] erred in finding (Reasons at [35]) that "It would have been inconceivable to those [NAME] in the art of mixing an aggregate into a cementitious matrix to form a surface finish that they would concern themselves with … the absolute size of any particular glass bead, be it the largest or smallest, in any given matrix", when claims 10 to 22 of the Patent require the identification of the absolute largest and smallest bead in the given matrix and the [NAME] and its expert [NAME] [NAME], calculated the midpoint for all of the claims by reference to this approach. 11. [NAME] erred in assessing infringement of claim 1 of the Patent by reference to a mathematical calculation adopted by the Court which had no basis in the words of claim 1 of the Patent, was first advanced by Senior Counsel for the Respondents in oral opening and was otherwise contrary to the [NAME]'s statement of the invention in the specification, as confirmed in its particulars of construction. [NAME]'s calculation inevitably results in identifying a boundary between the major and minor components close to the middle of the range of beads by weighted average and is therefore inconsistent with the particle size distribution of the invention. We should first deal with grounds 6, 10 and 11. 28 Ground 6 concerns the way in which the [NAME] Judge dealt with [NAME]'s evidence. [NAME] found that: the hypothetical [NAME] of the patent was a non-inventive person with skills in the art of mixing and forming surface finishes of a cementitious nature; [NAME] [NAME] was an [NAME] who specialized in the construction of swimming [NAME]; he had extensive experience in the use and application of cement in mixes for pool surface finishes; it was not apparent that he had similar expertise and experience in respect of the methods of mixing and forming surface finishes, whether of swimming [NAME] or otherwise; and his evidence was not irrelevant. [NAME] was also not satisfied that "insofar as he gave evidence which assumed a particular meaning of 'average particle size' it should be assumed that [he represented] the hypothetical [NAME] of this patent." 29 [NAME] have not identified any basis for upsetting [NAME]'s view of [NAME]'s expertise. They simply point out that he was chosen by the respondents as their expert witness and identified by them as the [NAME]. They also refer to his training and experience, but do not suggest that [NAME]'s summary of it was inaccurate. It may be that [NAME] implicitly assert that the case was conducted by the respondents on a particular basis which was inconsistent with that upon which [NAME] acted. However, in their written submissions at footnote 13, [NAME] indicate that the respondents' change in approach was evident in their opening. Although it seems that at some stage, [NAME] complained about the change of direction, [NAME] clearly allowed the respondents to conduct the case on the changed basis. There is no appeal against her decision to do so. 30 The final position adopted by the respondents at trial appears at paras 74 – 75 and 83 – 84 of their closing submissions. [NAME] seems to have adopted alternative (a) in para 84. We suspect that [NAME]' insistence that [NAME]'s reasons were not responsive to the respondents' submissions at trial is attributable to [NAME]' refusal to accept that integer 8 must be read with integer 7, a reading which we consider to be self-evident. 31 Clearly, it is for the Court to construe a patent, although experts may give evidence as to the meaning which those [NAME] in the art would give to technical or scientific terms and phrases, and/or unusual or special meanings given by such persons to words which might otherwise bear their ordinary meanings. [COMPANY] v [COMPANY] (1994) 30 IPR 479 at 485 – 486. [NAME] do not suggest that [NAME] [NAME] evidence was as to the meaning of technical or scientific terms or unusual or special meanings. Thus, as far as we can see, [NAME] concluded that claim 1 contained no technical or scientific terms, and that the [NAME] would not have understood any of the terms as having a special or unusual meaning. In those circumstances, it was for the [NAME] Judge to construe the claim. It is clear from the respondents' closing submissions at trial that they submitted that the meaning of the term "average particle size" in integer 7 might inform the construction of integer 8, as [NAME] concluded. 32 In ground 10 of the amended notice of appeal, [NAME] criticize the [NAME] Judge's observation at [35] that: It would have been inconceivable to those [NAME] in the art of mixing an aggregate into a cementitious matrix to form a surface finish that they would concern themselves with the absolute number of glass beads or the absolute size of any particular glass bead, be it the largest or smallest, in any given matrix. 33 [NAME] submit that claims 10 to 12 contemplate such an exercise. We consider that [NAME] was simply identifying the fact that, as a matter of common sense, it is unlikely that a commercial process of the kind in question would involve the time and expense necessarily incidental to such a task. 34 In ground 11 of the amended notice of appeal [NAME] criticize [NAME]'s construction of claim 1 and assert that it was first raised by the respondents in opening. We have dealt with that matter. The ground otherwise adds nothing to the criticisms contained in grounds 4 and 5, which grounds we will presently address. 