Archive for October, 2008

Wednesday, October 29th, 2008

Copyright Owners Keep on Trucking

In most intellectual property litigation in Australia, an order is made at a relatively early stage that issues of liability be determined separately from and prior to issues of quantum of any relief. While there are good reasons for the making of such an order, it does mean that a finding that a valid IP right has been infringed often means the battle is only half won. Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd (No 2) [2008] FCA 1493 addresses the question of pecuniary relief following a finding of liability for copyright infringement, previously reported here.

The Fourth Respondent, Vawdrey, had been found to have infringed copyright owned by Krueger in certain drawings for a truck load restraint system. Krueger sought damages under s 115(2) of the Copyright Act as well as additional damages under s 115(4). In response, Vawdrey’s primary submission, in reliance on s 115(3), was that it was not liable to pay any damages because it was an innocent infringer. Vawdrey had not directly copied the drawings of Krueger, but had done so indirectly by following instructions given by the First Respondent, Camerons.

Gordon J noted that Vawdrey bore the onus of proving its innocence and that if it intended to rely on s 115(3) “it had to lead evidence to establish that, at the time of the infringement of Krueger’s copyright, it was not aware of and had no reasonable grounds for suspecting that the act constituting the infringement was an infringement.” In the circumstances, Vawdrey’s failure to make any inquiries about the source of Cameron’s instructions was found to preclude a finding of innocence.

On the quantification of damages, Vawdrey’s submission that it was only liable for lost profits on the load restraint systems themselves, rather than on the entire trailers incorporating such systems, was rejected. As Gordon J noted “Any loss related to non-copyright items is recoverable where it is a foreseeable consequence of the infringement.” Having considered the competing methodologies for calculating lost profits, as presented by various expert witnesses, Gordon J awarded damages in the amount of $346,449 for lost profits. A further amount of $10,000 was awarded for lost goodwill.

Finally, Gordon J considered Krueger’s claim for additional damages, finding that “while Vawdrey’s infringement was not the most flagrant it was also not innocent”, noting in particular the failure to make reasonable inquiries as to the provenance of Camerons’ instructions. Also taken into account was the need to deter conduct of the type engaged in by Vawdrey, and the benefit which accrued to it by that conduct, with $30,000 in additional damages being awarded.

Tuesday, October 21st, 2008

Ignorance, Inconvenience & Interlocutory Injunctions

Since 2005, the first inclusion of a generic medicine in the Pharmaceutical Benefits Scheme (PBS) has resulted in an automatic 12.5% price reduction in the government subsidy of all medicines of that type, including the original listing. This factor has become increasingly significant in applications for interlocutory injunctions in pharmaceutical patent litigation, as illustrated by the decision of Jessup J in Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498.

In considering this price reduction on the question of the adequacy of damages should an injunction not be granted, his honour considered that if a 12.5% reduction in the price paid to the patentee would be the only impact of the entry of the generic product into the market “it would be difficult to conclude that the cross-claimants’ losses could not ultimately be calculated, and compensated in damages”. However, according to Jessup J:
the real problem is whether it would ever be possible to restore the cross-claimants to the position they now occupy, should they succeed at trial but not secure the interlocutory restraints they seek.

This problem was considered, at least in part, to be due to the apparent absence of any mechanism for restoring the price to its original level should a patentee ultimately obtain final injunctive relief.

In assessing the balance of convenience in granting or refusing the injunction, his Honour found persuasive the argument of the patentee that the alleged infringer, “has undertaken all its commercial preparations in the knowledge of one or both of the patents, or at least had been less than assiduous in its inquiries as to whether the marketing by it [of the allegedly infringing product] might have constituted an infringement”. On this issue, Jessup J concluded that:

I am not disposed to allow it to rely on its own ignorance as leading to a situation in which it would now be commercially inconvenienced were it to be subject to an interlocutory restraint of the kind that the cross-claimants seek.

Ultimately, an interlocutory injunction was granted in respect of one of the two patents said to be infringed.

Wednesday, October 15th, 2008

Designs Act 1906 no Flash in the Pan

While Australia has had a new Designs Act for over four years now, the previous Designs Act 1906 still has a significant role to play in respect of designs registered under that act.

Caroma Industries Ltd v Technicon Industries Pty Ltd [2008] FCA 1465 illustrates the breadth of the infringement provisions of the 1906 Act. As noted by Cowdroy J a design registered under the 1906 Act may be infringed by the application to an article of a design which is (i) the registered design, (ii) an obvious imitation of the registered design or (iii) a fraudulent imitation of the registered design.

In this instance, his Honour found that on first impressions Caroma’s registered design, in respect of a toilet pan, and Technicon’s alleged infringement were very similar, however:

the visual comparison undertaken by the Court involves both first impressions and later impressions. The Court accordingly observes that while the similarities between the Technicon pan compared with the registered design are initially striking, closer inspection reveals certain differences.

Cowdroy J concluded that the differences between the two meant that the alleged infringement did not “possess such a close resemblance to the registered design that it is ‘almost unmistakeable’” and therefore was not an obvious imitation.

