RESMED LTD v FISHER & PAYKEL HEALTHCARE LTD [2017] NZHC 2954

RESMED LTD v FISHER & PAYKEL HEALTHCARE LTD [2017] NZHC 2954 [30 November 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2016-404-001968[2017] NZHC 2954BETWEEN RESMED LIMITEDApplicantAND FISHER & PAYKELHEALTHCARE LIMITEDRespondentHearing: 16 October 2017Counsel: J G Miles QC, I Finch and J R E Wach for the ApplicantA R Galbraith QC and K McHaffie for the RespondentJudgment: 30 November 2017JUDGMENT OF EDWARDS JThis judgment was delivered by Justice Edwardson 30 November 2017 at 4.00 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Counsel: J G Miles QC, AucklandA R Galbraith QC, AucklandG F Arthur, WellingtonSolicitors: James and Wells, AucklandA J Park Limited, WellingtonIntroduction[1] ResMed Ltd and Fisher & Paykel Healthcare Ltd (FPH) are engaged in patentlitigation worldwide. This proceeding relates to four of ResMed's patents forcontinuous positive airway pressure (CPAP) therapy. The CPAP technology allowstreatment for sleep disordered breathing.[2] ResMed alleges that its patents are infringed by FPH's products, namely theSimplus, Eson and Eson 2 CPAP masks, and the Icon fixed pressure CPAP machine.FPH denies the infringement claims and it counterclaims seeking revocation of theResMed patents on various grounds including lack of novelty and obviousness.[3] ResMed seeks further and better particulars of FPH's statement of defence andcounterclaim. The particulars sought fall into the following broad categories:1(a) Category 1: FPH's reliance on specific features of commonly availablemasks said to form part of the "common general knowledge";(b) Category 2: FPH's failure to identify where in the cited prior art eachinteger of the claims relied on is said to reside;(c) Category 3: Positive allegations made by FPH in support of itsstatement of defence to the infringement claim.[4] FPH resists the application. It says that it has already provided particulars ofits pleading which go beyond what is required, and to provide further particulars wouldrequire it to plead evidence or matters of law. FPH also says that an order of particularsis premature given that discovery has yet to be completed.The current state of the pleadings[5] ResMed's statement of claim was filed on 17 August 2016 and wasaccompanied by particulars of breach. In October 2016, it provided further and better1 ResMed initially requested a fourth category of particulars relating to the use of open-ended ornon-exhaustive pleading, but this has since been resolved between the parties and is no longerpursued.particulars of its claim in response to a request by FPH. FPH's statement of defenceand counterclaim was filed on 4 November 2016.[6] FPH's statement of defence includes denials of each allegation of breach inrelation to each patent. Those denials are particularised by reference to the absence offeatures in the FPH's products which are claimed to breach the ResMed patents.ResMed seeks particulars of those denials in its request for particulars.[7] FPH counterclaims against ResMed seeking revocation of all four patentsunder s 112 of the Patents Act 2013. It relies on various grounds set out in s 41 of thePatents Act 1953,2 including:(a) That the invention is not new, having regard to what was known or usedbefore the priority date of the claim in New Zealand (lack of novelty);3and(b) That the invention is obvious and does not involve any inventive step,having regard to what was known or used before the priority date of theclaim in New Zealand (obviousness).4[8] The counterclaim includes pleaded particulars of the grounds of invalidity.These include particulars of what FPH says was known in New Zealand before thepriority date by reference to prior art (both documents and devices) and the commongeneral knowledge at the relevant date.[9] By notice dated 29 November 2016 (first notice), ResMed sought furtherparticulars of the defence and counterclaim. FPH provided further particulars on31 January 2017.[10] ResMed's application seeks further and better particulars of the statement ofdefence, counterclaim, and the particulars provided in response to the first notice.2 Patents granted under the Patents Act 1953 may only be revoked by the court on the grounds setout in s 41(1) or (3) of that Act: see s 254(2)(e) of the Patents Act 2013.3 Patents Act 1953, s 41(1)(e).4 Section 41(1)(f).Applicable rules and principles[11] Under r 5.21, a party may request another party to give such further particularsof its pleading that may be necessary "to give fair notice" of its cause of action,grounds of defence, or the particulars required by the rules. In Price Waterhouse vFortex Group Ltd, the Court of Appeal said that the purpose of a pleading is to:5 supply an outline of the case advanced, sufficient to enable a reasonabledegree of pre-trial briefing and preparation. Discovery and interrogatories areonly an adjunct, not a substitute for pleading.