Deliberate copying: Federal Court finds patentee entitled to additional damages in patent infringement case

By Jane Owen, Rebecca Currey, Patrick Brown

06-2019

On 3 June 2019, in a decision of the Federal Court of Australia in Gram Engineering Pty Ltd v Oxworks Pty Ltd [2019] FCA 689, a rare order was made finding that the patentee is entitled to additional damages for patent infringement.

Since the introduction of additional damages in 2007, the Court has only made one award: in Pacific Enterprises (AUST) Pty Ltd v Bernen Pty Ltd (2014) 321 ALR 715. In that case, Justice Pagone awarded the patentee additional damages of $40,000, representing half the gain from the infringement.

This case may provide encouragement to patentees that the courts are becoming more inclined to determine flagrancy and to award appropriate compensation for flagrancy.

Background

The patent in suit (AU 2004291566) is directed at fence plinths.

The case ultimately turned on the construction of the words "formed from sheet material".

Claim 1 of the patent claims:

A fence plinth formed from sheet material having spaced apart edge margins and being profiled to incorporate stiffening formations that extend along the sheet between the end edge margins.

The alleged infringer argued that its fence plinth product did not infringe the patent in suit, by virtue of the fact that its product was made from an aluminium billet that was extruded through a die, rather than being bent or pressed into shape.

However, Justice Robertson found that the word "sheet" did not necessarily require that the material be flat, and that it may have corrugations or profiles, and that the sheet, may or may not be made from metal. "A point of significance", his Honour said, "is that claim 1 of the patent in suit is a description of a product, rather than the specification of a process or description of an activity of profiling or shaping".

Entitlement to additional damages

In finding that the applicant was entitled to additional damages under s 122(1A) of the Patents Act, Justice Robertson referred to the nine principles set out in in H Lundbeck A/S v Sandoz Pty Ltd [2018] FCA 1797, in particular that "flagrant conduct includes that which is deliberate and calculated in disregard of the injured party's rights, or a cynical pursuit of benefit".

His Honour took into account the following in finding that the circumstances warranted an entitlement to additional damages under section 122(1A):

  • the respondent was twice provided with marketing material which expressly referred to the patent number;

  • it had purchased the applicant's product over a period of 10 years, and still retained inventory of the product;

  • that it was probable that the director of the respondent had looked at the applicant's website that contained references to the patent, because the same director had sent a link to the applicant's website to its manufacturer, and that director did not give evidence to displace this inference, although he was in a position to do so;

  • that the respondent did copy the applicant's product, even though the alleged infringing product was not of the same thickness and was made by a different process, and that the copying was deliberate, and that the copying was approved by a director or another employee or officer of the alleged infringer;

  • the respondent had received a cease and desist letter referring to the patent, but it continued to sell the allegedly infringing plinth after that letter.

Notably, no evidence was led by the respondent itself as to its knowledge of the patent in suit or any advice it had sought in respect of infringement or validity.

Subject to any appeal by the Respondent, the quantum of damages will be determined in a separate hearing later this year. Given that the only previous decision is the modest award in Pacific Enterprises, we await with interest the Court's approach to determining the quantum of additional damages to be awarded.


 

Authors

Rebecca Currey

Associate
Australia

Call me on: +61 2 9226 9888
Jane Owen photo

Jane Owen

Partner
Australia

Call me on: +61 2 9226 9888