Northern Territory v Collins

[2008] HCA 49

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(Judgment by: Crennan J)

Northern Territory
vCollins

Court:

Judges: Gummow ACJ
Kirby J
Hayne J
Heydon J

Crennan J

Hearing date:
Judgment date: 16 October 2008

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Judgment by:
Crennan J

58. Since 21 January 1999 the respondents, Vincent and Maryann Collins, have been the registered proprietors of standard patent No 742711 for an invention entitled "Methods of producing essential oils from species of the genus callitris" ("the patent"). The essential oil relevant to the appeal is said to be useful in aroma therapy, and in the manufacture of cosmetics and body care products; it may also possess anti-microbial properties and preservative qualities in the treatment of wood. It appears that an appealing feature of the oil is its azure colour.

59. Claim 1 of the patent describes "[a] method of producing a blue, guaiazulene-containing oil comprising the step of obtaining the oil from a mixture of the bark and wood of Callitris intratropica ". Claims 2 to 11 (inclusive) deal with method claims. Whilst the emphasis in the proceedings was on method claims, claim 12 was a product claim for "[a] blue, guaiazulene-containing oil when produced by a method according to any one of" the preceding claims.

60. This appeal from a decision of a Full Court of the Federal Court of Australia ^[31] (the "Full Court") concerns the allegation by Mr and Mrs Collins that the appellant, the Northern Territory of Australia (the "Northern Territory"), is liable under s 117 ^[32] of the Patents Act 1990 (Cth) (the "Act") for infringement by supply of timber from trees of species of the genus Callitris to Australian Cypress Oil Company Pty Ltd ("ACOC"). It is alleged that ACOC, which was licensed by the Northern Territory to take timber from one of its plantations, used the bark and wood of the timber to produce infringing oil by use of one of the methods claimed in the patent. The allegedly infringing oil was also said to have been sold and offered for sale by ACOC.

The facts

61. Species of the genus Callitris include Callitris intratropica , commonly known as the cypress pine, which can be found in the wild and in plantations in the Northern Territory, including at the Howard Springs Plantation which is situated on Crown lands under the Crown Lands Act (NT) (the "Crown Lands Act"). The Northern Territory government invested in planting cypress pine at various sites within the Northern Territory during the 1960s in the expectation that it would be a commercial timber producing crop. The evidence disclosed that by November 1995 this expectation had been disappointed and the timber from the cypress pine plantations was no longer considered to be of suitable commercial quality for the original purposes for which the trees had been planted ^[33] .

62. On 30 April 1993 Mr Collins was granted a permit from the Conservation Commission of the Northern Territory (then responsible for the administration of the Howard Springs Plantation) to undertake "Crop thinning of Callitris Intratropica" for a term of 12 months. That permit required the payment of a royalty of 20 cents per stem felled.

63. There was a dispute (which is not relevant to the present appeal) as to whether Mr Collins had been issued with a second permit to fell the cypress pine for the period 18 October 1994 to 17 October 1999.

64. At some point after 1993, the precise date of which is not clear, the Howard Springs Plantation ceased to be part of a reserve, and reverted to Crown lands within the meaning of the Crown Lands Act ^[34] . From 1998 until 2001 the government of the Northern Territory granted to ACOC four miscellaneous licences, pursuant to s 91 of the Crown Lands Act, to enter and take the stems of the cypress pine ^[35] from various areas within the Howard Springs Plantation. Those licences were subject to terms and conditions prescribed in the Crown Lands Regulations as provided by s 94(2) of the Crown Lands Act, and reg 46 provided that the Minister "may determine a royalty on the material removed from the land".

65. It was not in contest that although original plans for exploitation of the various cypress pine plantations were shelved, there remained several commercial uses which could be made of the timber harvested or collected from the Howard Springs Plantation. These were milling, producing woodchip mulch from surplus materials, oil extraction, and producing potting mix and firewood. A forester from the Department of Natural Resources, Environment and the Arts amplified that information by deposing that he was aware that the trees in question have been used and were still being used (at the time of swearing his affidavit) as a constituent element in poles, fence posts and rails, flooring, light construction, oil extraction, mulch and certain traditional indigenous uses. In turn, these indigenous uses were confirmed and clarified in an expert's report. Reasons for which licensees, other than ACOC, sought permission from the Northern Territory to harvest the trees included the production of sawdust, woodchipping and making golf club poles.

