1 This afternoon, I thought it might be useful to make some observations on a topic that has been the subject
of two decisions of the Full Court of the Federal Court of Australia late last year (University of British Columbia & Anor v Conor Medsystems Inc (2006) 70 IPR 248, per Emmett, Stone and Bennett JJ and JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2006) 154 FCR 348, per Emmett, Stone and Bennett JJ) and is the subject of a number of cases before the Court all of which will
fall to be determined according to their own particular facts. However, it seems to me that some comments on the principles
that require consideration in determining who might be ‘entitled’ to apply for a patent for an invention for the
purposes of s 15 of the Patents Act 1990 (Cth) and the susceptibility of a patent to revocation on the ground that the patentee is not entitled to the patent, for the
purposes of s 138(3)(a), it timely.
2 Some things old are new again.
3 Before turning to those issues it is important to bear in mind some significant aspects of the history of
these provisions.
4 The origins of the patent system in England lie in the royal grants of trade and manufacturing monopolies
within the prerogative of the Crown and later the subject of some legislative grants.
5 The privilege conferred by the monopoly is said to be good in law because the inventor ‘bringeth to
and for the common wealth a new manufacture by his invention and he should have a privilege for a convenient time’: 3 Coke’s Institutes 184.
6 Importantly, the early cases held that the monopoly could be granted not only to the inventor but also to
the person who first brought the new invention into England. The question would metaphorically be asked, ‘And did those
feet of this invention previously walk upon England’s pastures green?’ If not, the importer of the invention would
be treated as a constructive inventor.
7 The Statute of Monopolies (1623) did not provide for regulated monopolies but rather it abolished the grant or profligate sale of prerogative grants which
had the effect of constraining trade but nevertheless preserved by s 6 the grant of patents to the ‘true and first inventor or inventors’ of any new manufacture. The phrase ‘first inventor’ was to have particular resonance in the patent law of the United
States. The inventor was the person who made the discovery, that is, the idea originated in the inventor’s own mind.
The inventor, after the Statute of 1623 was still held, in 1693, to include the person who first introduced the invention into
the realm (Edgeberry v Stephens (1693) 2 Salk 447).
8 Until 1883, a patent could only be granted to the ‘true and first inventor’. The Patents, Designs and Trade Marks Act 1883, 46 & 47 Vict, c 57 provided that any person could make application for a patent; two or more persons could make a joint
application; and a patent could be granted to several persons, even if only one of them was the true and first inventor.
9 By the 1880s, the industrial revolution had merged into its second phase. Eric Hobsbawm (The Age of Revolution: Europe 1789 – 1848, Weindenfeld & Nicolson Ltd) maintains that the industrial revolution emerged properly in the 1780s but its effect was not
fully felt until the 1830s or 1840s. The first industrial revolution merged into the second industrial revolution from the 1850s
when technological and economic progress seriously gained momentum with the development of steam powered ships, railways and
ultimately in the 19th century the development of the internal combustion engine and electrical power generation. At the same
time, the dominant vehicle of industrialisation throughout much of the world and particularly in England was the political theory
of capitalism. The classical political economists Adam Smith, David Ricardo, Jean‑Baptiste Say and John Stewart Mill
published analyses of social organisation that posited that the means of production ought to be mostly privately owned and operated
for profit and the functional activities of distribution, production and pricing of goods and services ought to be determined
largely in a free market in which individuals (and groups) retained the right to trade capital, goods, labour and money. Arnold
Toynbee’s lectures posthumously published in 1884 in which he analyses the theories of Adam Smith, Thomas Malthus and David
Ricardo were also influential (Arnold Toynbee was the uncle of the famous historian Arnold Joseph Toynbee 1889 - 1975).
10 The significance of the consolidation and emergence of the second industrial revolution and the guiding influence
of capitalism as a doctrine is that social organisation recognised that inventors might join with investors to transition key
enabling technology from the stage of invention to working deployed applications of creative effort. As a result, investors
in joining with inventors could acquire interests in an invention or a patent. Investors might take assignments of a right to a patent or seek security by means of a deposit of the patent certificate with either an investor or a lender.
