INVERNESS MEDICAL INNOVATIONS, INC. AND ANOR V MDS DIAGNOSTICS LIMITED AND ANOR HC AK CIV 2007-404-748 [2009] NZHC 690 (10 June 2009)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                                             CIV
2007-404-748



                BETWEEN                            INVERNESS MEDICAL
                                           
       INNOVATIONS, INC.
                                                   First Plaintiff

                AND                
               INVERNESS MEDICAL
                                                   SWITZERLAND GMBH
                           
                       Second Plaintiff

                AND                                MDS DIAGNOSTICS LIMITED
            
                                      First Defendant

                AND                                SIVA PRAKASH APPANNA
 
                                                 Second Defendant


Hearing:        9 June 2009

Appearances: C Elliott and S McLaughlin
for the Plaintiffs
             D Marriott and I Finch for the Defendants

Judgment:       10 June 2009 at 10:00 a.m.


        
                  JUDGMENT OF WOODHOUSE J
                              (Admissibility of Evidence)



             This judgment
was delivered by me on 10 June 2009 at 10:00 a.m.
                      pursuant to r 11.5 of the High Court Rules 1985.

      
                           Registrar/Deputy Registrar

                                ..........................................




Solicitors:
Mr C Elliott, Barrister, Auckland
Mr D Marriott, James & Wells, Solicitors, Auckland

INVERNESS MEDICAL INNOVATIONS,
INC. AND ANOR V MDS DIAGNOSTICS LIMITED AND
ANOR HC AK CIV 2007-404-748 10 June 2009
[1]    The plaintiffs have objected to some
evidence sought to be adduced by the
defendants.


[2]    One item of evidence is a midstream pregnancy testing device first referred
to
in the re-examination of the defendants' expert, Mr Hanlon. This was given a
provisional exhibit reference "L".


[3]    There
is a document presently in the bundle of documents at volume 9, pages
157-158. On the face of it this is an instruction for use of
a midstream pregnancy
testing device sourced in some way from Syntron Bio Research, Inc. of the United
States. The second page records
an effective date of August 20 2001. A copy of this
document was first made available to the plaintiffs shortly before the trial
commenced on 18 May. It seems that the defendants anticipated that a Dr Lee of
Syntron would give evidence about this. On short notice
I agreed, in the course of
the trial, to Dr Lee's evidence being provided by video-link. In the event that did not
happen. I understand
Dr Lee declined to make himself available.


[4]    The third set of documents are three pages attached to the second
supplementary
brief of evidence of the second defendant, Dr Appanna. This brief is
dated 7 June 2009.       That is to say it is dated on the Sunday
before the
commencement of the fourth week of this trial which was originally scheduled for
two weeks. The three documents on the
face of them also come from Syntron.
There are two pages of what appear to be drawings of the two halves (upper and
lower) of the
casing for a midstream pregnancy testing device. These have recorded
on them "effective date March 06 1998".           The third
page appears to be an
advertisement for a similar device and records an effective date of "07-17-98". The
picture of the device on
this page appears to be very similar to the midstream device
marketed by the first defendant and said to breach copyright of the
plaintiffs.


[5]    The question of admissibility needs to be considered under three broad
headings. The first is hearsay. Mr Marriott,
for the defendants, acknowledged that
the documents at least are hearsay statements: see the definitions of "statement" and
"hearsay
statement" in the Evidence Act 2006 ("the Act"). For the documents to be
admitted the provisions of s 18 of the Act need to be satisfied.


[6]    The first question is whether, under s 18(1)(a) "the circumstances relating to
the statement provide reasonable assurance that the statement is reliable". In my
judgment
the defendant is not able to meet the requirements of this provision. This
is because there is no adequate evidence bearing on the
circumstances relating to the
statements. Matters of this nature would turn solely on what might be drawn from
what is recorded in
the documents, the progeny of which simply cannot be tested.