ACOC's licences

66. The first licence granted to ACOC was Miscellaneous Licence No 1858, granted on 3 July 1998, pursuant to a competitive tender process. It was a "Licence to go upon Crown Lands and take there from timber". The licence defined the areas of land covered by it and contained a condition requiring payment of "royalties of $2.50 ... per tree". The licence ran from 6 July 1998 to 6 August 1998 and contained the following terms:

"14. The licensee will, in respect of the licenced land, ensure that all plantation trees including stumps are removed.

15. The licensee acknowledges that after extraction of the stumps, that he is responsible for rehabilitation of the site to a standard which allows reasonable access by a tractor/slasher. All holes and other safety hazards shall be smoothed out (flatblading standard is envisaged) to the satisfaction of the Assistant Secretary, Land Administration, Department of Lands, Planning and Environment.

16. The licensee acknowledges that Conditions 14 & 15 above will be undertaken to the satisfaction of the Department of Lands, Planning and Environment, at nil cost to the Territory.

17. If the licensee fails to observe and carry out or cause to be carried out the conditions outlined in Conditions 14 & 15 above of the licence on his part, the Territory will have a right to enter onto the licenced land and do all things necessary to that end and the expense and costs thereof, as determined by the Minister, will be borne and payable by the licensee on demand."

67. The second, third and fourth licences (Miscellaneous Licences Nos 1863, 1869 and 1875) ran, in succession, from 1 April 1999 to 30 June 2001. Unlike the first licence, each of these licences required a royalty fixed at 5% of the "'FOB' price" ^[36] of the essential oil and any other products derived from the timber harvested in accordance with the licence.

68. The second, third and fourth licences contained terms relevantly the same as Conditions 14, 15 and 17 extracted above from the first licence. In addition, they contained terms relevantly identical to the following terms which appeared in the second licence:

"19. It will be a condition of the licence that all works carried out are in accordance with an approved Site Management Plan (Attachment A) agreed by [ACOC] and the Department Lands, Planning and Environment.

...

22. The licensee acknowledges that Condition 20 & 21[ ^[37] ] above will be undertaken in accordance with the Site Management Plan submitted to the Department of Lands, Planning & Environment, at nil cost to the Territory."

The litigation

69. The application for the patent was filed on 8 July 1998 and Mr and Mrs Collins were entered on the Register of Patents as proprietors on 21 January 1999. They commenced proceedings in the Federal Court of Australia alleging infringement of the patent by the Northern Territory under s 117 of the Act. The Northern Territory's liability was said to derive from its supply of timber (alleged not to be a staple commercial product) to ACOC, from which timber ACOC, without the licence of Mr and Mrs Collins, would extract blue cypress oil by means of a process (application of steam distillation to the bark and wood of the timber) said to be protected by the patent.

70. In its Defence, the Northern Territory denied the validity of the patent and did not admit that ACOC used the timber to produce blue cypress oil by a process protected by the patent. As well, the Northern Territory denied that s 117 was engaged by the grant of the licences, irrespective of whether the patent was valid or whether ACOC used the timber to produce blue cypress oil by a process which infringed the patent.

Separate trial of issues

71. The issues which were the subject of a separate trial ^[38] are best understood by reference to s 117 and the definition of "supply" in Sched 1 to the Act.

72. Section 117 of the Act deals with "Infringement by supply of products" and provides:

"(1)

If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent.

(2)

A reference in subsection (1) to the use of a product by a person is a reference to:

(a)

if the product is capable of only one reasonable use, having regard to its nature or design - that use; or

(b)

if the product is not a staple commercial product - any use of the product, if the supplier had reason to believe that the person would put it to that use; or

(c)

in any case - the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier."

73. At the time the licences were entered into, Sched 1 to the Act defined "supply" to include "supply by way of sale, exchange, lease, hire or hire-purchase".

74. The primary judge (Mansfield J) directed that there be a separate trial of issues as to whether ^[39] :

"a.

the [Northern Territory] has supplied a product to [ACOC] the use of which would infringe the patent;

b.

the product supplied by the [Northern Territory] ... is not a staple commercial product and its use is one which the [Northern Territory] had reason to believe would be used to produce a blue coloured oil by a process protected by the patent."

75. The first issue addressed s 117(1) of the Act and the second issue concerned s 117(2)(b).

76. At trial Mr and Mrs Collins contended that an infringement by supply would be established by a "use" which met the description set out in s 117(2)(b). They accepted that the timber in question is capable of more than one reasonable use and they did not rely upon pars (a) or (c) of the sub-section.