11 However, doubts began to emerge that an importer could now be granted a patent under the 1883 Act and, more
importantly, doubts emerged that several persons could obtain a patent jointly if one of them was not the inventor. Gladstone’s Government in 1885 was not prepared to tolerate doubts about the relationship between inventors
and investors and, as a result, the Patents, Designs and Trade Marks (Amendment) Act 1885 48 & 49 Vict, c 63 was passed by the English Parliament. Section 1 provided that the Act was to be read together with
the 1883 Act. By s 5, the legislation provided that, ‘whereas doubts have arisen whether under the principal Act a patent
may lawfully be granted to several persons jointly, some or one of whom only are or is the true and first inventors or inventor;
be it therefore enacted and declared that it has been and is lawful under the principal Act to grant such a patent’. Note
the observations of Finkelstein J, Conor Medsystems Inc. v The University of British Columbia (No. 2) [2006] FCA 32 [3] – [8].
12 In Australia, the Patents Act 1903 (Cth) as the reading speech confirms, confined the patent rights to the ‘actual inventor’ thus abolishing the
notion of a ‘constructive inventor’ by importation. However, the inventor’s assignee could apply or, importantly,
‘the inventor jointly with the assignee of a part interest in the invention’. Also, the legal representative of
such a person could apply and any person to whom the invention has been communicated by the actual inventor, could apply. The
Act required the filing of a declaration reciting the facts demonstrating the standing of the applicant.
13 Section 32 of the 1903 Act is in these terms:
“32(1) Any person whether a British subject or not may make an application for a patent.
(2) Two or more persons may make joint application for a patent and a patent may be granted to them jointly.
(3) Any of the following persons may make application for a patent –
(a) the actual inventor; or
(b) his assignee agent attorney or nominee; or
(c) the actual inventor or his nominee jointly with the assignee of a part interest in the invention; or
(d) the legal representative of a deceased actual inventor or of his assignee; or
(e) any person to whom the invention has been communicated by the actual inventor his legal representative or assignee
(if the actual inventor, his legal representative or assignee is not resident in the Commonwealth).’
14 The 1952 Patents Act (Cth), by s 34, adopted a different approach to an application by an inventor together with an assignee of an interest by conferring
an entitlement on ‘a person who would, if a patent were granted upon an application made by (the actual inventor, the assignee
of the actual inventor, a relevant legal representative of such a person or a person to whom the invention had been communicated)
be entitled to have the patent assigned to him. Section 34(2) provided that two or more persons may make a joint application
for a patent and a patent may be granted to them jointly. Section 34(3), importantly, provided that ‘an assignee of a
part interest in an invention may make a joint application for a patent with any of the persons referred to in subsection (1) of this section and a patent
may be granted to them jointly’.
15 Section 34, for completeness, is in these terms:
‘34(1) Any of the following persons, whether a British subject or not, may make an application for a patent:
(a) the actual inventor;
(b) the assignee of the actual inventor;
(c) the legal representative of a deceased actual inventor;
(d) the legal representative of a deceased assignee of the actual inventor;
(e) a person to whom the invention has been communicated by the actual inventor, his legal representative or assignee (if
the actual inventor, his legal representative or assignee is not resident in Australia);
(f) the assignee of such a legal representative as is specified in paragraph (c) or (d) of this subsection;
(fa) a person who would, if a patent were granted upon an application made by a person referred to in any of the preceding paragraphs,
be entitled to have the patent assigned to him; or
(g) an agent or attorney of a person referred to in any of the preceding paragraphs.
(2) Two or more persons may make a joint application for a patent and a patent may be granted to them jointly.
(3) An assignee of a part interest in an invention may make a joint application for a patent with any of the
persons referred to in sub‑section (1) of this section and that patent may be granted to them jointly.
(4) Where at any time before a patent has been granted, a person would, if the patent were then granted, be
entitled, by virtue of an assignment or agreement made by the applicant or one of the applicants for the patent, or by operation
of law, to the patent or to the interest of the applicant in the patent or to an undivided share in the patent or in that interest
–
(a) the Commissioner may upon a request being made as prescribed, direct the application is to proceed in the name of the
person or in the names of the person and the applicant or the other joint applicant or applicants, as the case requires; and
(b) upon such a direction being given, the Act applies as if the person were the applicant or one of the joint applicants,
as the case requires.’
16 The 1952 Act preserved the philosophy of the 1903 Act about importation by providing in s 6, that ‘actual
inventor’ does not include a person merely importing an invention from abroad.