[12] Particulars illuminate a pleading, and ensure that the opposite party is fairlyinformed of the case to be met at trial. In that respect, particulars serve to isolate theissues in dispute, and assist in determining the scope of the evidence required to becalled at trial.6[13] The Court of Appeal has cautioned against the temptation to insist uponexcessively refined pleadings, observing that it is not an area for "mechanicalapproaches or pedantry".7 Excessively refined pleadings are also wasteful of costsand court time, especially in complex cases where a party's case will inevitablydevelop with time.8 Whether a request is oppressive or an unreasonable burden uponthe recipient is a relevant consideration in deciding whether to grant an application forfurther and better particulars.9[14] Part 22 of the High Court Rules sets out rules regulating proceedings andappeals under the Patents Act 2013. Subpart 4 deals with objections to the validity ofa patent.[15] Under r 22.19, particulars of an objection to the validity of a patent mustinclude the grounds on which the validity of the patent is disputed (sub-r (b)); and"include particulars clearly stating issues intended to be raised" (sub-r (c)).5 Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 19.6 Ayers v LexisNexis NZ Ltd [2012] NZHC 3055, (2012) 21 PRNZ 313 at [49]; Platt v PoriruaCity Council [2012] NZHC 2445 at [19].7 Price Waterhouse v Fortex Group Ltd, above n 5, at 19.8 BNZ Investments Ltd v Commissioner of Inland Revenue (2008) 23 NZTC 21,821 (HC) at [45].9 Body Corporate 74246 v QBE Insurance (International) Ltd [2015] NZHC 1360 at [18(h)(iii)].[16] Rule 22.20 deals specifically with particulars of a claim for want of novelty.That rule provides:22.20 Particulars if want of novelty alleged(1) The particulars of an objection on the basis of want of novelty muststate the time and place of the alleged previous knowledge,publication, or use.(2) The particulars of an objection on the basis that the invention has beenused prior to the date of the patent must—(a) state the name and address of the alleged prior user and theplace of prior use; and(b) state whether the prior use is alleged to have continued to thedate of the patent, and, if not, the earliest and latest dates onwhich the prior use is alleged to have taken place; and(c) contain a description (accompanied by drawings, ifnecessary) sufficient to identify the alleged prior use; and(d) if the use relates to machinery or apparatus, specify whetherit is in existence and where it may be inspected.(3) Evidence that exists at the date of delivery of the particulars aboutmachinery or apparatus in relation to which prior use is alleged is notable to be received, unless it is proved that the party relying on theprior use has,—(a) if the machinery or apparatus is in that party's own possession,offered an inspection of it; or(b) if the machinery or apparatus is not in that party's ownpossession, used best endeavours to obtain an inspection of itfor the other parties to the proceeding.[17] Under r 22.24, a party may not be heard or adduce evidence in support of analleged infringement, objection, or defence insofar as it relates to matters that are notspecified in, or are at variance with, the particulars delivered by that party. However,under sub-r (2), the Court may grant leave on terms that it considers appropriate.[18] Rule 22.25 provides that particulars may be amended by leave of the Court onterms the Court considers just, but further and better particulars may, at any time, beordered by the Court.Category 1 – reliance on specific features of commonly available masks said toform part of the common general knowledge[19] This category of requests targets FPH's reliance on "common generalknowledge" in its counterclaim. Requests 4, 6, 8, 9, 13, 14, and 17 fall within thiscategory. Requests 8 and 13 also fall within category 3 and I have addressed themunder that category as set out below.[20] The FPH pleading targeted in the requests includes a pleading that theinvention claimed in the ResMed patents is no more than "collocating known featuresof mask systems" available before the earliest priority date. The other parts of thetargeted pleading include allegations that the claims are not new, or are obvious anddo not involve any inventive step, having regard to what was "common generalknowledge" at the relevant time.[21] FPH pleads that the "common general knowledge" includes features of masksystems which are then listed with some specificity. FPH has also identified theavailable masks which are said to incorporate these known features in the particularsof its counterclaim.[22] ResMed's requests require FPH to specify "which specific features of eachmask relied on are alleged to be common general knowledge". In effect, the requestrequires FPH to marry the pleaded "known features" with the pleaded "commonlyavailable masks".[23] ResMed submits that without these particulars it is left to guess at which of thefeatures within the pleaded lists are said to be found in each of the various products,and that presents a serious challenge for assessing FPH's counterclaim and briefing itsexpert witnesses. Furthermore, ResMed submits that these particulars should be easyto provide because FPH must have already conducted an analysis and identified whichof the pleaded features resides in each pleaded mask or humidifier for the purposes ofpreparing its counterclaim.