77. Something more needs to be said about the relevant method claims of the patent and the use which ACOC made of the timber which it harvested under the licences.

78. It is stated in the body of the patent that:

"[t]he oil will typically be obtained from the bark and wood by distillation and usually by a hydro-distillation or steam distillation method".

79. Claim 3 covers "[a] method according to any one of claims 1 to 3 wherein the oil is obtained from the bark and wood by distillation". Claim 4 claims "[a] method according to claim 4 wherein the distillation is hydro-distillation or steam distillation".

80. Whilst the validity of the patent remains in issue on the pleadings, it is important to note that validity was assumed by the primary judge for the purposes of testing whether the acts of the Northern Territory constituted infringement by supply under s 117 of the Act. His Honour also assumed for those purposes "that ACOC's alleged actions have infringed [the patent]" ^[40] .

Decision of the primary judge

81. The primary judge determined the separate issues adversely to Mr and Mrs Collins, and dismissed their application.

82. Mansfield J considered that what had been supplied by the Northern Territory to ACOC was the timber, and ACOC then took the bark and wood of the timber and produced blue cypress oil from them ^[41] . His Honour noted the timber, or the bark and wood from the timber, is "but an input into the process by which" the oil was produced ^[42] .

83. However, the main basis for his Honour's conclusion, that there was no "supply" within the meaning of s 117, was his finding that the licences were merely "permissive" ^[43] . His Honour said the word "supply" does ^[44]

"not readily accommodate a licence which merely enabled ACOC to go upon the territory's land at Howard Springs and to harvest the trees there and to remove the timber so harvested. There is no positive act of the territory which, in terms of the definition of 'supply', amounted to the 'sale, exchange, lease, hire or hire-purchase' or the offer to supply by way of sale etc of the timber."

84. His Honour then considered, if he were wrong on the "supply" question, whether what had been supplied was a "staple commercial product". Mr and Mrs Collins had accepted that, but for the fact that the Northern Territory had "written off" the Howard Springs Plantation as a commercial crop for use as timber, the timber in question would have been a "staple commercial product" ^[45] .

85. The primary judge found that the trees and timber retained commercial value to the Northern Territory, and that there were residual commercial uses for them, for example, use as milled timber, woodchip mulch, pine oil extraction, potting mix and firewood ^[46] . His Honour concluded that the decision of the Northern Territory "not to maintain the plan to allow further growth of the trees on the Howard Springs land for harvesting for timber" ^[47] did not deprive the timber of its character as a "staple commercial product". His Honour also made a finding of fact that the Northern Territory had reason to believe that ACOC would use the bark and wood from the timber in combination for the purpose of producing blue cypress oil ^[48] .

Decision of the Full Court

86. The appeal of Mr and Mrs Collins to the Full Court was allowed by a majority (Branson and Sundberg JJ, French J dissenting).

87. The majority considered that the primary judge had erred in characterising the licences to ACOC as merely "permissive". Condition 14 of the first licence, and its successors in subsequent licences, were considered by the majority as plainly requiring that all plantation trees be removed, and that ACOC was obliged to harvest the trees and remove the timber from the land ^[49] . In all the circumstances their Honours concluded that the Northern Territory had supplied the timber to ACOC, and the "timber so supplied was felled but unmilled trees of the species Callitris Intratropicus" ^[50] .

88. Whilst not attempting to state a comprehensive test for determining what constitutes a "staple commercial product", Branson and Sundberg JJ considered "that a quality of such a product is that it is an item of commerce in the sense that it is ordinarily available for purchase from an entity that trades in that product" ^[51] . On all the evidence, including that of the difficulty of obtaining licences for harvesting cypress pine from the Department of Lands, Planning and Environment, their Honours were satisfied that the timber in question was not a staple commercial product ^[52] .

89. In dissent, French J considered that the concept of "supply of a product" in s 117 did not extend to "the conveyance of interests in land" ^[53] such as grants in the nature of a profit à prendre ^[54] which his Honour considered described the licences.

90. After construing the collocation "staple commercial product", his Honour also held that the timber, being millable timber in the form of standing trees, was such a product and accordingly Mr and Mrs Collins could not rely upon s 117(2)(b) to establish infringement by supply ^[55] .

91. All members of the Full Court rejected the Northern Territory's contention (by way of a notice of contention) that the supplied product (the timber) and the product said to have been used for infringement (the milled wood and stripped bark) were relevantly different for the purposes of s 117 ^[56] .