35 We should also say something about claim 13 and its dependent claims, 14 – 19. Claim 13 refers to a "weight average particle size", an expression which the respondents used in their closing submissions at paras 14 and 25. They suggested that the concept emerges from the specification. It seems likely that the expression, where used in claim 13, refers back to integers 7 and 8 of claim 1. 36 The [NAME] criticism of [NAME]'s construction of claim 1 appears in paras 4 and 5 of the amended notice of appeal. [NAME] attack the [NAME] Judge's construction of integer 8 of claim 1. [NAME] did not approach the construction of that claim by reference to the integers. Rather, she addressed the meaning of the terms, "cementitious", "aggregate" and "average particle size". Concerning the meaning of the word "cementitious", [NAME] submitted that the word encompassed both cements and resins, whilst the respondents contended that it referred only to cements. [NAME] resolved this question in favour of [NAME]. The [NAME] Judge concluded that the term "aggregate" was, "an ordinary English word and not a term of art", and that in the context of the patent, the word takes its ordinary geological meaning of, "[a] rock or other deposit composed of distinct minerals closely adhering or combined together". [NAME] concluded that in this sense, glass beads comprised an aggregate. 37 At the heart of [NAME]' construction case is the proposition that integer 8 must be construed in isolation from integer 7. The point of this construction seems to be the absence of the term "average particle size" from integer 8. We consider that this approach is fundamentally flawed. The use of integers is very much a forensic technique. It provides a structure within which the Court and the parties address the factual issues. However, the meaning of each claim must be determined by reference to the words, the way in which they are arranged, and in the context of the specification as a whole. Integers 6, 7, 8 and 9 all appear in one, discrete paragraph of claim 1. Paragraphing is an aspect of punctuation which is designed to identify discrete parts of the subject matter in question. Although the paragraphing of claim 1 is not the best imaginable example of the fulfilment of this purpose, there is nothing surprising about the possibility that some parts of para (c) may be related. 38 That paragraph deals with two matters: the use of boundary material and particle size, weight and distribution. We are concerned only with the [NAME] matter. Integer 7 prescribes an average particle size which is to be within the specified range of 1.5 – 4.5 mm. In so doing it assumes that particles will be of various sizes. Since it is the average particle size which must fall within the specified range, it follows that some particles may be outside of that range. The words "particle size distribution" in integer 8 assume a characteristic by which large and small beads may be distinguished from each other. The word "defining" seems to mean identifying the major and minor components of the aggregate mixture by reference to size of the particles. Integer 9 assumes that particles can be sized as "large" or "small", and the weight of each category determined. Integers 7, 8 and 9 are clearly inter-dependent. There is no basis for [NAME]' insistence on the construction of each in isolation from the others. 39 There is no appeal against [NAME]'s construction of the term "average particle size" in integer 7. Nonetheless, it was faintly suggested in submissions that it was not correct. [NAME]' submission seems to be entirely dependent upon the assumption that the respondents' case was, and is, that the notion of a midpoint as used in claim 10 should be imported into claim 1. [NAME] attack such an approach, probably correctly, but refuse to accept or engage with the alternative approach which the respondents advanced at trial, and which [NAME] accepted. [NAME]' only answer to the alternative case is to assert that integer 8 must be construed without reference to integer 7, a submission which, as we have said, is fundamentally without merit. 40 [NAME] submit that at [26], [NAME] misquoted [NAME]'s evidence. The alleged error seems to be that the [NAME] Judge treated [NAME]'s evidence concerning the construction of integer 8 as dealing with the term "average particle size". The submission reflects [NAME]' insistence that integers 7 and 8 be construed in isolation from each other, a view which we have rejected. We need say no more about this criticism. 41 [NAME] also submit that as integers 7 and 8 are "independent", there is no basis for finding that "average particle size" means only "weighted average particle size". They submit that expression may also include a "mean". We do not understand the meaning of the term "mean" in that context, or how such an approach might differ from that adopted by the [NAME] Judge. In any event, as we have observed, there is no appeal against [NAME]'s conclusion as to the meaning of the term "average particle size". The appeal goes only to the importation of that term into integer 8. 42 In effect, [NAME]' argument is that there is no way of deciding how to identify a larger or a smaller bead. Given the reference in integer 7 to average particle size, we have no doubt that it was to be the criterion for distinguishing between relatively large and relatively small particles. We see no reason to doubt the correctness of [NAME]'s construction of claim 1.

