The recent case of CQMS Pty Ltd v Bradken Resources Pty Limited has reinforced the need for patent owners to tread carefully if they believe their patent is being infringed, to ensure it is not seen as an unjustified threat of infringement. This is because a party is entitled to recover any damages resulting from a threat of infringement or seek an injunction to the threat if it is found that the threat of infringement was unjustified. CQMS Pty Ltd v Bradken Resources Pty Limited [2016] FCA 847 (CQMS v Bradken) reaffirmed that if the patent in question is found to be invalid or not infringed, the threat of infringement constitutes an unjustified threat.

Before parties bring infringement proceedings to Court, the Civil Dispute Resolution Act recommends that the parties involved attempt to resolve the matter themselves. This is typically initiated with the patentee sending an initial letter to the alleged infringer informing them to the existence of the patent(s) in question. Section 131 of The Patents Act 1990 states that “the mere notification of the existence of a patent, or an application for a patent, does not constitute a threat of proceedings”.

However, as confirmed by CQMS v Bradken, this initial letter is difficult to draft and care must be taken when drafting such letters to ensure that they cannot be interpreted as constituting an unjustified threat. It is important to keep in mind that such letters can only be sent when a patent is granted and cannot be sent when an application is pending.

In CQMS v Bradken, CQMS sent Bradken an initial letter alleging that they were infringing two of their patents along with other details regarding the patents in question, legislation and Bradken’s conduct. During the trial, CQMS argued that this letter was not a threat of proceeding as it concluded by saying that this “letter constitutes our Client’s genuine steps to resolve this dispute”. The judge disagreed with CQMS as all other aspects of the initial letter constituted a threat of infringement.

During the trial, both CQMS’ patents were found to be valid, but not infringed by Bradken. Accordingly, as Bradken did not infringe either of CQMS’ patents, and that CQMS’ initial letter constituted a threat of legal proceedings, the judge determined that CQMS’ initial letter was an unjustified threat. A decision regarding the damages to Bradken resulting from the unjustified threat is still pending.

Accordingly, legal advice should be sought before sending such letters.