On the question of fraudulent imitation, the Court noted that:

whether a product constitutes a fraudulent imitation of a registered design requires an examination of the alleged infringer’s state of knowledge of the relevant registered design … it is not necessary that the alleged infringer had actual knowledge of the fact of registration of the registered design, but merely that the alleged infringer had reason to believe or strongly suspect, or had wilfully disregarded the likelihood of such registration

In this instance, and in part relying on Technicon’s familiarity with the registered design system having sought design registration itself, it was held that Technicon ‘had reason to believe or strongly suspected’ that the design of the Trident toilet pan (the commercial embodiment of the registered design to which it had reference) may have been registered.

The Court further found that the Technicon pan “incorporates significant visual features of the registered design”, which combined with the finding of implied knowledge, led to a finding of fraudulent imitation and hence infringement.

This decision highlights the dangers of seeking to adopt or adapt a competitor’s product design and that lack of actual awareness of the existence of registered rights will not necessarily prevent a finding of infringement. Generally it will be preferable to be fully aware of all relevant design registrations in order to better design around the rights of others.

Monday, October 13th, 2008

IP Australia and USPTO sign international patent search arrangement

IP Australia and the USPTO have entered into an arrangement that will see IP Australia act as an international search and examination authority for certain international patent applications filed with the USPTO. The arrangement comes into effect on 1 November 2008 and will allow US applicants to choose IP Australia to undertake the initial search and examination of their patent application under the Patent Cooperation Treaty (PCT).

Friday, October 10th, 2008

The Privilege of Amending Patents

Section 105 of the Patents Act empowers the Court to direct amendment of a patent which is the subject of pending legal proceedings, including at the request of the patentee. The course of patent litigation may give rise to many good reasons for considering amendment to the patent in suit, however any decision to do so must be very carefully considered, as illustrated by the judgement of Bennett J in Apotex Pty Ltd v Les Laboratoires Servier [2008] FCA 1466.

In considering whether to direct an amendment under s 105, the Court has a wide discretion and will consider the public interest in allowing the amendment but also conduct of the patentee. This gives rise to an obligation on the part of the patentee to disclose information relevant to the amendment. A decision not to disclose relevant documents on the basis that they a privileged may bear on the exercise of the Court’s discretion.

In Apotex v Les Laboratoires Servier, the patentee, Servier, sought to explain the “reasons for and factors impacting on” its decision to seek amendment via affidavits from the solicitor having the conduct of the proceedings. Apotex served a notice to produce, seeking documents recording or referring to the solicitor’s views as expressed in the affidavits, including his views that amendments to the patent were necessary. Servier resisted production, claiming privilege in the documents sought.

Bennett J noted that “Apotex does not presently rely on a primary obligation to waive legal professional privilege as part of the obligation of good faith on the part of a party seeking to amend a patent.” Rather, Apotex relied upon an implied waiver of privilege by Servier due to its reliance on the affidavits which disclosed the giving of advice regarding the amendment. Her Honour, having considered the authorities relating to waiver, concluded that:

It must be accepted that the application to amend was made with instructions from Servier. Accordingly, Servier intentionally presented Mr Hamer’s affidavits and evidence as evidence of its reasons for making that application. In effect, Servier has disclosed the legal advice of Mr Hamer by presenting that advice as the totality of its reasons for seeking amendment. It is then inconsistent with that presentation to claim legal professional privilege with respect to the communications between Servier and Mr Hamer concerning Mr Hamer’s opinion, Servier’s instructions, the application for amendment and Servier’s reasons for making it.

This decision provides another clear illustration of the importance of carefully reviewing a patent with a view to the need for any amendment prior to the commencement of proceedings.

Tuesday, October 7th, 2008

King for a day

A number of recent Federal Court decisions have highlighted the importance of correctly identifying inventors and owners in the context of patent applications. Anakin Pty Ltd v Chatswood BBQ King Pty Ltd [2008] FCA 1467 illustrates the importance of clearly identifying ownership in the context of Trade Mark rights.

The first applicant and registered trade mark owner, Anakin, was one of a number of companies which, along with certain individuals, had been involved in the operation of a Chinese restaurant under the name “B.B.Q. King” since the early 1980’s. As noted by Branson J “considerable informality has attended the business affairs of the companies associated with the BBQ King restaurant”, leading to uncertainty as to the actual owner of the BBQ King trade mark at the date the application for registration was filed.
Her Honour found that at the time of filing, the second applicant Gold Kings owned the goodwill in the trade mark as well as the right to conduct the BBQ King business. As the applicant was not the owner of the trade mark at the date of filing, the respondent’s cross-claim for rectification was made out. Having regard to the informal way in which the affairs of the applicants were handled, including failures to comply with the Corporations Act and to pay stamp duty on transfers of the business, Branson J refused to exercise discretion allowing the trade mark to remain on the register.

The applicants were however successful in their claim for passing off and breach of the Trade Practices Act, obtaining orders for damages in the amount of $20,000 and an injunction restraining the respondent from using the name “Chatswood BBQ King”.