SECTIONS 40(2) and 40(3) 43 Section 40 of the Act provided: (1) … (2) A complete specification must: (a) describe the invention fully, including the best method known to the applicant of performing the invention; and (b) where it relates to an application for a standard patent–end with a claim or claims defining the invention; and (c) where it relates to an application for an innovation patent–end with at least one and no more than 5 claims defining the invention. (3) The claim or claims must be clear and succinct and fairly based on the matter described in the specification. (4) … 44 Amended appeal ground 18 is as follows: 18. [NAME] should have found that claim 1 was invalid for lack of definition (s 40(2)(b)) and lack of clarity (s 40(3)) by reason of the failure to identify the boundary between the major and minor components. 45 [NAME]' submissions on appeal assume that we accept their submission as to claim 1 being, "without a defined boundary". As we have rejected that submission, it is not necessary that we consider this aspect of the appeal.

NOVELTY 46 Pursuant to s 18(1)(b)(i) of the Act, an invention is "a patentable invention" only if it is "novel". Pursuant to s 138(3) the Court may order revocation of a patent if the invention is not a patentable invention. Concerning novelty, s 7(1) of the Act provides: (1) For the purposes of this Act, an invention is to be taken to be novel when compared with the [NAME] art base unless it is not novel in the light of any one of the following kinds of information, each of which must be considered separately: (a) [NAME] art information (other than that mentioned in paragraph (c)) made publicly available in a single document or through doing a single act; (b) [NAME] art information (other than that mentioned in paragraph (c)) made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that [NAME] [NAME] in the relevant art would treat them as a single source of that information; (c) [NAME] art information contained in a single specification of the kind mentioned in subparagraph (b)(ii) of the definition of [NAME] art base in Schedule 1. 47 We note that, subject to s 7(1)(b), the question of novelty is to be determined by reference to each item of [NAME] art information, taken in isolation from any other item. For present purposes the relevant [NAME] art information is comprised of two patents: GB 2,255,099 (the "UK Patent"); and CH 665 665 (the "Swiss Patent"). 48 Concerning novelty, the respondents cite the following passage from [COMPANY] v [NAME] Company Limited [1972] RPC 457 at 485 – 486: If the [NAME]'s publication contains a clear description of, or clear instructions to do or make, something that would infringe the [NAME]'s claim if carried out after the grant of the [NAME]'s patent, the [NAME]'s claim will have been shown to lack the necessary novelty, that is to say, it will have been anticipated … if carrying out the directions contained in the [NAME]'s publication will inevitably result in something being made or done which, if the [NAME]'s patent were valid, would constitute an infringement of the [NAME]'s claim, this circumstance demonstrates that the [NAME]'s claim has in fact been anticipated. If, on the other hand, the [NAME] publication contains a direction which is capable of being carried out in a manner which would infringe the [NAME]'s claim, but would be at least as likely to be carried out in a way which would not do so, the [NAME]'s claim will not have been anticipated, although it may fail on the ground of obviousness. To anticipate the [NAME]'s claim the [NAME] publication must contain clear and unmistakable directions to do what the [NAME] claims to have invented … 49 Concerning the UK Patent the [NAME] Judge said at [92]: The UK patent discloses an invention comprising a road marking composition containing glass beads, a synthetic resin and aggregate. In other words, the UK patent discloses an invention comprising a cementitious material providing a matrix for glass beads. The glass beads are preferably to be retained on a 1.18 mm sieve (that is, be larger than 1.18 mm) in specified weight ratios including up to 55% being so retained. Further, the glass beads may include larger glass beads in the size range of 1.5 to 3.5 mm, the proportion of larger glass beads to aggregate being in a specified weight ratio range wherein the larger glass beads exceed the weight of the aggregate. The UK patent also discloses the use of any suitable plasticiser, which from the evidence I infer must be understood to mean a polymer. As such, leaving aside my preferred construction of the patent it is clear that the UK patent discloses the combination of an aggregate and a polymer as well as glass beads. 50 At [93] the [NAME] Judge observed that, concerning claim 1, [NAME] had submitted that the UK Patent anticipated it, because, in the absence of a defined midpoint, … "any collection of beads including those in the UK patent will equally possess this feature or not." [NAME] said at [93], concerning that submission: I disagree for the reasons already given. I consider that the UK patent does not literally disclose either the particular average particle size range or particle size distribution integers of the patent. I say "literally disclose" because there is a principle that something less than a literal disclosure may suffice (referred to as "enabling" disclosure). If the disclosure is not complete but it is sufficient to enable the [NAME], in the ordinary course and without invention, to add what is missing in the [NAME] publication to obtain the claimed invention, then the invention is not novel ([NAME] A/S v [COMPANY] (2009) 177 FCR 151; [2009] FCAFC 70 at [181]-[183]). 51 At [94] – [95] [NAME] said: The [[NAME]'] case is that the size range and particle size distributions in the patent are simply arbitrary and there is nothing inventive in the ranges and distributions claimed. I do not consider that this argument can be dismissed merely because the expert evidence in this case was not particularly helpful in disclosing the perspective of an uninventive person [NAME] in the art at the priority date. First, the UK patent discloses the use of glass beads in the size range of 1.5 to 3.5 mm. The only difference between that size range and the range claimed in the patent is the 1 mm at the upper end of the range (that is, 4.5 mm). Otherwise all of the size ranges claimed are within the disclosure of the UK patent. Given the nature of the invention, which involves relative proportions of large numbers of glass beads, the notion that there is anything inventive at all about adding one millimetre to the size range of the glass beads cannot possibly be accepted. The [NAME], in the ordinary course and without invention, would add what is missing in the [NAME] publication to obtain the claimed invention. I cannot reach the same conclusion about the particle size distribution. The UK patent discloses a particle size distribution where more (55%) of the glass beads are larger than 1.18 mm. Hence, it discloses an invention where the major component of said beads within a relatively large incremental size range and a minor component of said beads is within a smaller incremental size range wherein the weight of beads in the large incremental size range is greater than the weight of beads within the small incremental size range, in accordance with the claimed invention. However, this does not relate to the larger glass beads. In so far as the larger glass beads are concerned what is disclosed is a relationship between the beads and the aggregate, not the larger and smaller beads themselves.

For these reasons the UK patent does not destroy the novelty of the invention claimed in the patent. 52 Concerning the UK Patent, amended appeal grounds 20 and 21 are: 20. [NAME] erred in finding that the UK Patent GB 2,255,099 (the UK Patent) did not anticipate claims 1, 2, and 3 of the Patent (Reasons at [94]) on the incorrect basis that the disclosure was limited to the relationship between large glass beads and aggregate.

