A smart move for Australian IP holders in China IP age 2.0 I went to China last month attending IP conferences and meeting with Chinese associates there. Similar to other fast-changing aspects of...
An overview of patent litigation
Once granted, a patent gives its owner the right to commence patent litigation and to receive an injunction and compensation for an infringement case. Determining what legal steps you can take to prevent infringement can be a complex exercise.
Pre-commencement – what to do if you think someone is infringing your patent?
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, dispute resolution 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 into trouble. Care needs to be taken in communications with an alleged infringer. This is because of Section 128 of 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 proven 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.
Commencement of patent litigation
Jurisdiction of patent litigation
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.
Originating process & Statement of claim – what are they?
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 sets 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.
What happens after filing?
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 5 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 the following: 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 details about the steps between filing and trial are set out in the Federal Court’s Practice Note IP 1.
By way of overview, the typical steps between filing and trial are as follows:
- Pleadings: a respondent has 28 days to file a defence, which responds to the allegations in the statement of claim. An applicant then has an opportunity to reply to the defence.
- Discovery: this is the process whereby parties exchange the documents in their possession that are relevant to the case.
- Evidence: the exchange of witness statements setting out the evidence each witness which the parties intend to rely on at the trial. This includes any expert evidence.
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 damages (or quantum), 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 can be kept to a minimum.
What if the matter is urgent?
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 that 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 between 60% to 70% 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.
- See for example Mizzi Family Holdings Pty Ltd v Morellini  FCA 1435 (24 December 2013).