A recent decision of the Federal Court of Australia provides a reminder of the need for caution in the manner of correspondence between a patentee and a party suspected of infringing the patentee's rights.
Section 128 of the Australian Patents Act (1990) provides that a person unjustifiably threatened with infringement proceedings may apply to a Court to restrain the making of those threats and to recover any damages sustained as a result of the threat.
In the case recently decided in the Federal Court , Occupational and Medical Innovations Limited (OMI), an Australian company and patentee of a patent directed to retractable syringes, alleged that Retractable Technologies Inc (RTI), an American company with Australian and US patents in the same field of technology, had made unjustified threats of patent infringement proceedings. In 2004 and 2006 OMI was the recipient of several letters written on behalf of RTI which stated, among other things, that RTI:
'is prepared to take any legal action necessary to protect its patented and unpatented technology, its products and its proprietary position with respect to [RTI's supplier] and any company with which [the supplier] or its affiliates may be dealing.'
Notably, the RTI letter did not explicitly assert infringing conduct in Australia nor did it explicitly refer to the commencement of infringement proceedings. Nevertheless, the reference in the RTI letter to "protecting patented technology" was interpreted by the Court to "suggest infringement proceedings or, perhaps, an application to revoke [OMI's] patent with the intention that infringement proceedings follow".
Accordingly, the Court was satisfied that "a recipient in the position of [OMI] would have understood the letter to threaten enforcement or similar proceedings in Australia, pursuant to an Australian patent held by RTI, in connection with the importation into, and/or other exploitation in, Australia of retractable needles manufactured in China." The Court therefore held the letter referred to above included unjustified threats.
Although in this case the Court exercised its discretion to not grant an injunction (as the Court formed the view that it was "unlikely there will be any further unjustifiable threats" by RTI), the case serves to remind that any approach by a patentee to an alleged infringer must be couched with caution.
Section 131 of the Patents Act makes it clear that the "mere notification" of the existence of a patent or patent application does not (by itself) constitute a threat of proceedings under s128 of the Act. Indeed, given that s123 of the Act provides the Court with a discretion not to award damages or make an order for an account of profits if an infringer can establish that, at the time of the infringement, it was unaware of the existence of a relevant patent and had no reason to believe one existed (so-called "innocent infringement"), notifying a suspected infringer of your patent may be a desirable course of action. However, as is made clear in this case, any words used beyond a mere notification may be interpreted by a Court as a threat of proceedings. Therefore it would be prudent to consult with a patent attorney or legal adviser before sending a letter of notification to anyone or before making any allegation of patent infringement.
1Occupational and Medical Innovations Limited (ACN 091 192 871) v Retractable Technologies Inc [2007] FCA 1364 (31 August 2007)
For more information please contact Dr Martin O'Brien at martin.obrien@sprusons.com.au
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