21. Further, if claims 1, 2 and 3 of the Patent does not require a midpoint between the upper and lower bead particle sizes to define the boundary between the major and minor components, then [NAME] should have found that the disclosure of the particle size distribution in the UK Patent anticipates claims 1, 2 and 3. 53 In effect, [NAME] found that the UK Patent taught that there should be a larger proportion by weight of larger size beads than smaller size beads, but that it did not teach that there be a particle size distribution in which there were more larger size beads than smaller size beads. 54 [NAME] submit that [NAME] mischaracterized the disclosure in the UK Patent. They submit that it discloses, "the addition of large beads to the known components of British Standard 3262 ("BS 3262"), substantially all of which are less than 1.18 mm". It is not clear whether, at trial, [NAME] advanced such an argument. [NAME] does not refer to it. In their written submissions on appeal, [NAME] do not expressly refer to s 7(1)(b), although it might not be difficult to conclude that the UK Patent and BS 3262 should, at least for some purposes, be read as one, given that the latter is expressly referred to in the former. 55 However, in their submissions [NAME] mis-state the context in which BS 3262 is mentioned in the UK Patent and its effect. It is mentioned at p 1, l 18 and p 2, l 13. However that patent does not state that the invention involved the addition of large beads to the known components of BS 3262. It rather states that a composition is to be "made according to BS 3262", and that any aggregate is to be in accordance with that standard. BS 3262 provides for the inclusion of some glass beads. However, neither in that standard, nor in the UK Patent are beads treated as "aggregate". See the UK Patent at p 1, ll 7 – 10 and 15 – 17, p 2, ll 12 – 18 and claim 1. Thus it is clear that in those documents any comparison between larger beads and aggregate does not involve a comparison between larger and smaller glass beads. In any event, whatever may have been the composition of BS 3262, it would not follow that in any subsequent mixture with additional glass beads, there would necessarily be a particle size distribution as prescribed in the patent. We agree with [NAME] that the UK Patent does not disclose the requirement that the number of larger particles exceed the number of smaller particles. Nor do we see any basis for concluding that the [NAME], in the ordinary course and without invention, could have supplied that missing integer. 56 Concerning the Swiss Patent, [NAME] said at [96] – [99]: 96 The Swiss patent relates to road markings using glass beads embedded in the marking mass. The invention involves the use of glass beads at least 1.5 mm in diameter, preferably 2–3 mm, projecting from the surface of the marking mass. The specification identifies large glass beads as those of at least 1.5 mm in size, with conventional glass beads being smaller, between 0.15 and 0.8 mm. According to the specification the proportion by weight of the large glass beads can be between 25% and 60%, preferably 30% and 50%. The marking mass can be thermoplastic (that is, a polymer). 97 The difficulty for the [[NAME]] is that the Swiss patent identifies any glass bead of 1.5 mm or above as large, with those up to 60% (that is, the majority) by weight being large beads as opposed to smaller beads, such beads being between 0.15 and 0.8 mm. In other words, the combination of the size range and size distribution for the Swiss patent is different from the size range and size distribution for the patent in this case, the latter involving beads ranging from 1.5 to 4.5 mm with the particle size distribution wherein the weight of beads in the large incremental size range is greater than the weight of beads within the small incremental size range. 98 From the evidence I cannot be satisfied that the disclosure in the Swiss patent, as at the priority date, would be sufficient to enable the [NAME], in the ordinary course and without invention, to add what is missing in the [NAME] publication to obtain the claimed invention. 99 The [[NAME]'] case in respect of the parent application cannot be understood as an argument to the effect that the parent application itself is a document that anticipates and thus destroys the novelty of the patent. This is because the [[NAME]] concede that the parent application does not disclose the particle size distribution integer of the patent. This is sufficient to reject the case to the extent that it involved a suggestion of lack of novelty by reason of the parent application. The role of the parent application in the [[NAME]'] case more concerns the arguments about [NAME] use. The "parent application" is, as we understand it, the parent application of the Swiss Patent. 57 [NAME] concluded that the Swiss Patent did not anticipate integers 7, 8 and 9. There were two bases for that conclusion. First, at p 4 of the Swiss Patent, the large glass beads are said to be at least 1.5 mm in diameter whilst "conventional size" beads are 0.15 to 0.80 mm in diameter. The proportion by weight of large beads is to be, "between 25% and 60%, preferably 30% and 50%". Claim 1 of the Swiss Patent provides that, "at least some of the large glass beads … have a diameter of at least 1.5 mm …". In the patent, the average particle size is to be within the range of 1.5 – 4.5 mm. It is difficult to reconcile this proposition with the Swiss Patent's treatment of beads with a diameter of 0.80 mm as large. [NAME] submit that pursuant to the Swiss Patent it is possible to calculate the average particle size. That may be so, but such a process is not disclosed by that patent. Average particle size plays no part in it. 58 [NAME] also submit that claim 5 of the Swiss Patent discloses larger beads in the range of 25% to 60%, without any dividing line. It is clear from p 4 (in the first full paragraph) that the proportion is by weight, not particle size. The absence of a "dividing line" simply demonstrates another integer of claim 1 not disclosed in the Swiss Patent. However one looks at it, the Swiss Patent does not disclose integers 7 and 8 and therefore does not anticipate claim 1.

INFRINGEMENT 59 The grounds of appeal on the issue of infringement are numerous and dispersed throughout the amended notice of appeal. Although the respondents pleaded both direct infringement and infringement pursuant to s 117 of the Act, they succeeded only on the latter basis. [NAME] dismissed a number of secondary submissions and, commencing at [123], addressed the alleged infringement of claim 1, finding that: each appellant had supplied glass beads with other relevant material, together with instructions for use as a surface finish for swimming [NAME]; people had used the material supplied by [NAME] in accordance with the instructions; the tested beads were "but four colours available from a range of hundreds of colours"; to [NAME]' knowledge the four colours had been used in combination with other colours; and these facts were relevant to proof of infringement. 60 The [NAME] Judge then set out her reasoning with respect to those conclusions, having particular regard to s 117. First, [NAME] observed that the infringing product was capable of more than one reasonable use. [NAME] found that: the tested beads were representative of [NAME]' product in the 1 - 3 mm grade; [NAME] had reason to believe that [NAME] would use the product, selecting only beads of one colour; [NAME]' instructions for use included use of a single colour as well as a combination of colours; a series of tests (the "first [NAME] tests") did not provide any useful evidence for present purposes, because the sieve sizes did not reflect the sizes relevant to the patent; a [NAME] series of tests (the "[NAME] [NAME] tests") reflected those sizes and so were useful for present purposes; the weighted average particle sizes were: clear beads 1.72 mm; green beads 1.84 mm; ice-blue beads 1.64 mm; and cobalt beads 1.83 mm; in the case of the clear and cobalt beads infringement had not been proven; and in the case of the green and ice-blue beads, infringement had been proven.