Relevant provisions of the Act

92. Section 117 and the definition of "supply" in Sched 1 to the Act have been set out above ^[57] . A number of other related provisions in the Act are also relevant.

93. Section 13(1) of the Act grants, to an owner of a patent, "exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention".

94. The term "exploit" in relation to an invention is defined in Sched 1 to the Act to include:

"(a)

where the invention is a product - make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or

(b)

where the invention is a method or process - use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use."

95. An "invention" is defined in Sched 1 to the Act to mean:

"any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention".

96. This definition has been a constant throughout Australia's patents legislation ^[58] and can be traced back to the patents legislation of the United Kingdom ^[59] . The definition inevitably directs attention to the patentee's rights under s 6 of the Statute of Monopolies of 1623 which included the right to the "sole working or making of any manner of new manufactures" which others "shall not use" ^[60] .

97. There is no definition of "product" or "staple commercial product" in the Act.

Questions

98. Three questions arose on this appeal concerning the interpretation of s 117 of the Act. First, whether the literal meaning of s 117(1) has the consequence that supply of an "input" into a patented method or process (or an input into a resulting product) is incapable of engaging the operation of s 117(1) of the Act. Second, whether the grant of statutory licences to ACOC under the Crown Lands Act constituted a "supply" of a "product" within the meaning of s 117(1). Third, whether the "product", the supply of which was alleged to breach s 117, namely timber, was a "staple commercial product" within the meaning of s 117(2)(b). The reasons which follow explain why the Northern Territory succeeds on the appeal but only in relation to the third question.

Applicable principles

99. The outcome of the appeal turns on the proper construction of s 117. The applicable principles of construction can be shortly stated. Construction must begin with a consideration of the text itself ^[61] . The meaning of the text cannot always be determined in isolation from its context, which includes the general purpose and policy of the provision ^[62] , in particular the mischief ^[63] which the statute was designed to remedy ^[64] . Secondary material seeking to explain the words of a statute cannot displace the clear meaning of the text of a provision ^[65] , not least because such material may confuse what was "intended ... with the effect of the language which in fact has been employed" ^[66] .

Indirect infringement

100. It is convenient to consider the legislative history of s 117 of the Act and comparative provisions in the United States of America and the United Kingdom before turning to competing submissions on the construction of s 117 which raised both historical and comparative considerations. Section 117 covers infringement by supplying another person with a product, the other person being the direct infringer. Such an act has been referred to over time as "indirect", "contributory", "participatory" or "secondary" infringement.

101. Indirect infringement was referred to in the Royal Grant ^[67] , once part of the words of grant of Letters Patent deriving from the Statute of Monopolies. The patentee received the "especial licence, full power, sole privilege, and authority ... [to] make, use, exercise and vend the ... invention". It was for the patentee alone to "have and enjoy the sole use and exercise and the full benefit of the ... invention"; relevantly, others were commanded "that they do not ... either directly or indirectly make use of or put in practice the ... invention, nor in anywise imitate the same" (emphasis added).

102. Notwithstanding that reference, the precise boundaries of "indirect" infringement at common law proved elusive. In particular, the sale or supply of an article, including material "produced by nature" (such as timber), which could in any way be used in the making of an article covered by a patent was not an infringement ^[68] . There were, however, some acts of indirect infringement which could give rise to remedies at the patentee's suit. These included the separate tort of knowingly inducing or persuading another to infringe ^[69] , acting as a joint tortfeasor in a conspiracy or common design to directly infringe ^[70] and ordering another, for example an agent, to do an infringing act ^[71] . In each of these examples the availability of remedies turned on the indirect infringer being a "contributor" or "party" to the direct infringement ^[72] .

103. The limitations of the common law position are stated in Blanco White, Patents for Inventions ^[73] :

"The sale of materials for, or apparatus for carrying out, a patented process, does not infringe a claim to the process, even though it be intended that the purchaser should infringe, and probably even though what is sold is an apparatus that could be used in no other way.

If ... such materials, be in fact used, the use is of course an infringement" (footnotes omitted).

104. The rationale behind the narrow common law view of what constituted participation in infringement was explained by Dixon J in Walker v Alemite Corporation ^[74] :

"The basis upon which these rules rest is that whatever is not included in the monopoly granted is publici juris and may be freely used as of common right."

105. The legislatures of Australia, the United States of America and the United Kingdom all considered it necessary to intervene to modify the common law position.

