Allsop, Justice James --- "Expert Material and Evidence in Patent and Trade Mark Matters in the Office and on "Appeal"" (FCA) [2005] FedJSchol 7

EXPERT MATERIAL AND EVIDENCE IN PATENT AND TRADE MARK MATTERS IN THE OFFICE AND ON “APPEAL”

Address by the Honourable Justice James Allsop to the Institute of Patent and Trade Mark Attorneys of Australia 2005 Annual Conference Gold Coast – April 2005

There has been much discussion in recent years in fora such as this in different disciplines about the expectations of courts in relation to expert evidence.

That discussion has tended to concentrate on two issues or themes, which (it is important to understand) are inter-related:

1. independence and the role of the expert; and
2. the form of expert evidence.
   

Two other issues particularly concern patent and trade mark attorneys are:

1. the method of preparation of expert reports in patent cases: see in particular in this respect 3M v Tyco [2002] FCAFC 315; (2002) 56 IPR 248; and
2. the inter-relationship between hearings before the Office and the Court.
   

I wish to begin by identifying some foundational issues which bear upon these questions. They are issues which should be, at all times, at the forefront of the mind of the patent attorney in dealing with expert evidence. They are not, on their face, anything to do with evidence, but an understanding of them will assist you to appreciate some of the problems that have arisen about procedure.

The Office hearings and the Court “appeal” are (oxymoronically) identical and yet fundamentally different.

The Court hearing, though called an “appeal”, is not an appeal at all, other than being, in one sense, another attempt at resolution of the same issue.

The hearing before the Office is not the exercise of judicial power. It is the exercise of executive or administrative power. The hearing before the Court is the exercise (and the exercise in the original jurisdiction of the Court for the first time) of the judicial power of the Commonwealth.

This needs to be appreciated and its background understood.

In a series of tax and intellectual property cases from 1925 (with the First British Imperial Oil case – British Imperial Oil Co Ltd v Federal Commissioner of Taxation [1925] HCA 4; (1925) 35 CLR 422) to 1977 (R v Quinn; Ex parte Consolidated Foods [1977] HCA 62; (1977) 138 CLR 1) the High Court worked out the principles dealing with the distribution of power between the executive and the courts in connection with powers that are of a kind that can be exercised by either the executive or judicial branch of government.

The distinctions between Parliamentary power, executive power and judicial power are drawn by the Constitution. Some powers are obviously for Parliament alone, as the first arm of government: see chapter I of the Constitution. Passing legislation is the obvious example. This is the function of making law.

Some powers are obviously to be exercised by the executive, the second branch of government: see chapter II of the Constitution. Declarations of war or peace, the making of treaties, the formulating of government policy and the grant of mercy to convicted criminals. One would not necessarily expect either Parliament or a judge to undertake any of these things.

Some powers are obviously only for courts, the third arm of government: chapter III of the Constitution. Adjudication of criminal guilt and a declaration that a law is unconstitutional are functions which one would only expect a court to undertake.

These are not exhaustive lists.

Some powers or functions lie somewhere in between. If a customs official decides to levy duty at X% on your imported goods, he or she is not usurping the courts’ exercise of judicial power of the Commonwealth. Yet he or she has, as between you and the Crown, decided that the law is such as to lead to the conclusion that you must pay duty of $Y. There may be an “appeal” to a reviewing officer who may have the function of examining or even remaking the decision. There may be an “appeal” to the Administrative Appeals Tribunal. In all this, there may be an element of a controversy; there may be an element of someone making a decision about rights, about the meaning of a statute and about the consequences of such. There will, however, be no conclusiveness. In part, this is by reason of who is deciding it – by definition it cannot be conclusive, meaning that the decision is always open to collateral challenge because the customs officer is not a judge. One may detect a degree of circularity in this. There is an element of the asserted or agreed characterisation of the type of power being exercised affecting the content of the power being exercised. So, if we are all agreed that the decision is being made by a clerk behind the counter at Customs, we know that he or she cannot make a decision settling a controversy about present rights according to law in a way that is immune from challenge. Another way of looking at the issue is to say the customs officer has not decided any rights, he or she has merely purported to apply or execute the law which either does or does not provide for that result.