The [NAME] tests 61 We should explain the first and [NAME] [NAME] tests. The relevant explanation appears at paras 31 – 33 of the respondents' written submissions as follows: 31 In November 2009 and April 2011, tests on [NAME] were performed by a [NAME] laboratory (then named [COMPANY]). That laboratory was not accredited by the National Association of Testing Authorities (NATA). The sieves used in those tests were chosen by employees of [COMPANY] ([NAME]) and were of the following diameters: 4.75mm, 3.35mm, 2.8mm, 2.36mm, 2.00mm, 1.7mm, 1.4mm, l.l8mm, 1.0mm and 0.8mm. Those tests were conducted at the request of the respondents for the purpose of considering its action against the appellant. The results of those tests were not relied on at trial (and were not permitted to be used for that purpose). The November 2009 results were sent to [NAME] with a letter of demand on 11 April 2011. The April 2011 results were sent to [NAME] under cover of letter dated 2 May 2011. 32 ln October 2011, [NAME] of [NAME], a NATA accredited facility, initially performed a sieve test of the [NAME] with sieves with diameters 4.75mm, 2.36mm, l.l8mm, 600 microns, 425 microns, 300 microns, 150 microns and 75 microns, the results of which appeared in Exhibit 5 (First [NAME]). A few days letter [NAME] [NAME] repeated the test on the [NAME] with sieves of diameter 4.75mm, 3.35mm, 2.8mm, 2.36mm, 2.00mm, 1.7mm, 1.4mm, 1.18mm, 1.0mm and 0.8mm ([NAME] [NAME]), in accordance with the diameters of sieves used in the November 2009 and April 2011 Blue Circle tests. [NAME] [NAME], a Laboratory Supervisor, supervised [NAME] [NAME] testing. The results of the [NAME] test are set out in Annexure B to the affidavits of both [NAME] [NAME] and [NAME] [NAME] ([NAME] [NAME]). 33 While the [NAME] [NAME] was performed at the request of [RESPONDENT], an officer of the first respondent, sieve testing with sieves of these diameters satisfied AS 1141. AS 1141 provides that test sieves complying with AS 1152 are the apparatus that may be used in the sieve testing. The new sieves used by [NAME] in the [NAME] [NAME] comply with AS 1152 and were purchased from [NAME], the internationally accredited [NAME] of sieves to [NAME] and all of the materials testing industry. [NAME] [NAME] suggested to [NAME] [NAME] that he could purchase the sieves from [NAME]. [NAME] [NAME] and [NAME] [NAME] confirmed that the [NAME] test complied with the method specified in AS 1141. (Footnotes omitted) 62 [NAME] do not challenge the accuracy of that explanation. Amended appeal grounds 7, 8 and 9 are as follows: 7. [NAME] erred in giving no weight to the evidence of the first [NAME] test (Reasons at [131]) or to the cross-examination of the Respondents' expert concerning the first [NAME] test, as demonstrating that the Respondents' product did not infringe claim 1 of the Patent. 8. [NAME] erred in rejecting the evidence of the first [NAME] test as "unsuitable" (Reasons at [131]), given that it was done in compliance with the Court's orders, specifically using sieve sizes for aggregate sieving in AS1141 and in light of the statement of the invention in the specification that "the beads can be characterised as falling within two particle size distributions with the larger particle size being the predominant component". 9. [NAME] erred in admitting the evidence of or giving any weight to the [NAME] [NAME] tests in light of the fact that the tests did not comply with the Court's orders and in all the circumstances in which the [NAME] [NAME] test was conducted and disclosed to the Court and the Appellant. 63 The patent addresses particles, the average particle size of which is within the range of 1.5 – 4.5 mm. In the first [NAME] tests, the only sieve size within that range was 2.36 mm. The next largest sieve size was 4.75 mm. Fairly clearly, the first [NAME] tests were unlikely to say much about particle sizes between 1.5 and 4.5 mm. The [NAME] [NAME] tests included sieves sized 4.75 mm, 3.35 mm, 2.8 mm, 2.36 mm, 2.00 mm and 1.7 mm. Hence they provided much more information concerning particles within the specified range. 64 [NAME] submit that the first [NAME] tests were conducted in accordance with a Court order whilst the [NAME] [NAME] tests were not. The relevant order provided that the Court:

6. Grants leave for the purposes of Rule 34.50(2)(b) to [NAME]] to rely on experimental proof of the particle size distribution of the product sold by the [[NAME]], such proof being obtained by submitting an unopened sample of the [[NAME]'] product to [NAME]) [COMPANY] for testing in accordance with Australian Standard 1141.

7. Directs that [NAME]] provide the [[NAME]] with particulars of the source of the sample provided for testing contemporaneously with service of the results of any such testing.

8. Directs that the sample tested by [COMPANY] be made available to the [[NAME]] for inspection and, subject to the leave of the Court and if required, for testing.

