The recent case of CQMS Pty Ltd v Bradken Resources Pty Limited [2016] FCA 847  has highlighted the importance of carefully considering how to assert the rights provided by an Australian patent.

Unjustified Threats

The Australian Patents Act 1990 contains provisions intended to prevent patent holders, or those applying for patents, from making unjustified threats of patent infringement against others. The legislation also provides for the restraint of any such threats and damages that may have resulted.  It is typically the case that someone receiving a perceived threat may choose to take action against the threatening party to restrain the threats and recover damages, if any.  If this is done then the threatening party will typically counterclaim with a claim for patent infringement.

The way Australian courts have been determining actions for unjustified threats is, in short, that should the counterclaim for infringement be unsuccessful then the original threat is by definition ‘unjustified’.  This is unrelated to how reasonable the patentee’s case appeared at the commencement of the action.

Patent Infringement Case

CQMS is the patentee of two patents directed to a wear assembly for ground engaging tools (GETs, such as an excavator bucket) for use in mining and construction.  After having issued a fairly typical letter of demand, CQMS sued Bradken for infringement and, amongst other things, Bradken counterclaimed that the patents were invalid and the threats of infringement unjustified.  It was held that the patents were valid but were not infringed.  As a result, Dowsett J noted that as there was no finding of infringement this “means that the threats were unjustified” [at para. 159].

Damages

Of consequence in terms of the damages suffered by Bradken was the fact that CQMS had sent notice of the alleged infringement to Bradken’s customers, not just directly to Bradken and their representatives. CQMS did suggest that they were actually only informing their own customers but it was determined that the upshot of this was that Bradken’s customers were also notified and threatened.

Letter of Demand

The letter of demand sent by CQMS’s patent attorneys to Bradken initially was described by Dowsett J as “a statement of the applicants’ case at its highest, coupled with a demand for all of the relief to which they might, in any circumstances, be entitled…” [at para. 183]. However, this has been fairly typical of letters of demand prepared and sent by patent attorneys in Australia historically.  In addition, CQMS’s letter of demand specifically stated that it should constitute genuine steps to resolve a dispute, as required by the Dispute Resolution Act.  However, Dowsett J determined that this was not the case whilst delivering the observation noted at para. 183.

Strategy

The clear conclusion from this case is that the strategy employed in asserting patent rights in Australia must be very carefully considered. The issues at play are many and varied, and if not carefully considered and implemented may turn against their owner.  Each circumstance demands its own carefully considered solution in terms of what letters should be sent at what time, who should send then and to whom, and what information should be contained in any such letter.  It is also clear that it is best that letters of demand be sent by or in close consultation with lawyers experienced in Australian patent litigation matters.

Consequently, not all Australian patent attorneys are well placed to prepare patent assertion strategies and to run any patent litigation that may result. Wrays however has both a significant patent preparation, filing and prosecution practice together with one of Australia’s best patent litigation practices.