17 Those of us who have particularly worked with Universities will know that often a research team will be established
partly funded by the University, partly by bodies such as the National Health and Medical Research Council or partly funded by
grants from the Australian Research Council and partly by sponsored research involving collaboration. The field of inquiry and
the problem to be solved is defined and contributions are made to the disclosures ultimately recited in a specification defining the invention emerging out of the field of intellectual inquiry.
18 Almost universally, the preferred embodiment of the invention and the claims defining the monopoly for the invention narrow the scope of the patentable invention with the result that some of the potential claims first formulated are not pressed or are abandoned thus confining the claims
to a part of the invention that may have derived from the work of some only of the members of the team. In such circumstances, who might
be the inventor of the invention? What is the relationship between an invention and a patent for an invention defined by particular claims, in terms of an applicant’s entitlement to apply for and sustain a patent?
19 Let me give you briefly the agreed facts upon which an application was made to determine a preliminary question
of whether a patent granted to the University of British Columbia and Angiotech Pharmaceuticals Inc. was susceptible of revocation.
20 The facts were these:
1. A PCT application was filed on 19 July 1994.
2. Prior to the grant of the patent, the PCT application identified Angiotech and UBC as the persons to whom the patent was to be granted and named five inventors, A, B, C, D and E.
3. Prior to grant, the claims of the PCT application were deleted and new claims were substituted in the form as granted
in the patent.
4. A and B made no contribution to the alleged invention as claimed in any of the claims of the patent, as granted.
5. Prior to the grant of the patent A and B assigned their interests in the invention as claimed in the PCT application to UBC.
6. No steps were taken after the substitution of the new claims for the former PCT claims to remove UBC from the ‘patent
request’ as a ‘nominated person’ (being terms of art for the purposes of the Patents Act 1990 (Cth)) to whom the patent was to be granted.
7. C, D and E were the only persons who made a contribution to the alleged invention as claimed in the claims of the patent,
as granted.
8. Prior to the grant, C, D and E assigned their interest in the ‘invention’ as claimed in the PCT application
to Angiotech.
9. The patent was granted to UBC and Angiotech jointly and named A, B, C, D and E as inventors.
21 The question to be determined was whether the patent ought to be revoked either entirely or as to particular
claims on the ground that the patentee ‘is not entitled to the patent’ (s 138(3)(a)). The patentee was, of course, UBC and Angiotech jointly.
22 UBC derived an interest in the invention from two of the team members but its interest in the invention, the subject of the patent as granted, could not derive from the
inventors of the claimed invention. UBC simply remained a ‘nominated person’ to the ‘patent request’. Angiotech chose to progress the
patent request to grant on behalf of itself and UBC. The dilemma, of course, is that if one of two or more joint patentees is
not entitled to the grant of a patent, does that mean that the patent must be revoked or is it enough that one of the joint patentees
is entitled to the grant for the claimed invention, there being no other true inventor claimant outside the field of the assigned
interests.
23 That question raises the question of who is entitled to a grant of a patent. Section 15 of the Patents Act 1990 says that a patent for invention may only be granted to:
‘… a person who:
(a) is the inventor; or
(b) would, on the grant of a patent for the invention be entitled to have the patent assigned to the person; or
(c) derives title to the invention from the inventor or a person mentioned in paragraph (b); or
(d) is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).’
24 It can be seen that s 15 speaks of an inventor who invents an invention. Such a person may be granted a patent for that invention. Alternatively, a person
might ‘derive title’ to the invention from the inventor. Another alternative is that the inventor might enter into arrangements with another which have the result
that upon a patent being granted for the invention, that other person would be entitled to have the patent assigned to that person. The section contemplates various possible points on a continuum. The continuum starts with an inventor
who has made an invention. Further points along the continuum may involve the creation of rights in another which give rise to
a right of assignment of the patent when granted. Another point along the continuum might be one where a person has derived
title to the invention from the inventor and thus seeks the grant of a patent for the invention. Another point might be one
where a person has derived title to the invention from a person who would be entitled to call for an assignment of the patent once
granted. The section seems to contemplate that all such persons must ultimately show a derivation of interest from the inventor.