9. Directs that the admissibility of experimental proof other than in respect of Rule 34.50 be determined at the trial or at such other time as determined by the Court. 65 [NAME] submit that the [NAME] [NAME] tests were not conducted in accordance with Australian Standard 1141 ("AS 1141") because they involved the use of sieves of sizes other than those identified in that standard. AS 1141 is concerned with aggregate for use in asphalt, not glass beads for use in a surface finish. Whatever the relevance of including in the order the requirement for compliance with AS 1141, it cannot have been intended that such compliance would make the results useless for all relevant purposes. Further, the use of a 3.35 mm sieve is contemplated by AS 1141. Such a sieve was used in the [NAME] [NAME] tests, but not the first. [NAME] concluded that the [NAME] [NAME] tests provided useful information for all relevant purposes while the first [NAME] tests did not. At [131] – [132] [NAME] gave her reasons, which are, to a great extent, reflected above. Order 9 contemplated the possibility that further tests would be presented at trial, although admissibility was to have been considered at that time. 66 [NAME] do not advance any substantial challenge to [NAME]'s assessment of the evidence. [NAME] submit that [NAME] [NAME], the respondents' expert, was able to form a view based on the first [NAME] tests. That may be so, but acceptance of such opinion evidence depended upon the [NAME] Judge's assessment of the information upon which it was based. [NAME] assessed that evidence and rejected it. 67 In any event, the order contemplated the possibility that further test evidence would be received at trial. [NAME] must have decided to receive the [NAME] [NAME] tests results. Alternatively, she may have concluded that the [NAME] [NAME] tests were carried out pursuant to the order. In either event no basis can be demonstrated for concluding that [NAME] was in error in acting on the evidence provided by the [NAME] [NAME] tests. [NAME]' other submissions concerning the [NAME] tests are based upon [NAME]' construction of claim 1, which construction we have rejected, as did the [NAME] Judge. Other submissions may go to weight, but they do not demonstrate any basis for doubting the appropriateness of [NAME]'s treatment of the [NAME] tests.

Amended appeal ground 3 68 Amended appeal ground 3 provides: [NAME] erred in finding that [NAME]' green and ice blue product infringed claim 1 of the Patent in light of the evidence that these products were outside the particle size range of 1.5 to 4.5mm in claim 1 and in light of [NAME]'s findings concerning the disclosure in Patent Specification CH 668 665 on the question of novelty. As to particle size range, this ground seems to assume that the evidence of the first [NAME] tests should be used rather than the evidence concerning the [NAME] [NAME] tests. We have dealt with that matter. As to the Swiss Patent we have already dealt with it in considering the question of novelty. We are unable to discern in appeal ground 3, any further point concerning that patent. 69 [NAME] submit that the respondents did not establish infringement because they did not establish that [NAME] had instructed or induced others to use beads of only one colour in any pool. The significance of this submission may not be immediately obvious. It arises out of the evidence concerning the [NAME] tests. In those tests samples of beads of four different colours were discretely tested. The green and ice-blue bead samples infringed, but the clear and cobalt bead samples did not. [NAME] submit that only the supply of the green or cobalt beads, or a combination of both would constitute infringement. The presence of beads of other colours might reduce the relative proportions of larger and smaller beads so that infringement could not be inferred.

