Black & Decker Inc v GMCA Pty Ltd (No 2)

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FEDERAL COURT OF AUSTRALIA

Black & Decker Inc v GMCA Pty Ltd (No 2) [2008] FCA 504

PATENTS – infringement – standard and innovation patents – power saw able to be used as either panel saw or jigsaw

PATENTS – invalidity – whether invention novel – whether invention useful

PATENTS – standing of licensee – whether exclusive licence – whether retrospective operation of licence agreement

DESIGNS – whether divisional application valid – whether new and original – infringement by fraudulent or obvious imitation

Corporations Act 2001 (Cth) ss 127, 128, 129
Designs Act 1906 (Cth) ss 17, 22C, 30
Designs Act 2003 (Cth) s 73(1)
Patents Act 1990 (Cth) ss 18(1), 40, 120(1)

Adelmann & Ham Boiler Corporation v Llanrwst Foundry Co (1928) 45 RPC 413 cited
Cleveland Graphite Bronze Co v Glacier Metal Co Ltd (1950) 67 RPC 149 cited
Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 cited
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 cited
F Hoffman-La Roche & Co v Commissioner of Patents (1971) 123 CLR 529 cited
Foggin v Lacey (2003) 57 IPR 225 cited
General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd [1972] RPC 457 cited
Grant v Commissioner of Patents (2006) 69 IPR 221 referred to
Kimberly-Clark Australia Pty Limited v Arico Trading International Pty Limited (2001) 207 CLR 1 cited
Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 72 IPR 447 cited
Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274 cited
Minnesota Mining & Manufacturing Co v Beiersdorf (Aust) Ltd (1980) 144 CLR 253 cited
Nesbit Evans Group Australia Pty Ltd v Impro Ltd (1997) 39 IPR 56 cited
Nicaro Holdings Pty ltd v Martin Engineering Co (1990) 16 IPR 545 cited
No-Fume Ltd v Frank Pitchford & Co Ltd (1935) 52 RPC 231 cited
Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221 CLR 287 cited
R v Wheeler (1819) 2 B & Ald 345 cited
Royal British Bank v Turquand (1856) 6 E & B 327 cited
Stack v Brisbane City Council (1996) 35 IPR 296 cited
Ullrich Aluminium Pty Ltd v Dias Aluminium Products Pty Ltd (2006) 153 FCR 437 cited
Wanem Pty Ltd v John Tekiela (1990) 19 IPR 435 cited

BLACK & DECKER INC and BLACK & DECKER (AUSTRALIA) PTY LTD v GMCA PTY LTD

VID 1262 of 2005

HEEREY J
18 APRIL 2008
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1262 of 2005

BETWEEN:

BLACK & DECKER INC
First Applicant

BLACK & DECKER (AUSTRALIA) PTY LTD
Second Applicant

AND:

GMCA PTY LTD
Respondent

JUDGE:

HEEREY J

DATE OF ORDER:

18 APRIL 2008

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The parties bring in minutes of orders to give effect to these reasons.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

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Details
Case
[2008] FCA 504
Decision Date

CaseChat Overview and Summary

Black & Decker Inc v GMCA Pty Ltd (No 2) was a dispute involving the validity and infringement of patents and designs, with the primary parties being Black & Decker Inc (BDI), BDA, and GMCA Pty Ltd. The court was tasked with determining the legal status of licensing agreements, specifically whether BDA held an exclusive licence to certain patents and designs under various agreements. The central issues included the interpretation of the 1987 Agreement and subsequent deeds, the effective date of the termination of the 1987 Agreement, and the authority of BDA to execute the December 2006 Deed.

The court found that the 1987 Agreement did not confer an exclusive licence on BDA. The 2005 Deed could not retrospectively change the nature of the 1987 Agreement. The March 2006 letter, which terminated the 1987 Agreement, was interpreted as a deliberate act by both BDI and BDA. Despite the termination, BDA remained an exclusive licensee up until the date of the proceedings. The court also determined that the conduct of BDI and BDA post-termination did not imply a new agreement with the same terms as the 1987 Agreement. Instead, it was more likely that a non-exclusive licence was created, terminable at will or on reasonable notice. The December 2006 Deed was not properly authorised by BDA, as it was not executed under the company’s common seal and was not sanctioned or ratified by a Board meeting.

