So, you have a granted Australian patent or design and you become aware of another person or company which you believe infringes your rights.
Before contacting that person or company, it’s worth keeping in mind that there are provisions in both the Patents and Designs Acts which relate to “unjustified threats” (see Patents Act ss128, 129, 129A; Designs Act ss77, 78). If you threaten a company or person by asserting that they are infringing a patent or design, and it is later found that none of the claims of your patent are both valid and infringed, or it is later found that your certified design is not infringed, legally that person or company can seek:
- A declaration that the threats are unjustifiable; and
- An injunction against the continuance of the threats; and
- The recovery of any damages sustained as a result of the threats.
For innovation patents and designs it is worth keeping in mind that these both proceed directly to registration without examination (which must be requested separately). Infringement proceedings cannot be commenced for a registered innovation patent or a registered design unless and until they have passed examination and become certified. Asserting that an uncertified innovation patent or design is infringed by another person or company is explicitly considered to amount to an unjustified threat (see Patents Act, s129A(1); Designs Act s77).
So what else constitutes a “threat”?
Well, the threat may not just come from a letter sent directly to the infringing company or person. Both the Designs and Patents Acts state that the threat may be “by means of circulars, advertisements or otherwise” (see Patents Act, s128(1); Designs Act, s77(2)). However, the Patents and Designs Acts also state that mere notification of the existence of a patent, or a registered design, does not constitute a threat (see Patents Act s131; Designs Act, s80).
BLH Engineering and Construction Pty Ltd v Pro 3 Products Pty Ltd [2015] FCA 833 provides a good example of how these provisions were applied for an innovation patent.
In this decision, an innovation patent owned by Pro 3 Products Pty Ltd (“Pro 3”) was found to be valid, but not infringed by BLH Engineering and Construction Pty Ltd / BLH Safety Solutions Pty Ltd (“BLH”). As Pro 3 had asserted that BLH had infringed their innovation patent, BLH asserted that Pro 3’s threats were unjustified and sought declarations, injunctions and damages as discussed above.
Examples were provided in the decision of letters sent by the attorneys acting for Pro 3, and the judge decided if each letter constituted a “threat”. These letters are reproduced below:
This letter (sent to BLH on 2 September 2011) was found to be a “threat” (especially see the text in bold):
“Infringement of Certified Australian Innovation Patent No 2011100489 SYSTEM AND COMPONENTS FOR SAFELY ENCLOSING HANDRAILS, STAIRWAYS, WALKWAYS AND PLATFORMS PRO 3 Products Pty Ltd
Our Ref: 38381M TAM:CRW:MM
We act for Pro 3 Products Pty Ltd.
Our client is the proprietor of the above Certified Australian Innovation Patent No 2011100489. We enclose a copy of the certified innovation patent for your information.
It has come to our client’s attention that your company is developing and promoting a “a stop drop barricading system” – which includes a clip on bracket for mounting guard panels to stanchions, such as that described in your recent innovation patent 2011100520.
The manufacture, use, installation (including trial installations), promotion or other exploitation of your stop drop barricading system using such clip on brackets infringes the claims of our client’s certified innovation patent.
Accordingly, we have been instructed to request that you provide an undertaking in writing that you will cease and desist from manufacturing, installing, promoting or otherwise exploiting your above described stop drop barricading system, and immediately take steps to remove any existing installations of your system, or otherwise come to an acceptable commercial agreement with our client such as licensing our client’s intellectual property.
You can provide this undertaking by signing the enclosed copy of this correspondence and returning it to us within 10 working days from the date of this correspondence. If you do not provide the requested undertaking within this time, or provide the undertaking and do not comply with it, our client reserves the right to take action against you without further notice to you.
In the meantime, all of our client’s rights (including those related to costs and damages) are expressly reserved.”
This letter (sent to BHP on 2 September 2011) was found not to be a “threat”:
“Certified Australian Innovation Patent No 2011100489
SYSTEM AND COMPONENTS FOR SAFELY ENCLOSING HANDRAILS, STAIRWAYS, WALKWAYS AND PLATFORMS
PRO 3 Products Pty Ltd
Our Ref: 38381M TAM:CRW:MM
We act for Pro 3 Products who have recently developed a Dropped Object Prevention System, an example installation which has been on display in the PPO building of Olympic Dam since March 2011.
Our client takes protection of its IP seriously, and we are pleased to inform you that our client’s innovation patent 2011100489 relating to clip on brackets for use in this and other similar systems (including plastic systems) has recently been examined and certified by IP Australia. We enclose a copy of the Certified Innovation Patent for your information.
Please do not hesitate to contact us if you would like any further information on this Certified Innovation Patent.”
This letter (sent on 27 January 2012 to BLH’s attorneys) was found to be a “threat”:
“Infringement of Certified Australian Innovation Patent No 2011100489
SYSTEM AND COMPONENTS FOR SAFELY ENCLOSING HANDRAILS, STAIRWAYS, WALKWAYS AND PLATFORMS
PRO 3 Products Pty Ltd
Our Ref: 38381M CRW:TAM:NH
Your Ref: BLHG001-PRO3
We refer to our letters of 2 September 2011 and 4 October 2011 and would like to invite your client to enter into discussions with our client to seek a commercial agreement to resolve this matter.
It has come to our client’s attention that BLH have launched a website at http://blhsafetysolutions.com/ which promotes the BLH stop drop barricading system. Further we understand that representatives from BLH propose to promote the system both in Australian [sic] and overseas such as the Offshore Technology Conference in Houston, USA in April 2012.
We wish to remind you that our client’s Innovation Patent No 2011100489 is still in force, and manufacture, importation, use, installation (including trial installations), promotion or other exploitation of the clip on brackets used in the BLH stop drop barricading system in Australia infringes at least claim 1 of our client’s certified innovation patent.
Whilst a re-examination Report has been issued based on prior art outlined in your letter of 22 September 2011, we have filed a detailed response to this and consider that the claims (as amended) are valid and infringed by your client’s clip on bracket used in their stop drop barricading system. Your client’s decision to launch their website, perform installations, and promote their system at various conferences in spite of our previous letters, and the knowledge that our patent is still in force has been noted.”
The letter went on to state that the parties might “come to a commercial arrangement” (such as by way of BLH licensing the intellectual property) or that BLH might “make an offer to buy the IP”. These suggestions followed a statement that Pro 3 was “prepared to take further action if required” and that a commercial outcome “would avoid the significant costs, time and effort associated with Court action”.
Ultimately, two of the letters sent by the attorneys acting for Pro 3 were found to constitute unjustified threats. What happened next?
BLH sought and Jessup J decided to make a declaration that the threats are unjustifiable, and to grant an injunction against the continuance of the threats.
BLH also sought recovery of damages sustained as a result of the threats. However, BLH was unable to relate any net loss to the infringing threats of Pro 3. It was found that neither financial statements, nor any other evidence led by BLH disclose the gross profit BLH made, or would have made, on the sale of each unit of their BLH system. There was also nothing in the evidence from which Jessup J could infer that sales which, on the probabilities, would have been made in the specified time period were permanently lost to BLH because it chose to close down its sales efforts after receipt of the letter from Pro 3 of 2 September 2011. Consequently, no award of damages was made to BLH.