[7]    The circumstances also need to be assessed against the contentious
background to this proceeding in respect of pregnancy testing devices produced in
different parts of the world. The dates, amongst
other things, may be critical. In
terms of the circumstances bearing on reliability I also take into account the nature of
the evidence
adduced by the defendants from Mr Glasser, the in-house attorney for
another American company called Phamatech. The evidence is that
Phamatech
supplies the midstream and other devices to the defendant. On the face of the
documents now in contention there may be
some sort of link between what
Phamatech supplies to the defendant and what is shown in the Syntron document.
The evidence from Phamatech,
also provided by video-link, was evasive. In saying
that I am not saying that Mr Glasser necessarily lacked credibility or that he
was
unreliable in his evidence. The problem with his evidence is that he was able to
answer very few, if any, questions relevant
to the matters in issue in this proceeding.
It appeared as if Phamatech executives had decided that Mr Glasser should give
evidence
because he would not be able to answer relevant questions because he had
no personal knowledge of the contentious matters.


[8]
   On the question of hearsay I must also be satisfied, under s 18(1)(b), either
that the maker of the statement is unavailable as
a witness or undue expense or delay
would be caused if the maker of the statement were required to be a witness. I am
not satisfied
on either point. As earlier mentioned a video-link was arranged for the
apparent maker of the statement, or the person responsible
for the making of the
statement, to give evidence. There would be no undue expense or delay in that.
There is no adequate evidence
of unavailability as defined in s 16(2) of the Evidence
Act.


[9]     I would therefore rule the challenged evidence inadmissible
under the
hearsay provisions. This relates to the documents, not to the device. But ss 7 and 8
of the Evidence Act are also relevant.
These provisions apply to the device. And
these provisions apply to the documents even if the documents might otherwise have
been
admissible notwithstanding their hearsay nature.


[10]    Under s 7 of the Act the evidence must be relevant. In this context it
is
pertinent to note the relevance contended for by Mr Marriott.


[11]    Mr Marriott submitted that the primary reason for seeking
to adduce this
evidence is because it bears on the question whether Dr Appanna's belief that the
defendants' products did not infringe
the plaintiffs' copyright was a reasonably held
belief. I have some difficulty in seeing how the evidence in question can bear on
this
point, in any material respect, because these documents and the device have only just
come to Dr Appanna's attention.


[12]
   Mr Marriott submitted that the further reason for seeking to adduce this
evidence is that it is relevant to the wider question
of copyright infringement. The
evidence is plainly relevant in that regard. Mr Marriott nevertheless accepted that,
because of the
circumstances in which the defendants seek to adduce this evidence,
and the complete inability of the plaintiffs to cross-examine
any person with
knowledge, means that the weight that might be attached to the evidence may be
limited.


[13]    Although there
is plain relevance in the second regard, s 8(1) of the Evidence
Act still applies:

        In any proceeding, the Judge must exclude
evidence if its probative value is
        outweighed by the risk that the evidence will--

        (a)     have an unfairly prejudicial effect on the proceeding; or

     
  (b)     needlessly prolong the proceeding.
[14]   The probative value of this evidence is minimal, at best, on the question of
the reasonableness of Dr Appanna's belief. The probative value of this evidence on
the question of copyright infringement is also
limited, as acknowledged by Mr
Marriott in respect of the question of the weight that might be attached to it. Against
this, in my
judgment, the evidence could be unfairly prejudicial to the plaintiffs to a
high degree. Alternatively, if this evidence is admitted,
the proceedings will be
needlessly prolonged.     This is because the plaintiffs would have to have an
opportunity to conduct a range
of inquiries which would take an uncertain amount of
time and there would be likely to be need for a further hearing which would
not be
for some months. This would occur following the earlier procedural course of this
litigation which has had numbers of significant
difficulties. Both parties have on
more than one occasion during this trial referred to these matters. There is no need
for me to
spell them out again. I simply refer to earlier judgments and minutes in the
proceeding. In respect of these matters it is significant
that both parties advised me
when making submissions on this issue that neither party wants an adjournment.


[15]   A final consideration,
separate from questions under the Evidence Act, is that
the defendants require leave under the High Court Rules to adduce all of
this
evidence except, possibly, the document produced in early May and in the bundle of
documents at 9/157-158. The application to
adduce further evidence has been made
very late indeed. This consideration is not decisive, although I take it into account.


[16]
  For all of these reasons I rule that the evidence in question is inadmissible. A
further consequence of this is that Dr Appanna's
second supplementary brief of
evidence is not to be read.




________________________________
Peter Woodhouse J