Australia

106. The difficulties of enforcing patents against indirect or contributory infringers at common law were considered by the Industrial Property Advisory Committee ("IPAC") in its report of 29 August 1984 ^[75] (the "IPAC Report"). Central to the endeavours of IPAC was consideration, and proper management, of the tensions between patent law and competition law ^[76] , a tension familiar to intellectual property lawyers in the United States of America since the passing of the Sherman Act 1890 ^[77] and the Clayton Act 1914 ^[78] . An account of relevant developments in respect of patents can be found in a decision of the Supreme Court of the United States Dawson Chemical Co v Rohm & Haas Co ^[79] (" Dawson ").

107. The patentee in Dawson owned a patented method for using an unpatented product, propanil, to inhibit the growth of certain weeds. The defendant supplied propanil to farmers (which was not a direct infringement of the method patent), with instructions to persons receiving a supply, to apply propanil in accordance with the patented method. A majority of the Supreme Court of the United States found that the defendant's conduct was an indirect or contributory infringement of the patented method under cognate statutory provisions about which more will be said later.

108. It is sufficient for present purposes to note that IPAC referred to the facts of Dawson to illustrate the mischief which it was addressing in its report, namely that "[a] patentee may encounter serious difficulty in enforcing his patent where it is prone to infringement by an eventual consumer who is supplied by an unauthorised person with the means to infringe" ^[80] . IPAC then explained its support for legislation which provided a discrete action for "infringement by supply" directed at suppliers of "goods, materials or parts" to direct infringers ^[81] :

"We believe that it would be more effective, realistic and just for the patentee to be able to take action against the supplier or middleman who facilitates the commission of the infringing act by the ultimate consumer. The most common example of indirect, secondary or contributory infringement is where goods, materials or parts are supplied to a consumer with the intention that they be used, consumed or assembled in a way which constitutes an infringement of a patent." (footnote omitted)

109. Recommendation 33 of the IPAC Report, subsequently endorsed ^[82] and implemented by the government ^[83] , stated:

"that in general the supply of goods whose only use would infringe a patent, or which are accompanied by a positive inducement for the ultimate consumer to perform actions which would innocently or knowingly infringe a patent, should itself be an infringement of the patent".

110. One of the reasons given by the government for accepting the recommendation and introducing s 117 was said to be to "harmonise [Australian patent law] with the laws of Australia's major trading partners" ^[84] .

United States of America

111. One of those major trading partners, the United States of America, had introduced a statutory provision governing "indirect" or "contributory" infringement in the Patent Act 1952 codified at 35 USC §271, which currently relevantly provides as follows:

"(b)

Whoever actively induces infringement of a patent shall be liable as an infringer.

(c)

Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer."

112. In Dawson Blackmun J, delivering the opinion of the majority, remarked ^[85] :

"[T]he language of §271 is generic and freighted with a meaning derived from the decisional history that preceded it."

113. His Honour summarised that decisional history ^[86] and recognised, as Dixon J had done in Walker v Alemite Corporation , that "an inevitable concomitant of the right to enjoin another from contributory infringement is the capacity to suppress competition in an unpatented article" ^[87] .

United Kingdom

114. Following the Declaration on the Adjustment of National Patent Law annexed to the Convention for the European Patent for the Common Market (the "Community Patent Convention") of 1975 ^[88] , a statutory provision specifically aimed at "infringement by supply" was introduced into the Patents Act 1977 (UK). The need for a provision governing indirect infringement had been canvassed by the Banks Committee ^[89] and the Department of Trade in the United Kingdom ^[90] , both of which recommended that infringement should encompass some acts referred to at common law as acts of indirect or contributory infringement. In particular, the Department of Trade White Paper recommended that a patentee should have a right to a remedy "if an essential element of [a patentee's] invention is supplied ... with the intention that it should be used to carry out the patented invention" ^[91] .

115. Section 60 of the Patents Act 1977 (UK) defines infringement and relevantly provides:

"(2)

Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.

(3)

Subsection (2) above shall not apply to the supply or offer of a staple commercial product unless the supply or the offer is made for the purpose of inducing the person supplied or, as the case may be, the person to whom the offer is made to do an act which constitutes an infringement of the patent by virtue of subsection (1) above."

116. It is now convenient to turn to the questions raised in the appeal.

Question 1: Does s 117 cover supply of an "input" into a process (or resulting product)?

