RE WING YICK BAMBOO SCAFFOLDERS LTD

HCMP6390/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.6390 OF 2001

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REASONS FOR DECISION

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1. The respondent is the proprietor of a short-term patent No.1024379A relating to a mixed metal-bamboo scaffolding structure, also known as MBMSS (Metal-Bamboo Matrix System Scaffolds). On 5 December 2001, the applicant issued these proceedings seeking to revoke the registration of the patent on the grounds set out in the Particulars of Objection. On 12 March 2002, the respondent filed its Answer to Particulars of Objection. Evidence in the form of affirmations from witnesses was then filed by both sides. Discovery has not yet taken place, but some disclosure and inspection of documents had taken place.

2. By summons filed on 6 March 2003, the applicant applies to amend the Particulars of Objection. The respondent does not actively oppose the application to amend, but contends that a See v. Scott-Paine order should be imposed as a condition for allowing the amendment. The order proposed by the respondent has the following features :

(1) The respondent be given a six weeks' period to elect whether it will consent to revoke its Short Term Patent No.1024379A and to withdraw the Answer to the Petition or to apply to amend the Patent.

(2) If the respondent elects to consent to the revocation of the Patent, then the applicant will have the costs of the proceedings up to and including the date of service of the Original Particulars of Objection. The costs thereafter will be to the respondent to be taxed. The taxing master will set off the taxed costs of the applicant against that of the respondent.

(3) If the respondent elects to apply for an amendment of the patent, the applicant is to pay forthwith the respondent's costs subsequent to the service of the Particulars of Objection.

(4) If the respondent elects not to consent to the revocation of the Patent or to amend the patent, then the applicant will proceed with the amendment of the Particulars of Objection, in which case the costs of and occasioned and thrown away by the amendment shall be paid by the applicant forthwith.

3. The applicant does not dispute that the respondent is entitled to the costs of and occasioned and thrown away by the amendments. The applicant is, however, not prepared to concede a See v. Scott-Paine order. The core issue in the application to amend therefore turns on what is the appropriate consequential and costs order to be made upon the amendment.

RELEVANT PRINCIPLES

4. See v. Scott-Paine orders originate from the case of See v. Scott-Paine [1933] 50 RPC. The purpose of such an order has been explained by Slade LJ in Williamson v. Moldline [1986] RPC 556, at 563-4 as follows :

" I think it undeniable that the form of an 'Earth Closet' order has much to commend it, at least in many cases where a defendant in a patent action seeks leave to amend his particulars of objections. The preparation of such actions for trial is likely to be particularly expensive, because of the need for experimentation and the employment of independent experts to give evidence. In the common case, where at the date of his original pleading the defendant had the knowledge or means of knowledge which would have enabled him originally to plead those matters which he seeks to plead by the proposed amendment, an 'Earth Closet' order may very well be thought to work substantial justice. For in such a case a plaintiff may well be justified in making observations such as this to the court:

'If, at the time when the defendant served his original particulars of objections, I had known that he was going to rely on the new point now sought to be raised, I might well have discontinued my action. If, however, after further investigation of the legal and factual position in the light of this new point, I now find that there is a valid objection to my patent and accordingly I, sensibly, decide to discontinue my action, it is only fair that the defendant should be ordered to pay the unnecessarily wasted costs which I have incurred since service of the original particulars of objection'.

The rationale of the 'Earth Closet' order was described by Chitty J. in rather similar terms in Ehrlich v. Ihlee (1887) 4 R.P.C. 115 at 117 and 118. Typical examples of cases where the order may be manifestly appropriate are cases where a defendant seeks to introduce by amendment objections of obviousness, or want of novelty, when by making appropriate enquiries he could readily have discovered the availability of such pleas when he served his orignal pleading. Mr. Young, I think, implicitly accepted that, because of the expense of patent actions, there may fall on defendants in such actions a rather heavier duty to attempt to get their tackle in order before pleading than would fall on them in other actions, so as to avoid unnecessary wastage of costs."

5. It used to be that the imposition of a See v. Scott-Paine order was almost as a matter of course. The current judicial trend, however, recognizes that costs is a matter of discretion and See v. Scott-Paine orders should only be imposed in appropriate case. The authorities also recognize that See v. Scott-Paine orders can in some circumstances work injustice.

