MMI Research v Cellxion

We have before us an application for permission to appeal the judgment of Floyd J whereby he held the patent in suit valid.

There were a number of attacks on the validity of the patent. One of them was an attack of obviousness over a prior publication called Fox. Mr Wilson, for the defendant/appellant, opened with his application for permission concerning that and then went on to his further application, which is for this court to admit further evidence relating to the prior use, for which his clients had been contending. It had been their contention that the manufacturers, the patentees, Rohde and Schwartz (who have played no part in this litigation thus far) had been selling the machine in question complete with a manual describing the invention before the priority date for customers who were under no obligation to Rohde and Schwartz to keep the information secret. The defendants relied on sales to the Australian government. They lost on two grounds, firstly that the supply of machines to the Australian government was not in itself sufficient to enable the customer to work out how the device worked and, secondly, that in any event the supply was under a seal of confidence.

After the judge had given judgment and after the order giving effect to that judgment and, in particular, his decision that the patent was valid infringed had been perfected, the defendants received a box containing two files from an anonymous sender. The packaging was destroyed, we were told, not with any malicious intent but in the way these things happen, because it was destroyed in the post room and not thought to be recovered until the potential significance of the two files that were received was appreciated.

The two files (and we have seen the originals) are the instructions for the device in Italian and another file, rather thicker, with almost the same instructions in English. They were manuals. Along with the English version at least, is a floppy disk which has recently been read. There can be no doubt, and I do not think Mr Howe disputes it, that if this manual or the floppy disc had been prior disclosed to someone who was free in law and equity to use the information, the patent would lack novelty.

Mr Wilson particularly relies upon what he says is fairly obviously an event prior to the priority date of the patent, a certificate of compliance with an order from Rohde and Schwartz to a customer. The customer is not named but the order number is given and the document, which came in the English file, is dated 18/03/1998, which is before the priority date. Mr Wilson says the clear inference is that the recipients of this machine would have got the manual to go with it, that the document we have here is the manual that goes with it, that there is nothing about the manual being confidential, and that, accordingly, the recipient was a person free in law and equity to use the information. Likewise he says that the accompanying floppy disk also, when read, contains sufficient information to amount to an anticipation of the patent if it was part of the prior art. And the dates of the files on the disc are all before the priority date.

It is a strong thing to ask this court to adduce fresh evidence either on appeal or ask the appeal court to remit the matter to the trial judge after there has been a trial. There is a heavy onus upon the party who wishes for such evidence to be admitted. The principles are well known and I need not set them out.

Mr Howe says there is not enough here. In particular, he says the destruction of the packaging may be evidence that the defendants knew whom their “friend” was and were seeking to protect that person. All the more so, since it has now emerged that the very manuals referred to by the trial judge in the trial also appeared in a brown envelope. And he says the fact that the defendant’s solicitors went through a bizarre exercise of redacting material from the copies of the documents is further indication that the defendants wish to protect someone. (It is a rather odd thing to have done on any basis because the claimant’s solicitors have been allowed to see the documents in their unredacted form). So, Mr Howe says, the defendants must have had the possibility before the trial on investigating who their friend was and didn’t do so. Mr Howe also says there is no evidence the documents and floppy disc were distributed before the priority date by Rohde and Schwartz.

These are fair points but to my mind are not sufficient to prevent the court admitting this fresh evidence. On their face the documents and floppy disclose the invention. They also disclose that customers got a training manual, which is indeed what one would expect the sales to be accompanied by. It is true there are differences between the Italian version and one in English. It is also true the Italian version has some drawings in which are too late. But to my mind these documents are a fairly strong indication that there may very well have been a prior public disclosure.

The defendants, before disclosing the fact that they had received these documents -- that was not probably the best thing to do, without telling the other side -- set about trying to authenticate them. They contacted two government security officers, one in Italy and one in Germany, who have said that they themselves received training manuals like these and did so before the priority date. It may be asked why they were not contacted before, particularly since, at least as far as the Italian is concerned, the defendants knew him rather well. Mr Wilson told us, upon instructions which I would expect to be verified by an affidavit, the Italian had been asked whether he had got a training manual and had refused to supply it. That is perhaps understandable from a government security officer. But once he had been shown the documents, which came from the brown envelope, he said, “Yes, that is the thing I had”.

So I would admit the fresh evidence. I would also require that the defendant plead exactly what it is they intend to prove. Speaking generally it seems to me it is the following. (1) The prior sale to the customer who is named on the certificate of compliance with the order together with the supply of the training manual. I would not allow the issue of whether you can work out what the machine does from the machine itself to be re-opened. (2) The supply of manuals to the Italian and German security officers. (3) I would also allow, to this extent and this extent alone, the issue of the Australian supply to be re-opened but with no further evidence from Australia. All that can be raised is the question of the inference to be drawn from the existing evidence in the light of the further evidence which comes before the judge.

All these matters would have to be pleaded out with considerable precision. Any further amendment must be regarded with utmost suspicion and only allowed in the most exceptional circumstances.

Counsel are agreed that if the evidence is to be admitted, the appropriate course is to remit the matter to the same learned judge for him to issue a further decision dealing with those issues as pleaded and none other.

I agree.

It follows that we do not need at this stage to deal with the application for permission to appeal the existing judgment. It may become unnecessary. As to what happens to the costs if the defendants succeed on the further application, that would entirely be a matter for the judge below. We, for present purposes, adjourn the application for permission to appeal.