Section 117 70 Section 117 provides: Infringement by supply of products (1) If the use of a product by [NAME] would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the [NAME] unless the [NAME] is the [NAME] or licensee of the patent. (2) A reference in subsection (1) to the use of a product by [NAME] is a reference to: (a) if the product is capable of only one reasonable use, having regard to its nature or design–that use; or (b) if the product is not a staple commercial product–any use of the product, if the [NAME] had reason to believe that the person would put it to that use; or (c) in any case–the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the [NAME] or contained in an advertisement published by or with the authority of the [NAME]. 71 [NAME]' amended grounds of appeal 12 – 17 are as follows: 12. [NAME] erred in finding that [NAME] infringed claim 1 by the supply of products for the purposes of s 117 of the Patents Act. 13. [NAME] erred in treating the "product" for the purposes of s 117 of the Patents Act as the glass quartz aggregate product together with the [NAME], contrary to the case as pleaded. 14. [NAME] should have found that the glass quartz aggregate product (whether alone or with the [NAME]) was a staple commercial product for the purposes of s 117(2)(b) of the Patents Act, including in light of the finding (Reasons at [124]) that the product(s) would be suitable for other commercial uses. 15. [NAME] erred in finding that [NAME] had reason to believe, for the purposes of s 117(2)(b) of the Act, that customers would put the [NAME] product to use by selecting a single colour, being either green or ice blue. 16. [NAME] erred in finding that [NAME]' instructions to customers to use the [NAME] glass bead product "in any combination of colours you wish to choose" constituted instructions to the customer use the product in a manner which would infringe the patent for the purposes of s 117(2)(c) of the Act. 17. [NAME] erred in granting injunctions to prevent authorising or procuring infringement of s 117 of the Patents Act when the exclusive rights given to the [NAME] under s 13 and the definition of "exploit" do not extend so far. 72 At [124] the [NAME] Judge dealt with s 117(2)(a). The parties agree that the reference to s 117(2)(b) in [124] should be to s 117(2)(a), as is plainly correct. The [NAME] Judge found that the relevant product could be reasonably used for more than one purpose. Thus s 117(2)(a) was not engaged. [NAME] dealt with s 117(2)(b) at [125], apparently concluding that this provision would be engaged and infringement established under it if one of the four colours tested infringed the patent. That conclusion would necessarily involve a finding that [NAME]' product was not a staple commercial product. As to s 117(2)(b), [NAME] submit that [NAME] ought to have found that [NAME]' product was a staple commercial product so that s 117(2)(b) was not engaged. They submit that in considering s 117(2)(a), [NAME] found that [NAME]' product had "100's of applications". That submission is not strictly correct. [NAME] pointed out that on a website (presumably [NAME]' website or that of one of them) it was said that there were "100's of applications, [NAME], gardens, ponds and many more." In considering s 117(2)(b) [NAME] seems not to have addressed expressly the question of whether or not [NAME]' product was a staple commercial product. We will return to this matter. 73 [NAME] dealt with s 117(2)(c) at [126], concluding that the provision was engaged. 74 We turn to the grounds of appeal. Appeal ground 12 identifies no alleged error. Ground 13 addresses identification of the appellant's product for the purposes of s 117. [NAME] correctly submit that their product as pleaded by the respondents was comprised of the "glass quartz aggregate". See the amended statement of claim at paras 14 and 14B. At numerous points in her reasons, [NAME] refers to the product in such a way as to suggest that she was, as [NAME] submit, referring to both the aggregate and the polymer as the relevant product. The polymer was relevant to the alleged infringement of claims 13, 20, 21 and 23 –26. However it was not part of the supply said to have been an infringement upon claim 1. The case may not have been conducted in accordance with the pleadings, but we must assume that it was so conducted. If, however, the distinction between the aggregate and the aggregate with the polymer was treated as being of any significance, one would have expected some mention of it in [NAME]'s reasons. In footnote 37 at para 46 of [NAME]' submissions on appeal, it is said that the respondents' pleading of the "Product" was "important", but the importance is not demonstrated. 75 In Northern Territory v Collins (2008) 235 CLR 619 Gummow A-CJ and Kirby J said at [26]: Of course, the word "staple" has found its way into the language of a contemporary Australian statute designed to apply to modern conditions in this country. However, when the standard local dictionaries are consulted, they do not yield a meaning different from that in the United States. Thus the word has been defined, relevantly: "(1) a principal commodity grown or manufactured in a locality. (2) a principal commodity in a mercantile field; goods in steady demand; goods of known or recognised quality. (3) a principal item, thing, feature, element, or part. (4) the fibre of wool, cotton, flax, rayon, etc, considered with reference to length and fineness." (Footnote omitted) 76 At [41] [NAME] J said that: … a staple commercial product is one that is supplied commercially for various uses. … the product … must be an article of commerce that not only can be used in a variety of ways but also is traded for use in various ways. (emphasis in original) 77 Justice Crennan said ([NAME] concurring) at [142] – [145]: 142 The precise scope of the expression "staple commercial product" is not clear. One ordinary adjectival use of "staple", applied to raw materials, conveys the meaning that the material is capable of being used as a constituent element in a number of other products. That focuses on the inherent qualities of the product. Another equally well-known ordinary adjectival use of "staple" conveys the meaning that a product has a foremost place among products, for example, in a particular location. That focuses on the distribution of a product rather than upon its inherent capacity to be a constituent in a number of other products and overlaps with the idea that the product be a "commercial" product. 143 It has been suggested by at least one writer in respect of European rights that a "staple commercial product" has two main qualities: first, it must be "[a] basic product commonly used for various purposes", and secondly, it must be "[g]enerally available on the market". 144 Raw materials such as wool or timber undoubtedly have the first quality. As to the [NAME] quality, it is necessary to recognise that s 117(2)(b) operates to limit liability for contributory infringement. Policy arguments in favour of imposing liability for contributory infringement are much weaker with a product that has significant non-infringing uses. The legislative intention evinced in the statutory language, and apparent also from the relevant secondary materials, is to except from liability, the supply of products with significant non-infringing uses, or as it has been put in relation to the American provisions, products with "lawful as well as unlawful uses". A preference for such a construction has also been essayed in respect of s 60(3) of the Patents Act 1977 (UK) by a writer who states "the intention is to stop material particularly adapted to the use of an invention being made available to a putative infringer, but that material which has and, importantly, had, a general purpose of more than de minimis utility, falls within the [UK] exception". 145 The phrase "staple commercial product" means a product supplied commercially for various uses. This does not mandate an inquiry into whether there is "an established wholesale or retail market" or into whether the product is "generally available" even though evidence of such matters may well be sufficient to show that a product is a "staple commercial product". The relevant inquiry is into whether the supply of the product is commercial and whether the product has various uses. Leaving aside the supply to ACOC, the timber here was supplied on commercial terms to various licensees for a variety of non-infringing uses.