25 A patent if granted, may be revoked either wholly or ‘so far as it relates to a claim’ on one
of five grounds but on no other ground and the first ground is ‘that the patentee is not entitled to the patent’ (s 138(3)(a)). It should be recalled that the grant of a standard patent may be opposed on three grounds and no others, including that the
‘nominated person’ is not ‘entitled to a grant of a patent for the invention or, entitled but only in conjunction
with another’ (s 59).
26 It can be seen then that there is a certain symmetry between the provisions which govern those to whom a patent
might be granted, the basis on which an application for a patent might be opposed and the ground of entitlement upon which a patent might be revoked.
27 There is a difference of opinion in the Full Court in UBC & Anor v Conor Medsystems Inc as to whether the revocation provision means that the Court looks to s 15 and asks whether events prior to grant reveal that the patentee was not entitled to grant (like the UK Patents Act 1977) and thus the patent should go or whether, because of the use of the present tense ‘the patentee is not entitled to
the patent’ in s 138(3)(a), the section looks to events since the grant to see whether, at the date of inquiry by the Court, the grant is now unsustainable.
28 The Patents Act 1990 (Cth) starts its work with the notion of an invention conceived by one or more inventors. Third parties may acquire an interest
in that invention and usually will do so either by means of funders, investors or venture capital funds or commercialisation
arms of Universities. Third parties might take an assignment of the right to a patent derived from the invention or derive title
to the invention from the inventor. A person might acquire an interest in the patent or a right to the patent from the assignee.
29 The Act reduces an invention to the construct of a patentable invention for the purposes of a standard patent if the invention meets the requirements of s 18, that is; falls within s 6 of the Statutes of Monopolies 1623; is novel; reflects an inventive step as compared with the prior art base, prior to the priority date; is useful; and not secretly
used. See also the important role played by s 7 of the Act. Such a patent can only be granted to the s 15 field of ‘persons’
called by s 3, ‘eligible persons’, subject to the Act. One of the contended qualifications on the exclusion s 15 apparently prescribes, is the recognition that a patent may be granted
to two or more persons jointly (s 63). As to co‑owners, each of them is entitled to an equal undivided share in the patent with an entitlement to exercise
the exclusive rights, all subject to any agreement to the contrary.
30 In circumstances where there are co‑owners of a patent, the entitlement of ‘the patentee’
to grant under s 15 might simply depend upon an analysis of the conjunction of interests represented by the patentee with the result
that provided one of the joint participants in ‘the patentee’ satisfies s 15, the patentee will then satisfy s 15.
31 In the case of UBC and Angiotech, Angiotech on any view had acquired the right to obtain a patent for the claimed invention from inventors C, D and E. UBC’s presence as an applicant and grantee although not deriving any title or interest from the inventors of the claimed invention ought not to deny, in principle, qualification or eligibility to the patentee unless s 15 prescribes an entitlement on the part of each patentee participant, as a prerequisite.
32 There is also a difference of opinion in the Full Court in UBC on this question. Justice Emmett takes the view that because s 63 entitled ‘joint patentees’ recognises the two or
more ‘nominated persons’ are to be regarded as separate entities and joint applicants are to be treated as ‘separate
entities’, each must qualify in terms of s 15.
33 The question therefore is, has UBC standing or entitlement? How might standing arise? Not only does the Patents Act 1990 reduce an invention to a patentable invention but the claim to standing or entitlement must be sourced in a patentable invention as claimed in the grant. Thus, a patentee or each entity comprising ‘the patentee’ jointly must trace its title or interest to a connecting
factor identified in s 15. Since UBC could not demonstrate any derived title from the inventors of the claimed invention as granted, UBC would need to find an ‘act’ on the part of Angiotech as the source of its rights to sustain its interest.
34 Justice Emmett sought to explain the legal construct arising out of or influencing s 15 in these terms:
‘36. On the assumed facts, there is no act that could constitute an assignment to UBC by any of [C, D or E], Hunter,
Machan or Arsenalt. Nor is there any fact to be assumed that could constitute an assignment by Angiotech to UBC. There is no
fact that could constitute an express assurance, either oral or written, of the invention of the patent as granted or the right
to apply for a patent in respect of that invention.
37. Section 15 specifies no formalities as being necessary for an applicant to be effectively the assignee of the invention from the inventor.