117. The Northern Territory contended that the resolution of this first question turned on resolving the correctness of the supposedly competing views of s 117(1) evinced by Gummow J in Rescare Ltd v Anaesthetic Supplies Pty Ltd (" Rescare ") ^[92] and Black CJ and Lehane J in Bristol-Myers Squibb Co v F H Faulding & Co Ltd (" Bristol-Myers ") ^[93] .

118. Rescare mainly concerned allegations of infringement of a product patent. The question arose whether s 117 operated to render the direct infringer of the product patent also an "infringer by supply" under s 117 in circumstances where the infringing product was sold or offered for sale with instructions to use the infringing product in accordance with a related patented method.

119. In Rescare Gummow J said ^[94] :

"[A] pre-condition to the operation of s 117 in relation to a method claim ... is that there is a product the use of which by the [supplier] would infringe [the method claim]. In other words, that user would have to amount an 'exploitation' within the monopoly conferred by s 13, which is to be read with para (b) of the definition of 'exploit'.

... [W]here the invention relevantly claims a method or process, exploitation occurs, other than by use of the method or process , only by the doing of an act mentioned in para (a) of the definition of 'exploit'. There must be an act done 'in respect of a product resulting from such use'." (emphasis added)

This reasoning was upheld on appeal by Lockhart J (with whom Wilcox J agreed) in Anaesthetic Supplies Pty Ltd v Rescare Ltd ^[95] and subsequently followed in Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd ^[96] .

120. Relying on Gummow J in Rescare and s 13 of the Act, the Northern Territory urged that the expression "use of a product [which] would infringe" in s 117(1) must be limited to the circumstance where the product supplied results from the use of the patented method. The argument assumes that Gummow J's reasoning in Rescare applied to exploitation "by use of the method or process". This argument was also supported by a detailed comparison of s 117 with cognate provisions in the United States of America and the United Kingdom set out above. It was submitted that the words used in each of the cognate provisions were substantially different and apt to include products supplied preparatory to the use of a patented method, whereas the words used in s 117 were not apt to include such products.

121. Adopting the reasoning of Black CJ and Lehane J in Bristol-Myers ^[97] , Mr and Mrs Collins countered that such a construction of s 117 would give it a very limited operation and result in considerable overlap between "infringement by supply" covered by s 117 and acts of direct infringement. They supported the construction of s 117 advanced by Ann Monotti ^[98] , which found favour with Black CJ and Lehane J in Bristol-Myers ^[99] . Their Honours rejected the proposition that where an invention is a method or process, use of a product exploits the invention only if the product is one which results from use of the method or process ^[100] .

122. Section 13, and the definition of "exploit" in Sched 1, were intended to define the exclusive rights to exploit the invention, given by a patent, in clear terms, so as to avoid any obscurities in the previous language of "make, use, exercise and vend" in s 69 of the Patents Act 1952 (Cth) ^[101] . However, there is nothing in the new text or elsewhere in the Act to suggest that the monopoly in respect of an invention is more restricted than it was before.

123. Paragraph (b) of the definition of "exploit", critical to the reasoning of Gummow J in Rescare , defines two aspects of the exclusive rights to exploit a method or process patent, only one of which was explicated by his Honour.

124. The first aspect is the exclusive right to "use the method or process" per se . Nothing significant was said about this expression in Rescare because it was put to one side by the primary judge and it was not overtly considered in the appeal to the Full Court. There was never any doubt that carrying out a patented method or process was an exercise of the invention: "[w]here the claim is for a process, any carrying out of the process is, of course, an exercise of the invention, unless purely experimental" (emphasis added) ^[102] . Accordingly, carrying out a patented method or process could constitute infringement of a patented method.

125. The second aspect of the exclusive right to exploit a method or process patent is the exclusive right to do all the acts listed in par (a) of the definition of "exploit" in respect of "a product resulting from ... use" of "a method or process". In the absence of a product claim coupled with a method claim, there was often far less certainty about whether such acts would constitute an infringement of a patented method ^[103] . The insertion of the second aspect into the statutory definition of "exploit" resolves such uncertainty ^[104] . In this case, unlike Rescare , there is a product, the oil (alleged to infringe the product claim), which is a product for the purposes of the second aspect of the monopoly in respect of a method or process patent.

126. As a practical matter, it may often be easier to prove acts of infringement of a patented method by leading evidence of acts in respect of a product which results from use of a patented method, rather than seeking to prove use of the method per se ^[105] .

