Patents – infringement – claim construction – validity – novelty – obviousness – misleading or deceptive conduct – unjustified threats – costs

Damorgold Pty Ltd v Blindware Pty Ltd [2017] FCA 1552

Damorgold Pty Ltd v Blindware Pty Ltd (No 2) [2018] FCA 364

For as long as most of us can remember, and probably long before that, roller blinds have been a familiar, and seemingly uncomplicated, part of most Australian households. Yet patent disputes over a particular roller blind occupied a five day trial before Justice Middleton and a 426 paragraph judgment, followed by 86 paragraphs on a separate costs judgment. Most issues of patent law are dealt with and the convenient summary of the legal principles makes the judgment a useful handbook for the practitioner; a vade mecum.

The invention the subject of the claim was for a mechanism for “controlling extension and retraction” of a blind, the mechanism including a component, referred to in the evidence as a “helper spring”, which was “responsive to” rotation of the blind cylinder.

His Honour upheld Blindware’s argument that “responsive to” required a causal connection between the blind cylinder and the helper spring. Because the allegedly infringing product “merely corresponds to the turning of the blind cylinder (and is not caused by it)” the infringement case was not made out: [66]–[68]. The two elements did not “interact to produce an outcome”: [122].

As to want of novelty, Blindware relied on the supply by a company called Uniline Australia Limited of a product in Australia and also the publication of a US and a Japanese patent. His Honour held that the Uniline product was not an anticipation because the “helper spring” had to be mounted into its associated wall brackets, a feature not contained in the patent in suit: [163], [164], [166].

As to the US patent, the argument turned on the expression in the patent in suit “rotation of said cylinder in either said blind extending direction or said blind retracting direction” (emphasis added). The US patent only disclosed causation of the blind in the extending direction. His Honour rejected Blindware’s argument that “either … or …” in the patent in suit only required that that the condition is satisfied in one of the blind extending or blind retracting directions: [195].

His Honour held that the claims of the Japanese patent, that Blindware relied on in one aspect of its case on lack of novelty, were expressed at a far too general and imprecise level: [251]. (In the world of linguistic novelty, there is the introduction of the verb “to mosaic” – as in the “process of mosaicking various elements”: [254].)

On obviousness, his Honour found that the common general knowledge included the use of a helper spring in connection with chain-operated blinds: [328]. However, he did not accept that “the particular approach and solution” reflected in the patent in suit was obvious. While the problem reflected in the patent in suit was relatively straightforward, the solution would have required a number of analytical steps, or what was referred to as an “engineered solution”: [379].

Each party alleged misleading and deceptive conduct by the other. Damorgold alleged that Blindware’s failure to warn its customers of their potential exposure to infringement was misleading. But the finding of no infringement was a complete answer: [391].

Blindware complained about notices issued by Damorgold alleging that “a number of companies” were offering for sale roller blinds in contravention of its patent. His Honour construed that as not suggesting all such products infringed the patent. Thus the notices were not misleading or likely to mislead: [400].

Blindware alleged the notices, and two letters from Damorgold’s solicitors also constituted unjustified threats within the meaning of s 128 of the Patents Act 1990 (Cth). His Honour accepted Damorgold’s argument that it had good grounds for asserting the rights that it did and that the Court had considered and affirmed the validity of the patent in other proceedings. His Honour cited the observation of Bennett J in Nine Network Australia Pty Ltd v Ice TV Pty Ltd [2007] FCA 1172 at [232] that the section was concerned to deter unjustified threats themselves, threats that did not result in infringement proceedings or could not be justified by actual infringement or threats made to frighten away competitors or threatening to sue their customers or suppliers.

Thus at the end of the substantive proceedings Blindware had won on infringement and the misleading and deceptive claim against itself, but lost on all other issues. The background to the costs argument was as follows.

Before the issue of proceedings Blindware’s patent attorneys wrote to Damorgold raising the “responsive” argument on which it was to later succeed at trial. On 22 October 2015, after proceedings had commenced and shortly after the close of pleadings, Blindware served an offer of compromise under rule 25.01 to the effect that the application and cross-claim be dismissed with no order as to costs and that Blindware be granted a royalty-free licence for the remaining term of the patent. On 18 February 2016 Blindware served a further offer on the same terms but also with an offer of $80,000 in full settlement. There was also evidence of notices to admit facts and alleged non-response.

Blindware sought an order that Damorgold pay 85 per cent of its costs up to 26 October 2015 on a party and party basis and all of its costs thereafter on an indemnity basis. (Presumably the four day difference represents time given to Damorgold to consider the offer.) His Honour did not accept Blindware’s case as to costs. He noted that the issues raised in the cross-claim “involved considerably more time, effort and complexity for the Court and both parties than the infringement case”: [61]. As to the offers, his Honour noted that the fact that Damorgold was ultimately unsuccessful on infringement did not establish that its conduct was unreasonable. Its case was not “plainly hopeless or unarguable”: [67]. The question of construction “was not something amenable to compromise: its resolution required judicial determination”: [73].

The orders as to costs made on 20 February 2018 (the reasons as to costs discussed above were delivered subsequently on 19 March) were that Damorgold pay Blindware’s costs of and incidental to the application and that the latter pay the former’s costs of and incidental to the cross-claim.

While accepting of course that the question of costs is, par excellence, a matter for judicial discretion, and that the relevant circumstances of this case were perhaps unusually complicated, it is difficult to see why a question of construction should be treated differently from other issues of fact and law on which an offer-rejecting litigant ultimately fails. Litigation in all its aspects is inherently uncertain. You pays (or don’t pay) your money and you takes your chance.