Further, s 15 specifies no formality as being necessary for the derivation of title to an invention from an inventor or from a person who,
on the grant of a patent, would be entitled to have the patent assigned. While an assignment in writing might be preferable,
in order to avoid difficulties of proof, an assignment might be effected orally or may even be implied from the conduct of the parties (see Speedy Gantry Hire Pty Ltd v Preston Erection Pty Ltd & Anor (1998) 40 IPR 543 at 550).
38. There may be doubt as to whether an invention is itself a species of property. However, whether it is properly to be characterised as property or not is irrelevant. Section 15(1)(b) clearly contemplates the possibility of some juridical act relating to the grant of a patent prior to the grant, which has the consequence that, upon grant, a person would be entitled
to an assignment of the patent. Section 15(1) also assumes that, under the general law, a person may demonstrate title to an invention and that that title is capable of disposition or alienation by the inventor to another person, such that that other person can
be said to derive title to the invention from the inventor. That suggests that an invention is to be regarded as a form of property capable of assignment, alienation or disposition.
39. Thus, s 15(1)(c) clearly contemplates that there is something that is capable of assignment, disposition or alienation by the inventor, such that
another person has title to it. It may be that the subject matter of such an assignment, alienation or disposition, as contemplated
by s 15(1)(c), is nothing more than the right to have a patent granted in respect of an invention. Patents are the creature of statute, and
rights in relation to patents, and inchoate rights in relation to inventions that might be the subject of a patent, must depend
upon the statute under which their existence is recognised. If the statute treats and invention, or the right to apply for
a patent in respect of the invention, as something that is capable of assignment, alienation or disposition, it is necessary to
recognise any juridical act or conduct that might give effect to such an assignment, disposition or alienation.
40. It may not take very much to constitute an act or conduct that constitutes such an assignment, disposition or alienation
or that gives rise, by implication, to such an assignment, alienation or disposition. UBC and Angiotech have not eschewed any
claim that there was conduct or an act, apart from specifying UBC in the relevant patent request, that might constitute an assignment,
alienation or disposition from Angiotech to UBC of an interest in the invention of the patent and as claimed, or that would create
an entitlement for UBC, upon the grant of a patent, to have an interest in the patent assigned by Angiotech to UBC.’
[emphasis added]
35 Emmett J concluded at [44] that:
‘Each of two or more joint applicants is a separate nominated person. Each must be a person within s 15. Section 15 is to be construed on the basis that, if there are two or more inventors, the word “person” in s 15(1) is to be read as “persons”. That is to say, a patent cannot be granted to a person who is not mentioned in s 15(1): unless a person is a person mentioned in s 15(1), that person has no entitlement to have a patent granted.’
36 On the other hand, Justice Bennett takes the view that the term ‘person’ in s 15, the term ‘nominated person’ and the term ‘the patentee’, is a singular term although the term may possibly
comprise more than one participant. Accordingly, where a person must prior to grant have an entitlement, it is enough that one
of the participants of ‘a person’ has standing or entitlement. Similarly, for revocation of a patent for lack of
entitlement, it is necessary to prove that ‘the patentee’ is not entitled, that is, not one participant comprising
‘the patentee’ has standing or entitlement. I do not propose to express any opinion on these views. Rather, the point
of this paper is to raise the issue of differences of view in the construction of the provisions. These differences and the
potential construction of each of these provisions is a matter requiring further consideration.
37 It should also be remembered that the question to be resolved in UBC was whether a preliminary question ought to be answered in a certain way. The Full Court of the Federal Court took the view that
the decision of Finkelstein J ought to be set aside to enable a trial of the contested questions of fact to be resolved to determine
whether there was any basis upon which UBC could prove a ‘juridical act’ whether orally or by implication from conduct, that it had acquired recognised rights,
in terms of the paragraphs previously quoted, which would support an entitlement. That question is yet to be determined.
38 In reaching the views expressed by Bennett J, her Honour made this observation at [85]:
‘Angiotech and UBC accept that s 138(3)(a) refers back to s 15(1). Their submission is that “the patentee” Angiotech and UBC collectively, falls within the description of s 15(1)(c). This leaves the question of whether the requirement is that the whole of the entitlement resides in the “person”
collectively, who is the patentee or whether the question of entitlement is assessed distributively so that each of the persons who make up the patentee must be entitled to the patent.’
39 At [86] her Honour said:
‘In my view, the former construction is preferable’.
