Statutory framework
section 122 ( 1A ) of the Patents Act ( 1990 ) Cth ( the Act ) stipulates the following with regard to relief for misdemeanor of a patent :
1A ) A court may include an extra sum in an appraisal of damages for an violation of a patent, if the court considers it allow to do so having regard to :
- the flagrancy of the infringement;
and - the need to deter similar
infringements of patents; and - the conduct of the party that
infringed the patent that occurred: - after the act
constituting the infringement; or - after that party
was informed that it had allegedly infringed the patent; and - any benefit shown to have accrued
to that party because of the infringement; and - all other relevant matters.
It is discernible from second 122 ( 1A ) above, that a court must consider each token when determining if extra damages are an appropriate rectify. It is besides worth noting that the habit of the term “ may ” in mho 122 ( 1A ) provides the court with discretionary office when considering a call for extra damages .
Background and Primary Decision
Gram Engineering Pty Ltd ( Gram ) commenced proceedings against Oxworks Pty Ltd ( Oxworks ) in which it alleged, amongst early things, that Oxworks infringed Gram ’ mho Australian Patent No. 2004291566 ( the Patent ) entitled “ Fence pedestal ”. A pedestal, in this context, is an component of a wall and used at the base of a fence construction. relevant figures from the Patent are shown below, the pedestal being count 28 .
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Claim 1 of the Patent recites :
>A fence plinth
formed from sheet material having spaced apart end margins and being profiled
to incorporate stiffening formations that extend along the sheet between the
end edge margins.
Oxworks contended that their competing fence pedestal did not infringe the Patent because it was extruded through a die, quite than being “ formed from sheet material ” as required by call 1. however, the primary coil estimate decided that the bible “ sheet ” did not require that the material be flat and could have corrugations or profiles .
The primary evaluator besides decided that Gram was entitled to extra damages. The primary coil estimate took into history respective facts in considering second 122 ( 1A ), including :
- Oxworks was provided with advertising material
relating to the plinth on two occasions. - Oxworks received a cease and desist letter
referring to the Patent, yet continued to sell the infringing plinth even after
that letter. - There was indeed “copying” even though the
plinth made by Oxworks had different dimensions. The shape of the plinth was
almost identical. - There was no dispute about the validity of the
Patent and there was no subsisting cross-claim for revocation.
Summary of Appeal Decision
The Full Court agreed with the primary evaluate ’ mho decision regarding the construction of the claims and maintained the chief evaluator ’ second earlier finding that Oxworks had infringed Gram ’ s patent.
In considering the ground in relation to the claim for extra damages, the Full Court explained that certain actions may not necessarily be considered crying. For model, the Full Court noted that “ it is not illegitimate, or crying, for a rival to examine the disclosure of a patent and to attempt to work around the monopoly claimed in the claims ” 3.Furthermore, the Full Court stated that :
“A competitor
may take the patent, examine the scope of the claims, and endeavour to produce
something that does not fall within them. Often, infringement cases are
determined by having regard to contestable constructions of the claims. The
fact that an alleged infringer fails to defend its reasonably arguable view as
to the correct construction of the claim, and continues to produce infringing
products in the face of that view, may result in an award for damages, but
would not of itself trigger an entitlement to additional damages within s
122(1A) of the Patents Act.” 4
The Full Court concluded that a reasonably arguable defense to infringement based on the construction of the claims, despite being ultimately incorrect as was relevant in this case, was a relevant retainer to the exercise of the discretion as to whether or not to award extra damages :
“… the primary
judge erred in this case by failing to attend to an important aspect of the
argument advanced on behalf of Oxworks, namely that Oxworks had a reasonably
arguable defence to the allegation of infringement based on its construction of
the claims of the patent. Had he done so, he ought to have concluded in
accordance with the authorities to which we refer below that the decision of
Oxworks to continue to pursue its own commercial interests in the face of
allegations of infringement that could objectively be considered to be
reasonably defensible is a strong factor telling against the award of
additional damages.” 5
In reaching this conclusion, the Full Court reviewed evidence concerning an electronic mail from Mr Hoskins, CEO of Oxworks, to Gram in relation back to allegations of patent violation when applying the Court ’ south delicacy :
“In the present
case it is apparent from the content of Mr Hosking’s email of 29 May 2017 that,
as at that date, a non-infringement argument addressing the “formed from sheet
material” integer of claim 1 was contemplated. As may be apparent from the
reasons set out in addressing grounds 1 and 2 of the present appeal, whilst
that argument has been resolved in favour of Gram, we are satisfied that the
non-infringement contention based on this integer was reasonably arguable. In
this instance this weighs heavily against an award of additional damages. It
diminishes the force of the submission that the act of copying was flagrant,
because it provides a legal basis for Oxworks to pursue that conduct, and it
provides an explanation for the decision on the part of Oxworks to continue
making and selling the Oxworks plinth after the cease and desist letter. While
giving great deference to the discretionary nature of the decision, when the
reasonableness of the arguments against infringement are taken into account, we
do not think that the circumstances warrant the award of additional damages
under s 122(1A) of the Patents Act. Accordingly, the first basis upon which
this ground of appeal is advanced is accepted.” 6
Discussion
The Full Court ’ s decision reminds us that extra damages should be applied where intentional violation has occurred, and where the infringer continues to measuredly infringe, notwithstanding advice to the contrary. The Full Court has approved the view that flush if an alleged infringer fails to defend its reasonably arguable view regarding non-infringement, and continues to produce conflict products, entitlement to extra damages under section 122 ( 1A ) of the Act may not inevitably be triggered .
even though the courts have the agency to award extra damages which is encouraging to patentees, this decision highlights that the application of section 122 ( 1A ) of the Act is a balancing exercise and a range of factors need to be accounted for to determine if the infringer ’ randomness actions are in fact crying .
1 Gram Engineering Pty Ltd vanadium Oxworks Pty Ltd [ 2019 ] FCA 689
2 Oxworks Trading Pty Ltd v Gram Engineering Pty Ltd [ 2019 ] FCAFC 240
3 Ibid, [ 72 ]
4 Ibid, [ 73 ]
5 Ibid, [ 66 ]
6 Ibid, [ 77 ]