For present purposes, it is a helpful taxonomy to divide functions into three categories: those that can only be conferred on courts; those that can only be conferred on administrators; and those that can be given to either: see British Imperial Oil v Federal Commissioner of Taxation [1926] HCA 58; (1926) 38 CLR 153 (the Second British Imperial Oil case) at pp 175-76. It is the third category with which we are concerned. The framework of analysis in dealing with this third category was laid down in High Court and Privy Council cases in different generations that concerned tax “appeals” and intellectual property “appeals”. In a series of cases the High Court recognised that there were some powers not distinctively judicial or administrative which could be assigned to either arm of government subject to certain requirements.

In this middle category the High Court has stated that the repository of the power and the technique and method used by that repository is the determining factor in understanding what power is being exercised. In other words it is the same subject matter being dealt with but by two different types of power as Kitto J said in R v Spicer; Ex parte Australian Builders’ Labourers’ Federation [1957] HCA 81; (1957) 100 CLR 277:

The reason for concluding in some such cases that the judicial character of the repository imparts a judicial character to the power is simply that the former provides a ground for an inference, which in those cases there is nothing or not enough in other considerations to preclude, that the power is intended and required to be exercised in accordance with the methods and with a strict adherence to the standards which characterise judicial activities.

...

The circumstances in which the power is to be exercisable may be prescribed in terms lending themselves more to administrative than to judicial application. The context in which the provision creating the power is found may tend against a conclusion that a strictly judicial approach is intended. And there may be other considerations of a similar tendency.

Thus, in some circumstances, the same subject matter can be given to either a court or an administrator to make a decision. In one sense the same decision is being made. But a different species of power is being used to deal with the issue: for instance, the grant of a patent or the hearing of opposition proceedings. If the Office has heard the matter, there is an appeal to the Court. The appeal is described in language which indicates that the subject matter of the Court hearing is identical to that undertaken by the Office. When the administrator is dealing with the matter it is, in effect, granting the right. It is exercising administrative power. The administrator must attend to the statute to understand whether the right should be granted. Legal questions are of course involved. Material (not strictly speaking evidence) is what is relevant to the exercise of executive power. The administrator has it within his or her power to set policy or guidelines as to what kind of material he or she will find helpful. This will depend upon the issue at hand and it will be a decision that will need to be rational and conform to the statutory task before him or her. The distinction between evidence (in a court hearing) and material (in the exercise of the executive power) can be seen in Pochi [1979] AATA 64; (1979) 36 FLR 482 and in the Copyright Tribunal decision of Audio-Visual Copyright Society Ltd v Foxtel Management Pty Ltd & Ors (No 3) [2005] AcopyT 1.

When the matter goes on “appeal” the original (not appellate) jurisdiction of the Court is involved. It is the first exercise of judicial power. Essential to the exercise of judicial power is the conclusive determination of legal rights (subject to appeal). It is not the grant of the right. It is the determination as to whether in law the party is entitled to the right. Also essential to the exercise of judicial power is the judicial method and included within that is the notion of the rules of evidence. The rules of evidence become part of the fabric of the judicial process, as opposed to a mere choice of approach by the administrator. As I said, the administrator may, because of the proprietary nature subject matter being dealt with, wish to follow as closely as possible the rules of evidence. However, this a choice made by the administrator rather than part of the fabric of the administrative function.

If these fundamental considerations are borne in mind a number of debates are clearer in outline.

Must “evidence” be the same before the Office and the Court? The answer is clearly, no. Before the Court there will need to be admissible evidence for the exercise of judicial power under the Evidence Act 1995 (Cth). (Note, however, if matters are not truly in dispute to avoid unnecessary expense or delay the Court can dispense with some aspects of the rule of evidence: s 190(3) of the Evidence Act).