40 Justice Stone agreed with the analysis of Justice Emmett.
JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2006] FCAFC 141; (2006) 154 FCR 348
41 In JMVB Enterprises Pty Ltd v Camoflag Pty Ltd, the Full Court was called upon to consider a question that to my knowledge has not arisen for some considerable time. In that
case, a patent for a collapsible campervan was obtained by JMVB. A director of the patentee saw collapsible campervans in the United States during the course of a holiday in that country.
There were then two manufacturers making collapsible campervans. The director of the patentee sought interviews with each manufacturer
and sought to obtain a licence from one or other of the manufacturers. Ultimately, the director of the patentee was able to
secure a licence agreement with one of the manufacturers, ‘A Liner Inc’ in December 1993. Collapsible campervans
manufactured by that company were then imported into Australia, plans drawn and manufacturing changes adopted. A patent was
applied for and granted.
42 A question arose in relation to the patent of whether the patentee was entitled to a grant of patent. Standing
or entitlement was said in the ‘notice of entitlement’ to derive from the director, assignment of rights to the patentee
and from the licence agreement. There were in fact three relevant agreements. One was the licence agreement of December 1993.
The second was a further licence agreement of 17 December 1993 and the third document was a supplemental agreement to the 17
December 1993 licence agreement. Significant issues arose as to the entitlement based upon those sources of entitlement but the point of interest which I wish to mention for the moment involved an additional
argument as to whether the patentee could demonstrate an entitlement to grant on the footing that the patentee was ‘the inventor’
for the purposes of s 15(1)(a) on the footing that the term ‘inventor’ includes invention by ‘importation’. At [72], the Court in its
joint judgment said this:
‘[72] Inventor in s 15(1)(a) refers to the person who makes or devises the invention wherever the invention may be made. It does not include a person who
is not the inventor but who first imports the invention into Australia or to whom the invention is first communicated in Australia.
To the extent that communication or importing of the invention gives rise to an interest on the part of the communicatee or importer, such that the communicatee or importer can say that the communicatee or importer
derives title to the invention from the inventor, s 15(1) may be attracted. However, the language of s 15(1) is limited to a person who derives title to the invention from the inventor. Mere communication or importation, without anything
further, is not sufficient to give rise to a title on the part of the communicatee or importer. That, of itself, is not sufficient
to make [the director or the patentee] the inventor.’
43 Although her Honour observes that importation of the invention may elevate the importer to a person who derives
title to an invention, her Honour plainly has in mind that there must be some further juridical act coupled with importation
which would establish entitlement. That act would need to be an act of the kind described by Emmett J in the paragraphs previously
quoted in UBC, namely [38], [39] and [40].
Australian Broadcasting Corporation v O’Neill [2006] HCA 46
44 On 28 September 2006, the High Court delivered judgment in Australian Broadcasting Corporation v O’Neill. In that decision, the High Court considered the tests a Court must apply in determining whether an interlocutory injunction
ought to be granted. In doing so, the Court examined the two principles derived from Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 and aspects of the decision in American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; (1975) AC 396 and particularly the observations of Lord Diplock in that decision.
45 The decision in Beecham arose out of an appeal from an order refusing an application for an injunction pending trial in an action for infringement of
the claims of three patents for ‘penicillin nucleus in isolation’ for a semi‑synthetic penicillin known as ampicillin, a broad spectrum antibiotic. The alleged infringement consisted of advertising and selling a semi‑synthetic penicillin
preparation called hectacillin manufactured out of Australia.
46 In granting an interlocutory injunction and thus reversing the decision of McTiernan J, Kitto, Taylor, Menzies
and Owen JJ at page 622 said this:
‘It is as well to begin a consideration of the appeal by recalling the principles to be observed in dealing with applications for interlocutory injunctions in patent cases. The jurisdiction is discretionary … to make all such orders as are necessary for doing complete justice in the cause.
The Court addresses itself in all cases, patent as well as other, to two main inquiries.
The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v Luck; Challender v Royle.
How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely
to flow from the order he seeks. Thus, if merely pecuniary interests are involved, “some” probability of success is
enough: and in general it is right to say, as Roper CJ … said in Linfield Linen Pty Ltd v Nejain, “There are disputes
of fact as to a number of matters … but this being an application for an interlocutory injunction I look at the facts
simply to ascertain whether the plaintiff has established a fair prima facie case and a fair probability of being able to succeed
in that case at the hearing”.