6. In GEC Alsthom Limited's patent [1996] FSR 415, at 418, Laddie J identified two situations where too-ready imposition of See v. Scott-Paine orders may result in hardship. Firstly, while a plaintiff who alleges infringement of a patent will be able to prepare his case at his own speed before launching the action, the defendant competitor, however, has to put together an attack on the validity of the patent within the limited time set by the rules of court. The search for prior art, on the other hand, is frequently time consuming and difficult. The risk of a See v. Scott-Paine order may force an attacking party not to put forward additional prior art that comes to his attention as the case proceeds. This is particularly so where the validity of the patent is seriously in doubt, in which case the patentee may seize upon the opportunity to relinquish the patent while making the attacking party pay most of the costs of the action. Secondly, if See v. Scott-Paine orders were imposed without proper, careful and sensible regard to what can reasonably be expected by way of preparation by the defendant, then a defendant may feel obliged to engage in massive search for prior art at an early stage. The attended costs may be wasted given that patent proceedings do not always reach trial and infringement proceedings are in some cases a "try-on" by the patentee.

7. Laddie J therefore considers that regard should be given to all relevant facts including the timetable of the proceedings, the lateness of the amendment, the explanations for the lateness and whether the patentee is likely to be taken by surprise. It was pointed out that the overwhelming obligation of the court is to try to do justice between the parties. He must consider whether there has been unnecessary wastage of cost. In deciding whether to make a See v. Scott-Paine order, a major factor to be taken into account is whether the attacking party had been reasonably diligent in relation to the prior art enquiries.

PROPOSED AMENDMENTS

8. In the present case, the applicant seeks principally to amend the particulars of the prior art and the prior use. The amendments are substantial. Previously, the applicant relies on eight documents as constituting the prior art and four prior users by one Lai Chi Hung as follows :

(A) Prior art

(1) a plan drawing made on or about 28 April 1979 for the construction of 海洋綜合樓in Guangzhou;

(2) a plan drawing made in or about June 1999 for the construction of 聚龍閣in Guangzhou;

(3) a June 1983 publication;

(4) a May 1994 publication;

(5) an October 1995 publication;

(6) a March 1997 publication;

(7) an April 1997 publication; and

(8) an April 1998 publication.

(B) User

(1) The use of (A)(1) plan drawing to construct scaffolding for the construction of 海洋綜合樓;

(2) The use of (A)(2) plan drawing to construct scaffolding in the construction of 聚龍閣;

(3) The use of (A)(3) to (8) publications to construct scaffolding in five construction projects between 1980 and 1998 in Guangzhou; and

(4) The use of (A)(3) to (8) publications to construct scaffolding in the same five construction projects.

9. The proposed amendments involve :

(1) Abandoning four of the originally pleaded prior art;

(2) Substituting two publications among the originally pleaded prior art by their earlier editions;

(3) Adding six new publications;

(4) Abandoning all the alleged users; and

(5) Adding three new prior users.

REASONS FOR DECISION

10. As mentioned by Laddie J and in several other authorities : Wimmera Industrial Minerals Pty Ltd v. RGC Mineral Sands Ltd (1999) 46 IPR 173 at 176, CIL International Ltd v. Vitrashop Ltd [2002] FSR 67, A'Van Campers Pty Ltd v. Camoflag Pty Ltd [2003] FCA 353, a primary consideration of the court in deciding whether to make a See v. Scott-Paine order is whether the party applying to amend has exercised reasonable diligence in seeking out the prior art and prior user. For the respondent, it is pointed out that there is a conspicuous silence as to the reasons why the applicant did not plead or could not have pleaded the new prior art and users in the Original Particulars of Objection. The applicant, on the other hand, argues that the amendments were sought once the new materials came to its attention and that the amendments come as no surprise to the respondent since the new prior art and users had been disclosed in the evidence filed on behalf of the applicant. It is said that there is thus no unfairness to the respondent.

11. Evidently, the materials before the court do not show what enquiries the applicant had carried out in search of prior art and prior users before it launched these proceedings. Neither do they explain why the new prior art and users were not included in the original Particulars of Objection. The materials certainly fall short of making out a case that the applicant, despite reasonable diligence, only discovers the new prior art and users after the commencement of these proceedings and the filing of the Particulars of Objection.

12. The abandonment of four of the originally pleaded prior art and all of the originally pleaded prior users is put on the basis that the applicant came to discover a fundamental flaw in the evidence of Lai Chi Hung after the filing of Lai's 2nd affirmation. As a result, the applicant feels that it can no longer rely on Lai's evidence, and, because there is no evidence in respect of the source and date of publication of the two plan drawings, the applicant has to abandon some of the originally pleaded prior art and all the originally pleaded prior users.

13. In the absence of evidence to show what steps the applicant had taken to verify the veracity of Lai's evidence before relying upon it to launch these proceedings, this explanation is no evidence of reasonable diligence. It does not demonstrate that the abandonment of the four originally pleaded prior art and the originally pleaded prior users is unavoidable despite due efforts on the applicant's part.