127. Leaving aside practicalities of proof, if a product is in fact used for carrying out the patented process, an infringement occurs ^[106] . In terms of s 6 of the Statute of Monopolies referred to in the Act's definition of "invention" in Sched 1, such an act is a "working" of the invention ^[107] ; in terms of the definition of "exploit" in Sched 1 to the Act, the conduct is a "use [of] the method or process". Although acts in respect of a product resulting from a patented method which infringe the monopoly will commonly be acts of direct infringement, there is no reason to doubt that s 117(1) applies to a product resulting from a use of a patented method. However, equally, a consideration of the complete definition of "exploit" in respect of a method or process indicates that there is no reason to deny the application of s 117 to a product (including, as here, an unpatented product) supplied by the supplier, preparatory to any carrying out of the patented method by a person to whom the product is supplied. The secondary materials referred to above show that the latter type of product was the main target of the legislation. The word "product" in s 117 is not confined to a product resulting from the use of a patented method or process ^[108] .

128. Furthermore, a consideration of the whole of s 117, including s 117(2), indicates that the expression "the use of a product by a person" in s 117(1) refers to a use of a product by a person to whom the product is supplied; the use of the word "supply" suggests a third party ^[109] . The precondition to engagement of s 117 in relation to a patented method is not a use of a product by the supplier of the product, but rather a use of the product by the person to whom the product is supplied ^[110] .

129. Section 117(2) follows and qualifies s 117(1). It contains a set of limitations which clarify and limit the availability of remedies for a patentee in respect of an "infringement by supply". Section 117(2)(a) expressly provides that facts resembling those of Dawson ^[111] constitute an infringement by supply. Section 117(2)(b) is a limitation which operates to protect suppliers of "staple commercial products" from liability even if a use of a staple commercial product by a person supplied "would infringe" in terms of s 117(1). Section 117(2)(c) provides that contributory infringement by inducement (considered a separate tort at common law) is an infringement by supply.

130. It is clear from the limitations on "use" in s 117(2) that the product supplied may be unpatented and may include raw materials. The limitations in s 117(2) can be understood as operating to ensure that infringement by supply does not inhibit lawful competition in unpatented products.

131. Consideration of the entire definition of "exploit" in respect of a method or process patent and of the whole of s 117 confirms that s 117 can be engaged in respect of a supply of a raw material for carrying out a patented method. That construction applies s 117 according to its terms and promotes the objectives of the legislation which can be gleaned from the secondary materials. Whether a particular use of an input into a method (or an input into a resulting product) "would infringe" in terms of s 117 will turn on the claims.

132. In terms of the claims in this case, and the assumption made by the primary judge that ACOC infringed the patent, the alleged use which ACOC makes of the bark and wood of the trees (the "supplied" product) is making, selling and offering for sale, the oil (the "infringing" product) extracted from the supplied product by steam distillation (the patented method). Nothing more needs to be said in the context of determining separate issues other than that the Northern Territory fails in respect of its submission on the first question that s 117 has no application to the timber supplied to ACOC.

Question 2: Did the statutory licences constitute a "supply"?

133. On the second question, it was submitted for the Northern Territory that the licences were, in form and substance, grants of permission to enter Crown lands, enforceable by forfeiture, and subject to royalty obligations and therefore not a "supply" as defined in the Act. Mr and Mrs Collins contended that the statutory licence in essence amounted to sale of the timber.

134. It was not disputed that the definition of "supply" in Sched 1 to the Act is not exhaustive and in its ordinary meaning it encompasses any means by which something is passed from one person to another. It is therefore not necessary to characterise the relevant royalty payments as equivalent to payments pursuant to a contract for the sale of the timber.

135. The licences to ACOC were undoubtedly in the form of statutory permissions to take timber, as contended by the Northern Territory. As the judgment of French J demonstrates, through the comprehensive consideration of numerous authorities, whether a contract to take timber is a sale of goods, or an interest in realty, depends on the context in which the characterisation is considered, then on a number of factors ^[112] . Relevant statutory provisions affect the characterisation of an interest ^[113] . Some simple distinctions which affected rights as between a life tenant and a remainderman are not without interest. A tree severed from the land was personalty ^[114] , whereas a tree attached to the land was realty ^[115] . Trees containing a useable quantity of wood were "timber" trees, distinguishable from trees which do not bear timber ^[116] . However, as part of a statutory regime concerning Crown land, the licences need to be characterised "in the light of the relevant statutory provisions without attaching too much significance to similarities ... with the creation of particular interests by the common law owner of land" ^[117] .