Before the Office, the nature of the material put forward will depend upon the approach of the parties and the approach of the Office and any relevant legislation, including delegated legislation. The form of the material is not determined by the nature of the power being exercised, though it may be influenced by the subject matter at hand. The more proprietorial and difficult the issue, perhaps the more precise should be the material and the closer it should conform with the rules of evidence.

What is the proper role and place of s 160 of the Patents Act and s 197 of the Trade Mark Act? Section 197 of the TM Act and s 160 of the Patents Act govern the powers of the Federal Court on the hearing of an appeal. They are in identical terms:

On hearing an appeal against a decision or direction of the [Registrar/Commissioner] the Federal Court may do any one or more of the following:

(a) admit further evidence orally, or on affidavit or otherwise;

(b) permit the examination and cross-examination of witnesses, including witnesses who gave evidence before the [Registrar/Commissioner];

(c) order an issue of fact to be tried as it directs;

(d) affirm, reverse or vary the [Registrar's/Commissioner’s] decision or direction;

(e) give any judgment, or make any order, that, in all the circumstances, it thinks fit;

(f) order a party to pay costs to another party.

Order 58 rule 8 of the Federal Court Rules is in the following terms:

(1) Material before the Commissioner for the purpose of the decision appealed from is, with the leave of the Court and saving all just exceptions, admissible in evidence on the hearing of the appeal.

(2) At the directions hearing in respect of an appeal from a decision under the Patents Act, the Court may give directions, for the purposes of paragraph 160 (a) of that Act, as to the giving of further evidence.

Some care needs to be taken in the exercise of any power which would prevent a party adducing evidence before the Court on the basis that it was not led before the Office. It is a significant step to deny a party the entitlement to call evidence, on the first exercise of judicial power of the Commonwealth, remembering that is not an appeal proper.

What is the proper approach in allowing in evidence in Court which has been before the Office? If the evidence is admissible by the rules of evidence it can be admitted. If it is not admissible under the rules of evidence then subject to matters being admitted when they are not bona fide in dispute or when to comply with the rules of evidence would cause or involve unnecessary expense or delay (s 190(3) of the Evidence Act) it would be rejected.

How this works out in dealing with Office hearings and Court appeals depends upon the individual case. It may be that it is felt that a tolerably informal presentation of material can and will satisfy the Office, with an emphasis on the technical aspects of the material. In an appeal, the nature of the proceedings must be borne in mind. However, this does not mean that extraordinary lengths need to be gone to to bring matter into proper form. If material is not genuinely in dispute there is no reason why the Court cannot receive less formal forms of evidence (s 190(3) of the Evidence Act). However if the matter is in issue attendance to the form of the evidence and its admissibility will become important.

Role, Form and Process

It is often said (but it is not a cliché) that the role of the expert is to provide independent assistance to the Court. Similarly, apparently independent experts are there to provide independent assistance to the Office. You are all familiar with the Federal Court Practice Note on Guidelines for Expert Evidence. I annex it in case some of you are not. It is fundamental to understand this practice note.

Litigation creates combat. Combat drives neutrals into camps. Therefore, it is a constant human struggle for an expert, who is retained in the matter, to retain his or her objectivity in a real sense. But it is a struggle that must be waged even if, on occasions, there appears to be little lasting effect – similar, perhaps, to the struggle of medieval Marcher Barons on the Welsh border.

What a judge is really interested in is the display in an expert witness of a willingness to engage, reassess and assimilate and to provide an honest view in the process engaged in in court of dialogue with often highly intelligent barristers.

I lecture the Bar Association each year on the cross-examination of experts. I say to them that the expert may assume the barrister to be rude and ignorant. Do not expect that. Anyone who has seen some of the better silks at work in a patent case or a trade mark case will know what I mean. They empty the pockets of expert witnesses taking out all the useful information very quietly and very politely with the skill of late 18th century East End London pickpockets. They also require the expert to reassess fundamental aspects of his or her thinking. This is to be expected. It is to be engaged in. Nothing will indicate to a judge more that an expert is doctrinaire and stubborn than an unwillingness to engage in some frank interchange with counsel. You should expect the person cross-examining you to be extremely familiar with the expert’s area, in particular along the winding track through the subject matter which he or she will be taken. Along that winding track, counsel may well know more about the subject matter than the expert. This is quite possible given the often limited, but concentrated, body of knowledge which is required to be mastered for the purposes of cross-examination.