[24] In Amarillo Cell Culture Co Inc v Fernz Corp Ltd, Barker J considered whetherto order further particulars of a counterclaim in which obviousness had been pleadedas a ground for revocation.10 Barker J held that to support "common knowledge" in adefence of obviousness, the party seeking revocation of the patent should not be ableto rely on any document unless it had been particularised before trial. However,"common general knowledge" was a matter of evidence to be given by personsknowledgeable in the art.11[25] That approach was softened somewhat in Stallion Plastics Ltd v McInnes.12 Inthat case, Dobson J outlined what he considered to be a more contemporary approachto the pleading of common general knowledge. He referred to the following passagefrom Ratiopharm v Napp (a decision of the England and Wales Court of Appeal) asexemplifying that contemporary approach:13 I consider that the time has come when the matter which is said to becommon general knowledge ought to receive some more formal exposition inadvance of the expert evidence stage. Apart from anything else, the Pozzoliapproach, which depends on identifying a difference between matter allegedto form part of the start of the art and the inventive concept, cannot begin tobe applied without adequate particularisation of the starting point.[26] That statement needs to be understood in context. It is prefaced by a referenceto rules of pleading which require a party to identify the matter in the state of the artwhich is relied on to support an attack on the ground of obviousness. Justice Floydobserved that, despite those rules, there had been a practice in that jurisdiction forallegations of obviousness "to include a plea founded on nothing other than 'commongeneral knowledge'". The Judge observed that in some cases, claims had reached trialstage without any further particularisation other than the expert evidence adduced tosupport it. It was in those circumstances that the Judge considered the time had comefor common general knowledge to receive more formal exposition.[27] In Stallion Plastics, the Assistant Commissioner had struck out the pleading ofcommon general knowledge on the grounds that it was to be determined by theevidence of experts. In response to that reasoning, Dobson J said:10 Amarillo Cell Culture Co Inc v Fernz Court Ltd HC Auckland CL52/93, 3 October 1994.11 At 15.12 Stallion Plastics Ltd v McInnes HC Wellington CIV-2008-485-2250, 29 April 2009.13 Ratiopharm GmbH v Napp Pharmaceutical Holdings Ltd [2008] EWHC 3070 (Pat) at [154] citedin Stallion Plastics Ltd v McInnes, above n 12, at [19].[23] With great respect, that approach misconceives the purpose ofpleadings. If an opponent's argument on any one or more grounds ofopposition is intended to be supported by reference to common generalknowledge, then as a matter of pleading the opponent should commit to anoutline of the respects in which common general knowledge will be claimedto be relevant, and the applicant is entitled to know that in considering itsresponse. As with all factual allegations in pleadings, the assertion of whatconstitutes the common general knowledge at a particular point in respect ofa particular device does not give that assertion any status as being the truthfulor unquestionable state of the relevant knowledge: rather, it is the opponent'scontention of what the Assistant Commissioner will find, on evidence to beadduced, to be the state of knowledge. It is useful for it to be signalled as amatter of pleading to enable the applicant to consider the strength of evidenceavailable to challenge that assertion.[28] The Stallion approach therefore requires a party to commit to an outline of therespects in which common general knowledge will be claimed to be relevant.Signalling that as a matter of pleading enables the applicant to consider the strengthof the evidence available to challenge the assertion.[29] In the present case, there is a dispute between the parties as to whether theAmarillo principle still applies given the approach taken in Stallion. I do not considerit necessary or helpful to establish a bright line rule to apply to pleadings of "commongeneral knowledge". Just where the line between evidence and pleading is to be drawnwill differ from case to case depending on the application of the rules and principlesto the nature of the particular case and pleading in issue.[30] Applying those rules and principles to this case, I consider the particulars ofcommon general knowledge relied on by FPH are adequate. This is not a case wherethere has been no exposition of common general knowledge at all. FPH has givennotice of what it contends to comprise the common general knowledge, namely theknown features, together with the masks. That is a sufficient outline of its case aroundcommon general knowledge to allow expert evidence to be briefed.[31] The requests require FPH to plead matters which are to be addressed in expertevidence. They go further than requiring a formal exposition of what is relied on ascommon knowledge. Effectively, FPH is being asked to commit its expert evidenceto pleadings in circumstances where discovery has yet to be completed and thepleadings have not yet closed. Such a request is unduly burdensome and unnecessaryin the circumstances.