Suite 2, Level 3A
1 Bligh St
Sydney NSW 2000
+61 2 9264 6716
Suite 803, Level 8
488 Bourke St
Melbourne VIC 3000
+61 3 9602 2288
239 George St
Brisbane QLD 4000
+61 7 3188 5624
Once a patent is granted, it gives its owner the right to commence patent litigation and to receive an injunction and compensation for the infringement. Determining what legal steps you can take to prevent infringement can be a complex exercise.
Where it is believed that a patent is being infringed, making some attempt to resolve the dispute without going to court is usually a sensible idea. In fact, it is a pre-condition to commencing litigation in the Federal Court (see the section on “genuine steps” below).
Simply threatening others with a lawsuit for patent infringement can get you intro trouble. Care needs to be taken in communications with an alleged infringer. This is because of s128 Patents Act 1990 (Cth) (“the Act”), which enables a party threatened with infringement proceedings to bring an action for damages and an injunction against the person making the threats.
Even general threats, not directed at a particular party can be sufficient to ground such a claim1.
Of course, allegations of patent infringement will not be ‘unjustifiable’ if infringement is proved in subsequent court proceedings. Where a claim under s128 is brought, the patent holder can bring a counter-claim for infringement pursuant to s130 of the Act.
Most if not all patent litigation is commenced in the Federal Court, although the Supreme Courts of each State have the jurisdiction to hear such claims. The primary reason for this is that the Federal Court has a specialist panel of patent judges with specialist experience.
Infringement claims can be brought either by the patent owner, or an exclusive licensee. Where an exclusive licensee brings the action, the owner must be joined either as a co-applicant, or a respondent. As a respondent, the patent owner can choose not to take part in the proceedings, without any risk of a costs order against them.
Proceedings in the Federal Court are commenced by the filing of two documents: an originating application; and a statement of claim.
Put simply, an originating application sets out the orders (or “relief”) you want the court to make if you are successful. You may also seek interim or interlocutory relief to protect you in the period leading up to the final hearing. An interim injunction to prevent infringement until the matter is determined at trial, is a good example.
A statement of claim sets out, in summary form, the nature of your claim and the material facts on which it is based.
One further document is usually required to be filed in patent infringement proceedings: a “genuine steps statement”. This statement is to set out the “sincere and genuine” attempts taken to resolve the dispute with the opposing party, or an explanation of why no such steps were taken.
Once the originating application and statement of claim have been filed, they need to be served on the other party. The first court date will be set down around five weeks from the date of filing. At the time of filing, the matter will be allocated at random to a single judge. That judge will remain in the matter until trial.
This first court date (“directions hearing”) marks the court’s supervision of preparing the matter ready for trial. These steps include setting timetables for the exchange of documents; hearing applications for interim orders; referrals to mediation; directions as to the preparation of expert evidence, and the method by which such expert evidence will be received.
More detail about the steps between filing and trial are set out in the Federal Court’s Practice Note IP 1 (available at http://www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes/ip1)
By way of overview, the typical steps between filing and trial are as follows:
It is not possible to be specific about how long the court process takes from filing to trial, as it depends on the workload of the court, and the complexity of the issues in a particular case. However, as a rough guide, it might be assumed that the process takes around 12 months.
One the trial is held, it is also common for the judge to reserve their decision. Depending on the workload of the judge, and the complexity of the issues, it may take from weeks to months for the decision of the judge to be delivered.
It is normal for patent litigation to be split into separate issues of liability and infringement, with a trial limited to the question of liability to be decided first. This means that whether a patent is infringed is determined separately from how much the claim is worth. Often, once liability is proved, the infringer will be willing to negotiate an amount of compensation without the need for a further trial on that issue. In that way, the costs of the legal proceedings are able to be kept to a minimum.
At any time, even prior to commencing proceedings, an urgent application can be made to the duty judge of the Federal Court at short notice (and even, in the appropriate case, out of hours, and/or without notice to the alleged infringer).
For example, it might be necessary to obtain an urgent injunction to restrain an impending infringement which might materially affect the patent holder’s market position. Alternatively, there might be some concern that the alleged infringer will remove assets outside the jurisdiction before the court proceedings can be determined.
The usual rule in court proceedings is that the unsuccessful party is usually required to pay a proportion of the legal costs of the successful party. Typically this will be around 60% of the costs of the successful party. In some limited circumstances, such as where an offer to settle has been rejected, a party can be required to pay the other party’s costs on an “indemnity”, which covers almost all the costs of that party.