Accordingly, the Northern Territory is protected by the limitation in s 117(2)(b). (Footnotes omitted) 78 [NAME]'s findings that [NAME] had infringed by virtue of the operation of s 117(2)(b) has caused us some concern. Three problems would make it difficult to uphold [NAME]'s finding that s 117(2)(b) was engaged. They are: the mis-identification of the product; the absence of an express finding that [NAME]' product was not a staple commercial product; and the absence of any consideration of that matter in the reasons. 79 We do not mean to be critical of [NAME]. It is likely that these deficiencies were the product of the way in which the case was conducted. In the ordinary course, we would consider the relevant evidence and, if possible, make our own findings. The only evidence to which [NAME] refer is: [NAME]'s finding that there were 100s of uses for the glass beads; and references in the specification to various other uses. 80 We are inclined to the view that for the purposes of claim 1, the relevant use would be infringing use in any structure. Thus, for example, we do not see use on a path as a distinct use from use in a pool. Both are uses in a structure. The question, then, would be whether glass beads had any use other than as claimed in claim 1. The answer to that question would be relevant to both s 117(2)(a) and s 117(2)(b). We understand [NAME]'s reference to "100's of applications" is to uses in various structures. If so, then [NAME] may not have addressed the correct question. 81 Nonetheless we suspect that [NAME]'s finding concerning s 117(2)(a) is probably correct. It seems likely that there are uses for glass beads other than as claimed in claim 1. A more difficult question is whether the product is a staple commercial product for the purposes of s 117(2)(b). We are inclined to the view that, on the evidence to which we have been taken, a tribunal of fact could not be satisfied on the balance of probabilities that glass beads were not a staple commercial product. 82 However, because we consider that [NAME] was correct in concluding that s 117(2)(c) was engaged, it is not necessary that we form a concluded view concerning the engagement of s 117(2)(b). Given the uncertain state of the evidence and the absence of any substantial submissions concerning the matter, it is better that we not do so. We also need not address appeal ground 15. 83 Concerning s 117(2)(c) [NAME] said at [126] – [128]: 126 In terms of s 117(2)(c) I do not accept the [[NAME]'] characterisations of their instructions to use the product. The [[NAME]] said that people are instructed to use the glass beads in different colour combinations. In fact, the instructions are to the effect that there are "hundreds of colours and combinations", "a magnificent range of colours and combinations", there being "100's of colours and combinations to choose from and [NAME] may select "any combination of colours you wish to choose", there being "freedom of choice with colour". In other words, the [[NAME]] instruct that the product may be used as the customer sees fit, either with a single colour or any combination of colours from those available. This satisfies the requirement for instructions to use the product in both these ways; that is, by use of a single colour or a combination of colours. It follows that if one of the four colours tested by [NAME]] infringes the patent, infringement is established under s 117(2)(c). 127 I also do not accept the [[NAME]'] case that [NAME]] could only prove infringement by locating a pool in which the [[NAME]'] product has been used and testing the product as used in that application. That is one way [NAME]] might have proved infringement. But ss 117(1) and (2) do not require proof of that kind. It is clear that the respondents supply a product comprising glass beads and [NAME] instructed for use and which the [[NAME]] believe will be used, and in fact has been used by many people, in swimming and spa pool linings. As noted, if [NAME]] can prove any colour of glass beads as tested, when used as instructed with the [NAME], would infringe the patent, then infringement is established by operation of ss 117(2)(b) and (c). 128 The fact that the [[NAME]] supply only the glass beads and [NAME] is not to the point. The [[NAME]] direct the use of those products with cement, which is a "cementitious material" within the meaning of the claims of the patent. It is also clear from the evidence that at least a portion of the glass beads will project out of the cementitious matrix. Based on [NAME] [NAME] experience it should also be inferred that it is likely that no more than 40% of the glass beads will be exposed. Given their own experience in lining swimming [NAME] I infer that the [[NAME]] have reason to believe that their product would be used in this way. 84 [NAME] make two submissions concerning s 117(2)(c), namely: that the sales material to which [NAME] referred contained "trivial marketing exhortations" which did not constitute instructions or inducements; and that there was no evidence of any actual use in a pool of only green or ice-blue beads. 85 As to the first matter we do not accept that, because it may be possible to describe statements as "trivial marketing exhortations", such statements cannot also be instructions. In this respect, we see no error in [NAME]'s reasons. The website clearly indicates that the product is to be used as a surface finish for swimming [NAME]. It is said to have "100's of colours and combinations", and to be for, use for applications in "[NAME], gardens, ponds and many more". We see no difficulty in characterizing those statements as instructing a use which infringes claim 1. 86 As to the [NAME] matter, we consider that relevant statements identified by the [NAME] Judge clearly addressed the use of the full range of colours offered by [NAME], necessarily including the green and ice-blue products. Those statements also contemplated a combination of colours, necessarily including a mixture of the green and ice-blue products. Such use would infringe claim 1 so that the supply by [NAME] of their green or ice-blue product would constitute an infringement. In this respect, we see no error in [NAME]'s conclusion or in her reasons.

THE RELIEF GRANTED 87 Amongst other orders, the [NAME] Judge ordered that:

1. The [[NAME]] whether by themselves, their directors, servants, agents or otherwise, be restrained from infringing claim 1 of the Patent during the term thereof.

2. The [[NAME]] whether by themselves, their directors, servants, agents or otherwise, be restrained during the term of the Patent from, without licence from [NAME]]: (a) supplying, selling or disposing of, or offering to sell or dispose of, the [NAME] products green and ice blue, for use in isolation or in combination with each other; and/or (b) authorising, procuring or inducing others to supply or sell or to use the [NAME] products green and ice blue in isolation or in combination with each other. 88 Grounds of appeal 2 and 17 are as follows: 2. [NAME] erred in making Order 1 of the Orders in the form that it was made, given the limited nature of the findings on infringement, namely by only two colours (green and ice blue) out of many bead colours sold by [NAME] and in light of the fact that the parties had agreed on orders in a different form. … 17. [NAME] erred in granting injunctions to prevent authorising or procuring infringement of s 117 of the Patents Act when the exclusive rights given to the [NAME] under s 13 and the definition of "exploit" do not extend so far. 89 [NAME] in terms have appealed against both [NAME] and [NAME], their written submissions seem only to address [NAME]. During the hearing counsel for [NAME] informed us that the parties had agreed to [NAME] but not [NAME]. We proceed on the basis that [NAME] press only the appeal against [NAME]. [NAME] submit that [NAME] is inappropriate in this case because of the "very limited nature of the Respondents' success". We do not accept that as an accurate assessment of the outcome of the case. The patent has been construed. [NAME] were found to have infringed. For the reasons identified by [NAME] J in [COMPANY] v [COMPANY] (No 2) [2001] FCA 785, we consider that [NAME] did not err in making [NAME]. That case demonstrates that in the United Kingdom and in Australia, a [NAME] who establishes infringement will usually obtain the benefit of an order restraining infringement generally. The reasons for making such an order are identified in the judgment. We find them convincing. In oral submissions counsel for [NAME] suggested that in the United States of America, "one is not even necessarily entitled to an injunction as of right" in an infringement case. There is nothing surprising about that general proposition. However it does not in any way undermine the rationale for making such a general order as demonstrated by [NAME] J. We see no justification for [NAME]' criticism of [NAME].

ORDERS [ADDRESS] orders that: 1. The appeal be dismissed. 2. The parties exchange submissions as to costs and file same within 14 days after the delivery of these reasons. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the [NAME] and [NAME].

Associate: Dated: 10 September 2014