News from Australia on Preliminary Injunctions, False Patent Marking

1. Andrew Mullane, Craig Humphris and Todd Shand have published Interlocutory injunction applications in Australia in 10 Journal of Intellectual Property Law and Practice 170 (2015), available here.  Here is the abstract:

In Australia, patentees can apply to the court for an interlocutory injunction to prevent a competitor entering the market before the court finally determines whether the patentee's rights would be infringed. An interlocutory injunction will be awarded if (a) the patentee has a prima facie infringement case and (b) the balance of convenience favours the injunction. In practice, unless the infringement case is particularly weak, or the invalidity case almost irresistible, a prima facie case will invariably be established. As a consequence, most interlocutory injunction applications are decided on the balance of convenience.

Assessing the balance of convenience entails a complex task of weighing all the surrounding factors to determine whether granting the interlocutory injunction is in the interests of justice. While the relevant circumstances are specific to each case, a number of common factors arise in most interlocutory injunction applications, such as the extent and nature of the parties' respective potential loss, the patentee's prospects of establishing infringement and the respondent's awareness of the patentee's rights before it sought to enter the market. When contesting an interlocutory injunction application, a party's litigation strategy must pay close regard to these factors to maximise their prospects of success.

A review of recent patent interlocutory injunction applications shows that a high proportion of interlocutory injunctions are granted. This is primarily a function of the test applied by the court. It appears that a respondent must establish that there are exceptional circumstances in order to avoid the grant of an interlocutory injunction.

I found this article to be something of an eye-opener.  In my book (p.178), I cite an article by Charles Lawson, The interlocutory injunction dilemma in patent infringement and invalidity disputes, 21 AIPJ 73 (2010), which argues that Australian courts in recent years have become more lenient toward patent plaintiffs.  The above article would appear consistent with this thesis (though we are dealing with a relatively small sample).  According to Mullane et al., "The court will grant an interlocutory injunction against a respondent if it is satisfied that: (a) the patentee has a prima facie infringement case and (b) the balance of convenience lies with granting the injunction" (p.171).  Thus, although some decisions had required the plaintiff to show irreparable harm, "Samsung Electronics Co Ltd v Apple Inc clarified the test by confirming that the risk of the patentee suffering irreparable harm forms part of the balance of convenience enquiry, rather than being its own separate facet" (id.).  (I would note, however, that the November 30, 2011 Samsung case is an intermediate appellate decision, not a decision of the Australian High Court.)  The authors further assert that "unless the infringement case is particularly weak, or the invalidity case is almost irresistible, the court will simply acknowledge that both positions are arguable, and find that the patentee has established a prima facie case. It is consequently rare for the court to find that a patentee has not established a prima facie case, and most applications are decided on the balance of convenience" (id.).  Most importantly:

Generally speaking, patentees have enjoyed a high degree of success in seeking interlocutory injunctions. Annex 1 summarises the interlocutory injunction applications relating to patent rights which have been decided since 2009. In that time, 18 cases have come before the court, with 13 being granted and five being refused (where a first instance decision was appealed, the first instance decision has been excluded from this calculation).

2.  Johnathon E. Liddicoat and Dianne Nicol published a paper in 2013 that only recently has come to my attention, titled Re-evaluating False Patent Marking in Australia, 22 Journal of Law, Information and Science 128 (2013).  Here is a link to the paper, and here is the abstract:

False patent marking has come to prominence in intellectual property circles due to a recent boom and bust cycle of litigation in the US. This article examines this cycle and its ancient roots from an Australian perspective. In the absence of false patent marking data in Australia, this article uses the causative legal mechanisms of the US cycle to conduct a natural experiment on Australian false patent marking provisions. This natural experiment gives insight into the likely prevalence and potential effects of false patent marking in Australia.

Consideration is also given to the harms created by false patent marking. Previous analyses discussed in this article posit that false patent marking negatively affects competitive markets and consumers. However, it is argued that from a realistic commercialisation and consumer perspective, these harms may be exaggerated.

An analysis of the utility of Australian false patent marking laws is also undertaken, based on the evidence at hand and comparative legal reasoning. This analysis indicates that deficiencies in Australia’s false patent marking provisions do exist. A call is made for further empirical research into the incidence and effects of false patent marking in Australia; it is possible that costs created by false patent marking are not being recognised. However, since no empirical or recent anecdotal data indicates false patent marking presents a serious issue, and Australian provisions comply with basal aspects of what has been described as an ‘optimal’ enforcement system, no major reforms are suggested at this stage. Minor amendments are recommended to simplify the enforcement of the current provisions and improve trust in the patent system. It is further recommended that a watching brief is kept on this area of patent practice.