An expert does no good “winning an argument” in a dialectic debating sense with counsel. In fact, an expert is a waste of time and money if he or she is a committed arguer for the case of the party calling him or her. Money is much better spent on barristers and solicitors who are far better advocates than expert witnesses.

The judge has to be confident that the expert’s view is correct and accords with intuitive common sense. Engagement, reassessment and honest careful restatement are essential.

Independence and form are related. By form I mean the structure of the report. The reader has to be able to separate fact from opinion. Fact can be either assumed fact or fact that is or has been observed by the expert. In patent cases, the expert may be able to give actual evidence about factual matters such as common knowledge. Other factual matters may have to be assumed by the expert. It should be clear what is being assumed and what facts, if any, the expert is giving direct evidence of.

Apart from primary facts such as common general knowledge the expert will probably be either describing scientific or other principles or rules or giving opinions. One needs to understand what any such opinions are. They should not be intertwined inextricably with facts and assumptions, not making clear which is which. In Evans Deakin Pty Ltd v Sebel Furniture Ltd [2003] FCA 171 I had the misfortune to say the following about an expert report put before me:

“The report is largely a discursive body of views of someone who understands enough of litigation to put forward an argumentative case for how [X] could defend these proceedings. There are precious few accounting opinions displayed, and such as there may be are buried. ...There may well have been great value in those preparing [X]’s case obtaining the views of Mr [Z]. Such views would no doubt have assisted them in analysing and preparing the case and in marshalling and formulating arguments. That is the legitimate, accepted and well known role of expert assistance for a party preparing and running a case. Expert evidence in which a relevant opinion is given to the Court drawing on a witnesses relevant expertise is quite another thing. There is no ethical reason why it cannot be given by the person providing assistance, as long as that person and the legal advisers understand and recognise the difference between the two tasks and keep them separate.

I do not propose to dissect Mr [Z]’s report line by line. Much is assertion, submission and argument. The whole report is objected to. Such opinions as can legitimately be brought forward, if any, are sufficiently buried as to require mining to be discovered, a task which I am not prepared to perform. I reject the whole report.

Thus, it is important to make the evidence clear to have it structured soundly around a recognition of what is assumed fact, what is fact in relation to which the expert can give opinion, what scientific principles or other matters are being explained and what opinion the expert is proffering with which to assist the Court.

The Tyco problem.

In one sense the issue about expert evidence in patent cases is a function of the relevance of the opinion and the importance of independence.

If the inventive step in issue can be described as “hey, why not this?”, in circumstances where the understanding of basic principles can be seen as straightforward, it is very difficult to give much weight to someone who knows how the problem has now been solved and is now saying it was all obvious. No doubt these statements as to what was obvious will be supported by copious reference to the well known and straightforward principles. Yet if the world has been changed, even in an ever so slight way, by something which has been thought of in the context of simple principles, it is very very hard to put oneself back in the position of looking forward, not back.

Thus, without descending into a discussion of the case itself, Tyco throws up the need to think very carefully about how obviousness or non-obviousness can best be illuminated. It is not just a matter of getting words down on a piece of paper.

Tyco also throws up the importance of the distinction between assistance and evidence to which I referred in Evans Deakin. The same witness can do both in some cases. There is no absolute bar. But in patent cases, if the matter is worthwhile, it may be necessary to deal with an expert for assistance and a different expert for the evidence. If obviousness evidence is being brought in the Office then it may be appropriate to formulate it in as close to admissible form as possible. This is especially so if some form of “blackbox” evidence is to be led, wherein the patent is kept away from the expert for as long as possible. In relation to Tyco I would urge you to consider with some precision what you wish in any particular case the expert to say. If you do want to display or illuminate reality at an earlier point in time, Tyco requires you to think hard about how you do it.