14. As to the addition of some of the new prior art and prior users, it is said that they were not known to the applicant before Professor Chen Sheng Ze (陳聖澤) referred to them in his report exhibited to his affirmation filed on 14 June 2002 and before Mr Poon Kai Kit Joe gave his 2nd affirmation filed on 10 January 2003. Again, in the absence of evidence showing the applicant's effort in establishing the prior art and user, it cannot be said that the applicant is not in a position to discover the new prior art and users until Professor Chen and Mr Poon rendered their report and affirmation. The evidence does not show the publications mentioned by Professor Chen and Mr Poon to be obscure or restricted publications such that they would not have been known even with reasonable diligence. As to the two publications referred to by Mr Choi Chi Ming (蔡志明) in his 2nd affirmation, it is said that they are internal documents of Hong Kong & Kowloon Bamboo Scaffolders General Merchants Association and only available in the trade of construction. But the fact is the applicant does have access to the Association. Mr Choi Chi Ming and Mr Lai Kwok Hung (黎國雄) who had made affirmations for the applicant had been and are officers of the Association. Mr Choi was in fact part of the Hong Kong delegation to Guangzhou, during which the September 1993 publication was obtained. It would also appear from Mr Choi's 2nd affirmation that he and members of the Association were aware of the May 1993 publication in as early as 1993.

15. The fact that some of these publications and users were mentioned in Professor Chen and Mr Poon's 2nd affirmation will mean the amendments do not present any great surprise to the respondent. But the respondent cannot reasonably be expected to meet them on the basis that they form part of the prior art and users relied upon by the applicant. More importantly, it does not meet the objection of wastage of costs occasioned by the need to meet the now abandoned prior art and users.

16. Additionally, the court must note that this is a case brought by the applicant for the revocation of the respondent's patent. The applicant, being the attacking party, is not subject to the pressure of time as is in the case of a defendant who seeks to challenge the validity of the patent upon being sued for infringement by the patent holder. Indeed, the 1st letter before action from the applicant came in July 2001. Prior to the commencement of these proceedings in December 2001, the applicant had issued an action on 23 November 2001 but was discontinued in December 2001 due to procedural considerations. The kind of unfairness resulting from the award of a See v. Scott-Paine order as identified by Laddie J does not therefore apply. It is reasonable to expect the applicant to have conducted a careful and proper enquiries as to prior art and user. It is accordingly incumbent upon the applicant to explain why these new prior art and users were not or could not have been included in the original Particulars of Objection.

17. The matter can also be approached from another perspective. To the extent the applicant says that the abandonment of the bulk of the originally pleaded prior art and the whole of the originally pleaded prior users is occasioned by the discovery of the falsity in Lai Chi Hung's evidence, the applicant must be taken to have accepted that it cannot succeed in these proceedings on the basis of Lai's evidence. For that reason, the applicant has to look to the new prior art and users. Effectively, the applicant is proceeding on a differently pleaded case. Viewed in this way, there is no injustice to the applicant in granting the order sought by the respondent. The respondent should be afforded an opportunity to reconsider its approach to these proceedings and be compensated for costs unnecessarily incurred. The fact that the materials were already disclosed in the evidence only means that there is no unfairness in allowing the amendments.

18. For these reasons, I am of the view that in allowing the amendment of the Particulars of Objection, it is appropriate to make an order along the line proposed by the applicant, and I so order.

CONCLUSIONS

19. The order I make is as follows :

(1) The applicant do have leave to amend its Particulars of Objections herein as underlined in red shown in the draft attached to its Summons dated 6 March 2003 within 14 days from 3 June 2003.

(2) The service of the said Amended Particulars of Objection be dispensed with.

(3) The respondent do within six weeks from the date of this order elect whether it will consent to the revocation of its Short Term Patent No.1024379(A) ("the Patent") and to withdraw its Answer to the Petition herein.

(4) If the respondent shall elect to consent to the revocation of the Patent and shall give notice thereof to the applicant within the time aforesaid, then the applicant's costs of these proceedings be taxed up to and including the date of service of the original Particulars of Objections and the respondent's costs of these proceedings subsequent to such date be taxed down to and including this application and this order, and the taxing master is to set off the costs of the applicant and of the respondent to be so respectively taxed and certify to which of them the balance after such set-off is due, and that such balance be paid by the party from whom to the party to whom the same shall be certified to be due.

(5) If the respondent shall elect not to consent to the revocation of the Patent or shall not give notice to the applicant for such consent within the time aforesaid, then :

(a) the respondent do have leave to file an Amended Answer to the Amended Particulars of Objections within the period of the election as aforesaid; and

(b) costs of and occasioned and thrown away by the amendment be paid by the applicant to the respondent forthwith to be taxed if not agreed.

(6) The parties be at liberty to apply.

(7) The costs of this application including the costs of the hearing on 3 June 2003 be to the respondent in any event.