Thus where the defendant goes into evidence on the interlocutory application the Court does not undertake a preliminary trial, and give or withhold interlocutory relief
upon a forecast as to the ultimate result of the case.
The second inquiry is directed to this aspect of the matter. It is whether the inconvenience or injury which the plaintiff would be likely
to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction
were granted. It is of course to be remembered that if an injunction be granted it will be upon terms of the plaintiff submitting,
in the event of his ultimately failing, to such order as to damages as the Court may make in order to compensate the defendant
for any injury caused by the injunction.’
[emphasis added]
47 The notion that a prima facie case must be established in the sense described in the above quote came to be
understood as an obligation upon an applicant to demonstrate that there is a ‘serious question to be tried’ at the
trial.
48 In Australian Broadcasting Corporation v O’Neill, Gummow and Hayne JJ observed at [65] that the phrase ‘prima facie case’ in the context of its use by their Honours
in Beecham was intended to convey the notion that the applicant must show a sufficient likelihood of success to justify preserving the position of the parties pending the trial of the action. A sufficient likelihood of success is to
be determined in the context of that part of the above quote from Beecham which gives weight to the nature of the rights in contest and the practical consequences likely to flow from the order sought by
the applicant. In assessing those matters, the Court in O’Neill expressly rejected the notion derived from the observations of Lord Diplock in American Cyanamid that upon the Court being satisfied that the applicant’s claim is not frivolous or vexatious, a serious question to be tried would arise and thus the Court should proceed to determine the second
area of inquiry reflected in the quote from Beecham. Gummow and Hayne JJ [71] and Gleason CJ and Crennan J [19] took the view that the observations of Lord Diplock on this point
did not reflect a correct statement of the law in Australia established by Beecham and reverse the onus of proof.
49 The burden on the applicant is to demonstrate a sufficient likelihood of success, that is, a probability of
success having regard to the nature of the rights in contest and the consequences likely to flow from the order sought.
50 In determining the second question of where the balance of convenience lies, the strength of the probability
of success needs to be considered in determining where the balance of convenience lies in the ultimate exercise of the discretion.
51 These principles are described as the ‘organising principles’.
52 The ‘organising principles’ governing the grant of an interlocutory injunction are those identified
at [19] of the joint judgment of Gleeson CJ and Crennan J and the explanation of the organising principles is set out in the Reasons
of Gummow and Hayne JJ at paragraphs [65] – [72]. At [19] Gleeson CJ and Crennan J said this:
‘As Doyle CJ said in [Jakudo Pty Ltd v South Australian Telecasters Ltd [1997] SASC 6370; (1997) 69 SASR 440 at 442-443], in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried
as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will
not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the
organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice
and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne
JJ and their reiteration that the doctrine of the court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 should be followed.’ (per Gleeson CJ and Crennan J)
[emphasis added]
53 At [65] – [72], Gummow and Hayne JJ affirm that the governing principles the Court addresses on applications
for interlocutory injunctions are those explained in Beecham. In assessing whether the applicant has made out a prima facie case in the sense contemplated in Beecham, ‘it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation
of the status quo pending the trial’ [65]. Their Honours discussed the apparent distinctions between the views expressed and assumptions made concerning the approach
adopted in Beecham and that reflected in the speech of Lord Diplock in American Cyanamid Co. v Ethicon Ltd [1975] UKHL 1; [1975] AC 396. At [70], Gummow and Hayne JJ said this:
‘70. When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity and outcome, much of the
assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase “serious
question” if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability
referred to in Beecham, depends upon the considerations emphasised in Beecham.’
54 Their Honours Gummow and Hayne JJ expressed the view that ‘the apparent statement by Lord Diplock that,
provided the court is satisfied that the plaintiff’s claim is not frivolous or vexatious, then there will be a serious question
to be tried and this will be sufficient’, does not accord with the doctrine as established by Beecham and ‘should
not be followed’. Their Honours Gummow and Hayne JJ observed at [71] that such a view obscures ‘the governing consideration
that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical
consequences likely to flow from the interlocutory order sought’ and at [72] their Honours said this:
‘[72] The second of these matters, the reference to practical consequences, is illustrated by the particular considerations
which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour
of whichever party succeeded on that application. …’
55 These explanatory views of the organising principles were adopted by Gleeson CJ and Crennan J.