It is a problem that often confronts thinking and not just thinking in patent cases. History can often be read as the ex post facto description of what has happened. That can be something little more than a chronological catalogue of events. However, often, great history is written by men and women who can place themselves and the reader in the position of the time, looking forward. Looking into the future one sees nothing. One has hopes and fears and infinite possibilities. It is that which needs to be recognised. An historian by the name of John Lukacs in a number of books has skilfully removed the blinkers that the allied victory of World War II places on most history of that period. In one of his books, he has given a chilling description of the real political and human debate in the British Cabinet over a period of five days in one week in late May 1940 in London when a very hard decision had to be made – whether to capitulate to what appeared to be overwhelming force and almost certain defeat and thereby, perhaps, save British society and people from physical destruction; or to fight and face likely physical destruction, but save a national spiritual independence for the future and a future society based on the ideals of freedom. That was a choice, and it was a real choice. Few people realise the importance of that particular British Cabinet’s (argued and contested) decision. They don’t realise this because they know the answer. They look back from 1945.

By knowing what happened, you can fail to appreciate the living reality of the earlier existence. That is the essential task of the judge in an obviousness case. To assess the reality at an earlier point of time without looking back. Words such as hindsight often trip of the tongue, but if one appreciates the difficulty of moving back in time into a different reality, one understands what the judges were getting at in Tyco in relation to the need for independent thought about the issue.

ANNEXURE A

Federal Court of Australia

Guidelines for Expert Witnesses in Proceedings in the Federal Court of Australia

This Practice Direction replaces the Practice Direction on Guidelines for Expert Witnesses in Proceedings in the Federal Court of Australia issued on 4 September 2003.

Practitioners should give a copy of the following guidelines to any witness they propose to retain for the purpose of preparing a report or giving evidence in a proceeding as to an opinion held by the witness that is wholly or substantially based on the specialised knowledge of the witness (see - Part 3.3 - Opinion of the Evidence Act 1995 (Cth)).

M.E.J. BLACK
Chief Justice
19 March 2004

Explanatory Memorandum

The guidelines are not intended to address all aspects of an expert witness’s duties, but are intended to facilitate the admission of opinion evidence (footnote #1), and to assist experts to understand in general terms what the Court expects of an expert witness giving opinion evidence. Additionally, it is hoped that the guidelines will assist individual expert witnesses to avoid the criticism that is sometimes made (whether rightly or wrongly) that expert witnesses lack objectivity, or have coloured their evidence in favour of the party calling them.

Ways by which an expert witness giving opinion evidence may avoid criticism of partiality include ensuring that the report, or other statement of evidence:

(a) is clearly expressed and not argumentative in tone;
(b) is centrally concerned to express an opinion, upon a clearly defined question or questions, based on the expert’s specialised knowledge;
(c) identifies with precision the factual premises upon which the opinion is based;
(d) explains the process of reasoning by which the expert reached the opinion expressed in the report;
(e) is confined to the area or areas of the expert’s specialised knowledge; and
(f) identifies any pre-existing relationship between the author of the report, or his or her firm, company etc, and a party to the litigation (eg a treating medical practitioner, or a firm’s accountant).

An expert is not disqualified from giving evidence by reason only of the fact of a pre-existing relationship with the party that proffers the expert as a witness, but the nature of the pre-existing relationship should be disclosed. Where an expert has such a relationship with the party the expert may need to pay particular attention to the identification of the factual premises upon which the expert’s opinion is based. The expert should make it clear whether, and to what extent, the opinion is based on the personal knowledge of the expert (the factual basis for which might be required to be established by admissible evidence of the expert or another witness) derived from the ongoing relationship rather than on factual premises or assumptions provided to the expert by way of instructions.

All experts need to be aware that if they participate to a significant degree in the process of formulating and preparing the case of a party, they may find it difficult to maintain objectivity.

