Patent Litigation in Practice Series: Spotlight on Australia - Preliminary discovery in patent disputes

In Australia, it is possible to make an application to the Federal Court before bringing proceedings for an order for discovery of documents so that a patentee, or an exclusive licensee, can determine whether they are entitled to obtain relief if they were to sue for patent infringement. 

Orders for preliminary discovery can assist a patentee who, for example, suspects that the claims of their patent may be infringed but requires additional information to determine whether there is a basis to bring an infringement claim, or because, it believes that its patent may be infringed, but it seeks to understand what quantum of damages it may recover prior to initiating proceedings. 

These orders are particularly relevant to pharmaceutical patents because the details of a potential infringer’s formulation, or manufacturing process, are unlikely to be publicly available. 

We explore the circumstances in which orders for preliminary discovery can be made in Australian patent disputes and possible grounds to resist applications for these orders in further detail below. 

Rule 7.23 and patent infringement proceedings 

Rule 7.23 of the Federal Court Rules provides that a prospective applicant may apply for an order for preliminary discovery from a potential infringer if they: 

1. Reasonably believe that they may have the right to obtain relief for patent infringement from the potential infringer; 
2. After making reasonable inquiries, do not have sufficient information to decide whether to commence proceedings to obtain that relief; and 
3. Reasonably believe that the prospective respondent has documents within its control that are directly relevant to the question of whether the prospective applicant has a right to obtain the relief.

While rule 7.23 is similar to pre-action disclosure provisions in other jurisdictions, prospective applicants must ensure that they satisfy each of these factors to obtain an order for preliminary discovery. 

Nature of the patentee’s belief 

The patentee must establish that it believes that it may have the right to obtain relief based on the available information and that this belief is objectively reasonable. This could be by way of evidence from in-house counsel, and also expert evidence that identifies certain integers of a claim that may be infringed by reference to information published by the potential infringer. The belief will be reasonable if the supporting evidence demonstrates that it is not untenable or baseless (even where the belief is challenged as incorrect). 

A belief that a patent may be infringed at some time in the future, may be insufficient to support a preliminary discovery application if the potential infringer has indicated that they do not presently intend to launch.  

The patentee is not required to establish the strength of its infringement case. The Federal Court has discouraged parties from running preliminary discovery applications as dress rehearsals for infringement proceedings that may subsequently be brought by the patentee. The Court will also not form a view as to which party’s expert witness is preferred and will only rely on expert evidence to assess the reasonableness of the patentee’s belief that they may be entitled to relief for infringement. 

Potential scope of the orders

Preliminary discovery is ordered by reference to targeted categories of documents sought by the prospective applicant. The scope of the orders is limited to documents that are necessary to overcome the insufficiency of information that has prevented the prospective applicant from being able to decide whether to commence infringement proceedings.

In patent disputes it is common for orders for preliminary discovery to require that documents are produced under an appropriate confidentiality regime. Access to documents produced by the potential infringer are commonly limited to external lawyers and independent experts. 

Options for potential respondents

While rule 7.23 is typically applied broadly, a potential respondent can try and defend an application for preliminary discovery by showing that: 

• The patentee does not hold the required belief (for example, where it already holds sufficient information to decide whether to commence infringement proceedings and is seeking to test the prospects of its infringement claim); or 
• There is no reasonable basis for the patentee believing that they may be entitled to relief. 

On the current state of play in Australia, this will be an uphill battle, as an application for preliminary discovery is rarely refused.  It is insufficient, for example, for a potential infringer to argue that the application is speculative because the Rules effectively permit the production of documents in circumstances that may otherwise be considered a fishing expedition. 

Alternatively, a potential respondent can offer to provide an undertaking not to engage in certain conduct that the patentee believes may infringe the patent. Similarly, it may also be possible to provide information regarding the potential respondent’s product or process on a confidential basis to discourage the patentee from pursuing their application. 

The parties may also consider retaining an independent expert witness to provide a confidential opinion on whether certain features claimed by the patentee have been taken by the potential respondent’s product or process. 

Ongoing role for preliminary discovery in patent disputes 

The Federal Court has taken steps to streamline the application of rule 7.23 in patent matters and preliminary discovery applications have continued to be deployed by patentees in Australia. Despite the position taken by Courts on preliminary discovery applications (in that preliminary discovery is routinely ordered), it is important that potential respondents scrutinise the categories of documents sought by the application (which can be wide reaching), and only provide what is necessary for the patentee to form a view (for example, on infringement).