136. The licences, when considered in the light of the provisions of the Crown Lands Act and the Crown Lands Regulations referred to above ^[118] , grant to licensees a personal rather than a proprietary interest in the timber of the plantation.

137. It has already been explained that the intention of the Northern Territory when setting up the Howard Springs Plantation was cultivation of the trees for the production of commercial (ie saleable) timber. In the context of argument concerning the expression "staple commercial product" the Northern Territory relies, correctly, on numerous commercial uses of the timber in question. The licences are a means of passing, to ACOC, for commercial exploitation by ACOC, quantities of timber from trees cultivated by the Northern Territory to produce timber. The fact that an ad valorem royalty is charged in respect of the timber taken only serves to emphasise the fact that the interest granted under the licences involved commercial terms. The licences constitute a "supply" of raw materials for commercial use; this is a "supply" for the purposes of s 117. Accordingly, the Northern Territory fails in respect of its submissions on the second question.

Question 3: Is the timber taken under the licences a "staple commercial product"?

138. Because, contrary to the Northern Territory's submissions on questions 1 and 2, s 117(1) is capable of applying to the supply of the product here, it is necessary to answer question 3.

139. On that question, the Northern Territory contended that the expression "staple commercial product" in s 117(2)(b) should be construed as referring to any product supplied commercially which has substantial (ie not de minimis ) non-infringing uses, this being an exception to contributory infringement recognised in both the United States of America and the United Kingdom.

140. Mr and Mrs Collins sought to uphold the decision of the majority in the Full Court that a "staple commercial product" is "an item of commerce in the sense that it is ordinarily available for purchase from an entity that trades in that product" ^[119] . In particular, it was submitted that the Australian legislature has not incorporated the United States provisions with their reference to "substantial noninfringing use". It was contended that the conception of "staple commercial product" favoured in the United Kingdom and Europe, namely that such products were "generally available" ^[120] , should be preferred as the correct construction of the expression in s 117(2)(b).

141. Timber is a naturally occurring raw material whether deliberately cultivated or not. Timber of Callitris intratropica has a number of commercial uses. The primary judge was correct in his conclusion that the abandonment of original plans for the commercial exploitation of the plantation did not alter the character of the timber. The phrase "staple commercial product" derives from the statutory language in the United Kingdom. The cognate provisions in the United States of America refer to "a staple article or commodity of commerce suitable for substantial noninfringing use".

142. The precise scope of the expression "staple commercial product" is not clear. One ordinary adjectival use of "staple", applied to raw materials, conveys the meaning that the material is capable of being used as a constituent element in a number of other products ^[121] . That focuses on the inherent qualities of the product. Another equally well-known ordinary adjectival use of "staple" conveys the meaning that a product has a foremost place among products, for example, in a particular location ^[122] . That focuses on the distribution of a product rather than upon its inherent capacity to be a constituent in a number of other products and overlaps with the idea that the product be a "commercial" product.

143. It has been suggested by at least one writer in respect of European rights that a "staple commercial product" has two main qualities: first, it must be "[a] basic product commonly used for various purposes", and secondly, it must be "[g]enerally available on the market" ^[123] .

144. Raw materials such as wool or timber undoubtedly have the first quality. As to the second quality, it is necessary to recognise that s 117(2)(b) operates to limit liability for contributory infringement. Policy arguments in favour of imposing liability for contributory infringement are much weaker with a product that has significant non-infringing uses ^[124] . The legislative intention evinced in the statutory language, and apparent also from the relevant secondary materials, is to except from liability, the supply of products with significant non-infringing uses, or as it has been put in relation to the American provisions, products with "lawful as well as unlawful uses" ^[125] . A preference for such a construction has also been essayed in respect of s 60(3) of the Patents Act 1977 (UK) by a writer who states ^[126]

"the intention is to stop material particularly adapted to the use of an invention being made available to a putative infringer, but that material which has and, importantly, had, a general purpose of more than de minimis utility, falls within the [UK] exception".

145. The phrase "staple commercial product" means a product supplied commercially for various uses. This does not mandate an enquiry into whether there is "an established wholesale or retail market" ^[127] or into whether the product is "generally available" even though evidence of such matters may well be sufficient to show that a product is a "staple commercial product". The relevant enquiry is into whether the supply of the product is commercial and whether the product has various uses. Leaving aside the supply to ACOC, the timber here was supplied on commercial terms to various licensees for a variety of non-infringing uses. Accordingly, the Northern Territory is protected by the limitation in s 117(2)(b).