An expert witness does not compromise objectivity by defending, forcefully if necessary, an opinion based on the expert’s specialised knowledge which is genuinely held but may do so if the expert is, for example, unwilling to give consideration to alternative factual premises or is unwilling, where appropriate, to acknowledge recognised differences of opinion or approach between experts in the relevant discipline.

The guidelines are, as their title indicates, no more than guidelines. Attempts to apply them literally in every case may prove unhelpful. In some areas of specialised knowledge and in some circumstances (eg some aspects of economic “evidence” in competition law cases) their literal interpretation may prove unworkable. The Court expects legal practitioners and experts to work together to ensure that the guidelines are implemented in a practically sensible way which ensures that they achieve their intended purpose.

Guidelines

1. General Duty to the Court (footnote #2)

1.1 An expert witness has an overriding duty to assist the Court on matters relevant to the expert’s area of expertise.
1.2 An expert witness is not an advocate for a party.
1.3 An expert witness’s paramount duty is to the Court and not to the person retaining the expert.

2. The Form of the Expert Evidence (footnote #3)

2.1 An expert’s written report must give details of the expert’s qualifications, and of the literature or other material used in making the report.
2.2 All assumptions of fact made by the expert should be clearly and fully stated.
2.3 The report should identify who carried out any tests or experiments upon which the expert relied in compiling the report, and state the qualifications of the person who carried out any such test or experiment.
2.4 Where several opinions are provided in the report, the expert should summarise them.
2.5 The expert should give reasons for each opinion.
2.6 At the end of the report the expert should declare that “[the expert] has made all the inquiries which [the expert] believes are desirable and appropriate and that no matters of significance which [the expert] regards as relevant have, to [the expert’s] knowledge, been withheld from the Court.”
2.7 There should be included in or attached to the report (i) a statement of the questions or issues that the expert was asked to address; (ii) the factual premises upon which the report proceeds; and (iii) the documents and other materials which the expert has been instructed to consider.
2.8 If, after exchange of reports or at any other stage, an expert witness changes a material opinion, having read another expert’s report or for any other reason, the change should be communicated in a timely manner (through legal representatives) to each party to whom the expert witness’s report has been provided and, when appropriate, to the Court (footnote #4).
2.9 If an expert’s opinion is not fully researched because the expert considers that insufficient data are available, or for any other reason, this must be stated with an indication that the opinion is no more than a provisional one. Where an expert witness who has prepared a report believes that it may be incomplete or inaccurate without some qualification, that qualification must be stated in the report (footnote #4).
2.10 The expert should make it clear when a particular question or issue falls outside the relevant field of expertise.
2.11 Where an expert’s report refers to photographs, plans, calculations, analyses, measurements, survey reports or other extrinsic matter, these must be provided to the opposite party at the same time as the exchange of reports (footnote #5).

3. Experts’ Conference

3.1 If experts retained by the parties meet at the direction of the Court, it would be improper conduct for an expert to be given or to accept instructions not to reach agreement. If, at a meeting directed by the Court, the experts cannot reach agreement about matters of expert opinion, they should specify their reasons for being unable to do so.

footnote#1
As to the distinction between expert opinion evidence and expert assistance see Evans Deakin Pty Ltd v Sebel Furniture Ltd [2003] FCA 171 per Allsop J at [676].

footnote #2
See rule 35.3 Civil Procedure Rules (UK); see also Lord Woolf “Medics, Lawyers and the Courts” [1997] 16 CJQ 302 at 313.

footnote #3
See rule 35.10 Civil Procedure Rules (UK) and Practice Direction 35 – Experts and Assessors (UK); HG v the Queen [1999] HCA 2; (1999) 197 CLR 414 per Gleeson CJ at [39]-[43]; Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd [2000] FCA 1463 (FC) at [17]- [23]

footnote #4
The “Ikarian Reefer” [1993] 20 FSR 563 at 565

footnote #5
The “Ikarian Reefer” [1993] 20 FSR 563 at 565-566. See also Ormrod “Scientific Evidence in Court” [1968] Crim LR 240.