The final orders of the court directed the parties to bring in minutes of orders to give effect to the court’s reasons, affirming the limited rights of BDA to claim damages or an account of profits. The patents and designs were found to be valid and infringed, except for the design which was deemed not to be infringed.

Orders

Orders of the court

1. The parties bring in minutes of orders to give effect to these reasons.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

HEEREY J
The result of the foregoing is:1.BDA was an exclusive licensee of BDI from 13 September 2005;2.It had standing to commence this proceeding on 13 October 2005;3.It ceased to be an exclusive licensee from 3 March to 13 December 2006;4.It became an exclusive licensee from 13 December 2006 until the present time;5.It would not be entitled to an account of profits made from, or damages for any loss caused by, any infringement by GMCA before 13 September 2005 and between 3 March and 13 December 2006.9.0 Conclusion The Standard Patent and the Innovation Patent are valid and infringed. The Design is valid but not infringed. BDA’s rights to damages or an account of profits are limited to the extent explained above. The parties are directed to bring in minutes of orders to give effect to these reasons.

Ratio Decidendi

Legal Principle Established

Established by: HEEREY J

The 1987 Agreement did not confer an exclusive licence on BDA.8.2 Prospective operation of the 2005 Deed Black & Decker accepts that the 2005 Deed could not retrospectively make the 1987 Agreement a grant of an exclusive licence to BDA if, as I have found, it is not properly to be construed as such. However, from 13 September 2005 (ie before and at the time of the commencement of the present proceeding) BDA was an exclusive licensee of BDI.8.3 Termination of the 1987 Agreement by the March 2006 letter The March 2006 letter had effect in accordance with its terms. The result is that the 1987 Agreement, as varied by the 2005 Deed, was terminated. The United States tax motive confirms that this was a deliberate act on behalf of both BDI and BDA. The termination of the 1987 Agreement was stated to be “effective as of 1 January 1997”. Nevertheless that cannot retrospectively change the state of affairs which in fact existed at the commencement of this proceeding on 13 October 2005. At that date, as GMCA appears to accept, at least implicitly, BDA was an exclusive licensee of BDI. Black & Decker contend that the continued conduct of BDI in permitting BDA to exploit in Australia its patents and designs objectively suggests that it was not intended by the parties that the March 2006 letter effect a termination of all obligations under the 1987 Agreement, but rather “a variation of it to remove any entitlement of BDI to claim royalties”, this being the matter which had provoked concern about US tax liabilities. Alternatively, it is said that the conduct of BDI and BDA from March 2006 amounted to an entry into a new agreement on the same terms as the 1987 Agreement, including the exclusive licence arrangement introduced by the 2005 Deed, save only that BDA was not required to pay royalties or fees to BDI. Despite the March 2006 letter, it was “business as usual”. The March 2006 letter, agreed on by BDI and BDA for reasons which no doubt seemed compelling at the time, is quite unequivocal. The 1987 Agreement is not varied; it is “hereby terminated”. If a new contract is to be implied from conduct, it does not follow that BDA’s position is to be that of exclusive licensee, as distinct from sole or non-exclusive licensee. If BDI and BDA continued to do business I do not see how that fact can give rise to an implied new contract which incorporates some features (the exclusive licence) but not others (payment of royalties) from the former contract. As far as the very limited evidence goes, the better view is that the course of conduct gave rise to a non-exclusive licence, terminable either at will or on reasonable notice, and subject to payment of a reasonable royalty. Alternatively, BDI would be entitled to payment on a quantum meruit. 8.4 Authorisation of the December 2006 Deed The articles of association of BDA as at December 2006 vested the management of the company’s business in its Board (BDA constitution, Art 44). There were three directors at the time, Linda Bagioni (a US resident), Alison Armstrong and Christopher McKenna. Mr McKenna was disabled by a stroke. Ms Armstrong was in New Zealand. Mr Jordan, BDA’s solicitor in Australia, contacted her and asked her to sign the Deed. She executed the document whilst in New Zealand and returned it to Mr Jordan. Execution of the document was not sanctioned or ratified at a Board meeting of BDA. It was not executed under BDA’s common seal. In evidence Ms Armstrong said that the Board of BDA would not ordinarily meet for the purpose of granting power to her to sign agreements on behalf of the company.