[32] The current pleading provides a sufficient outline of what FPH relies on ascommon general knowledge for ResMed to know the claim that it must meet. Furtherparticulars are not necessary and this category of requests is declined.[33] The application for further and better particulars in relation to the requestsfalling within category 1 is declined.Category 2 — the defendant's failure to identify where in the cited prior art eachinteger of the claims relied on is said to reside[34] The requests falling within category 2 are requests 5, 7, 10, 11, 12, 15, 16, 18,and 19. These requests target the defendant's pleading which refers to certain specifiedprior art documents, and two allegedly prior devices.[35] Request 12 is in respect of FPH's pleading that one of ResMed's patents(NZ 597689) was obtained on a false suggestion or representation, and that anotherUS patent anticipates the claims. The remaining pleading targeted by the category 2requests contain references to prior art documents or prior devices to support FPH'sallegations of:(a) lack of novelty (requests 5, 10, 15, and 18); and(b) obviousness and lack of inventive step having regard to what wascommon general knowledge in New Zealand together with thedocument concerned (requests 7, 11, 16, 19).[36] Where it is relying on prior art documents, FPH pleads in some parts of itscounterclaim that it relies on the whole of the prior art document; in other parts itpleads that it relies on the whole of the document but refers to particular passages andfigures in the document. The particular features of the alleged prior devices reliedupon are pleaded in each case.[37] ResMed requests particulars of where each integer of certain claims reside inthe prior art documents/devices relied upon.[38] ResMed says that there are over 20 prior art documents, which are lengthy andcomplex. It submits that its burden in preparing its case in response to the whole ofeach document relied upon is oppressive. Further, ResMed says that the particularssought are easily provided as FPH must have already analysed the documents andformed a view about the particulars sought in order to plead them in good faith.[39] The principles concerning the scope of pleading required in respect of prior artdocuments are summarised in Terrell on the law of Patents as follows:14Whether or not a defendant will be required to give particulars of the exactpassages of the prior documents relied on, or to point out specifically whatpart or parts of the claimant's specification they allege to be affected thereby,will depend upon the circumstances of the case and the nature of thedocuments. Where it appeared that the defendant had, figuratively speaking,"thrown at the head" of the claimant a large number of complicatedspecifications without any attempt at discrimination, further particulars wererequired. If, however, the defendant bona fide relies on the whole of one ormore documents, and the subject matter is simple, the particulars of objectionswill not be interfered with.[40] That passage was applied by Quilliam J in Alfa-Laval Cheddar Systems Ltd vSilver Dawson Industries Ltd.15 In that case, Quilliam J went on to state that wherethe whole publication is referred to, the defendants will be taken to be relying uponevery claim which appears in the publication.16[41] When FPH's pleading is considered in its entirety, it is evident that FPH hasdiscriminated between those specifications where it relies on the whole of thedocument, and those specifications where it relies on certain passages and figures.This is not a case of FPH "throwing at the head" of ResMed a large number ofcomplicated specifications where the whole of the document was not relied upon byFPH in good faith.[42] The documents which are said to be unduly long and complex were notadduced in evidence. However, one document referred to in ResMed's submissionsas being particularly lengthy (165 pages) is one of ResMed's own patents. Other14 Colin Birss and others Terrell on the law of Patents (18th ed, Sweet and Maxwell, London, 2016)at [19.207].15 Alfa-Laval Cheddar Systems Ltd v Silver Dolphin Industries Ltd HC Christchurch A20/82,1 September 1982 at 6.16 At 7.documents referred to are also ResMed's patents. One of the devices relied on by FPH(the Sullivan HumidAire) is a ResMed product. It can be reasonably expected thatResMed will be familiar with its own patents and products, and able to construe thosewithout further assistance by way of particulars. To the extent that the otherdocuments are technical and complex, then ResMed is well equipped to instruct itsown experts to construe these documents in light of FPH's current pleadings.[43] The relative ease of providing the particulars may be a relevant factor indeciding whether to grant the request.17 I am unable to assess the relative ease ofidentifying the integers in each specification without seeing the specificationsthemselves. However, I consider it unlikely that identifying the integers is as easy asResMed suggests. What appears more likely is that the process of identifying whereeach integer of an independent claim resides will involve construing the documentsand devices. Where obviousness and lack of inventive step is pleaded the documentsand devices will need to be construed with the common general knowledge also reliedupon by FPH. To respond to the requests, FPH will be required to plead matters ofevidence and law which, in my view, strays beyond the proper function of pleadingsin this case.[44] The proceeding is still at its early stages with discovery yet to be completed.The current pleading provides the necessary level of detail to fairly inform ResMed ofFPH's case and the documents and devices it will rely upon to establish its claims ofinvalidity. No further particularisation is required.[45] The application for further and better particulars in relation to the requestsfalling within category 2 is declined.Category 3 — positive allegations made by the defendant in support of itsstatement of defence[46] Category 3 comprises requests 1, 2, 8 and 13 (with requests 8 and 13 straddlingcategory 1 also). All of the requests require FPH to explain aspects of its pleading in17 Body Corporate 74246 v QBE Insurance (International) Ltd [2015] NZHC 1360 at [18(h)(iii)].its statement of defence and counterclaim. Requests 1 and 2 are directed atpara [11.7.1], request 8 at para [24.1], and request 13 at para [27.1].Requests 1 and 2[47] The relevant paragraphs of FPH's statement of defence to the infringementclaims provides as follows:11.7 Apart from the above admissions, the allegations made in paragraphs1, 2, 3, 4 and 5 are denied. In particular, the defendant says that themanufacture and sale of its Simplus, Eson, Eson 2 masks, and Iconproduct do not infringe any of the relevant claims of the relevantpatents referred to in the said paragraphs. In particular the defendantsays:NZ59206411.7.1 The headgear used on the Simplus and Eson 2 masks does not have atleast:(a) one strap where the first fabric layer and second fabric layerare joined at a joint. The defendant says that the fabric layerson the headgear for the Simplus and Eson 2 masks are notjoined, or at least there is no joint therebetween, because theydo not come into direct contact with each other.(b) a joint configured to be positioned away from the patient'sface when in use.(c) at least one strap having at least one rounded edge whenviewed in cross-section.As claimed/described in the relevant patent (claim 1 andclaims dependent thereon).[48] ResMed's requests are directed at paragraph 11.7.1(b) and (c) and require FPHto specify in what way it is said that the headgear used on the Simplus and Eson 2masks does not have:(a) at least a joint configured to be positioned away from the patient's facewhen in use; and(b) at least one strap having at least one rounded edge when viewed incross-section.[49] FPH submits that these requests are objectionable as they require FPH to giveparticulars of a negative, that is, the absence of a feature. I agree. Furthermore, theyrequire FPH to plead its construction of the terms used in ResMed's patent. That is amatter of evidence, not pleading. The requests extend well beyond what is requiredto give fair notice to ResMed of FPH's claim, or an outline of its claim. No furtherparticulars are required.Requests 8 and 13[50] Both requests 8 and 13 target FPH's pleading that the inventions claimed inNZ 597689 and NZ 608551 comprise no more than collocating known features ofmask systems available before the earliest priority date. In each case FPH pleads the"known features" relied on and the commonly available masks incorporating theseknown features.[51] The pleaded known features include the following:[in relation to NZ 597689](a) Mask systems comprising a frame, and removably attached cushioncomponents, and the frame being external to the cushion component.[in relation to NZ 608551](b) Cushions or seals that are deformable to accommodate different facialgeometries, including by the use of folds, gussets, bellows orpleats.[52] Requests 8 and 13 require FPH to specify what is meant by "frame", "cushioncomponents", and "gussets" in the above pleading. Request 13 also requires that, if itis said that the gussets are comprised in a product or document, then FPH shouldspecify the product or document.[53] Again, I consider these requests go too far. What is meant by "gussets","frames" and "cushion components" will be obvious to those familiar with the patentsand the products. To require further explanation in the pleading would be to requirematters of evidence to be pleaded to a degree of specificity which is not required bythe rules or general principles relating to particulars.[54] The application for further and better particulars in relation to the requestsfalling within category 3 is declined.Result[55] ResMed's application for further and better particulars is declined.[56] If costs cannot be agreed between the parties, then a memorandum in supportof an application for costs may be filed 10 working days after receipt of this judgment,and a memorandum in opposition filed five working days thereafter. Costs will bedetermined on the papers.[57] I direct the Registry to allocate a first case management conference before meat the first available date in the first quarter of 2018.___________________Edwards J