FEDERAL COURT OF AUSTRALIA
Hood v Down Under Enterprises International Pty Limited [2022] FCAFC 69
Appeal from: File numbers: NSD 265 of 2021
NSD 266 of 2021
NSD 267 of 2021Judgment of: YATES, MOSHINSKY AND ROFE JJ Date of judgment: 4 May 2022 Catchwords: PATENTS – alleged infringement by supply of products – s 117 of the Patents Act 1990 (Cth) – staple commercial product – whether essential oil derived from the shrub Kunzea ambigua was a staple commercial product – where the primary judge found that the oil was a staple commercial product – whether the primary judge erred in so finding – held: no error in primary judge’s conclusion
PATENTS – inventive step – method of treatment claims – where primary judge found that the claims did not lack an inventive step – whether the primary judge erred in so finding – held: no error in primary judge’s conclusion
CONSUMER LAW – misleading or deceptive conduct – where the respondent’s website conveyed that the goods offered for sale were registered or listed on the Australian Register of Therapeutic Goods – where the website was not owned or maintained by the respondent – whether the primary judge erred in concluding that the respondent had engaged in misleading or deceptive conduct – held: primary judge erred
PRACTICE AND PROCEDURE – costs – where the primary judge ordered each respondent to pay a fixed portion of the applicant’s costs of the cross-claims – whether the primary judge erred in making such a costs order – held: no error in primary judge’s costs order
Legislation: Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, ss 18, 29
Federal Court of Australia Act 1976 (Cth), s 43
Patents Act 1990 (Cth), ss 7, 13, 14, 18, 117, 118, 119, 123, 168, 210
Therapeutic Goods Act 1989 (Cth), s 3
Cases cited: Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285
AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324
Barcelo v Electrolytic Zinc Co of Australasia Ltd (1932) 48 CLR 391
Collins v Northern Territory of Australia (2007) 161 FCR 549
Garford Pty Ltd v DYWIDAG Systems International Pty Ltd (2015) 110 IPR 30
Jumbunna Coal Mine, NL v Victorian Coal Miners’ Association (1908) 6 CLR 309
Northern Territory of Australia v Collins (2008) 235 CLR 619
Division: General Division Registry: New South Wales National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Number of paragraphs: 158 Date of hearing: 26 and 27 August 2021 Counsel for the Appellant NSD265/2021
NSD266/2021
NSD267/2021:Mr M Green SC with Ms BA Oliak and Dr G O’Shea Solicitor for the Appellant NSD265/2021
NSD266/2021
NSD267/2021:HWL Ebsworth Lawyers Counsel for the Respondent
NSD265/2021
NSD267/2021:Mr ADB Fox with Ms SJ Hallahan Solicitor for the Respondent
NSD265/2021
NSD267/2021:Gadens Lawyers Counsel for the Respondent
NSD266/2021:Mr SY Reuben with Ms…
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- Case
- [2022] FCAFC 69
- Decision Date
CaseChat Overview and Summary
The Federal Court of Australia found that the primary judge did not err in concluding that the oil derived from Kunzea ambigua was a staple commercial product. The Court noted that the primary judge had considered and appropriately weighed the evidence and arguments presented by both parties. The Court also found no error in the primary judge’s conclusion that the patent claims did not lack an inventive step, nor in the dismissal of claims for additional damages. However, the Court held that the primary judge erred in concluding that Down Under Enterprises contravened the Australian Consumer Law by falsely representing that the oil was registered or listed on the Australian Register of Therapeutic Goods. The Court found that while the website in question did convey this misleading information, it was not owned or maintained by Down Under Enterprises, and therefore, the respondent could not be held liable for the misleading conduct.
The Court upheld the primary judge's costs order, which required each respondent to pay a fixed portion of Mr Hood’s costs of the cross-claims. The Court found no error in the primary judge’s decision on costs. Therefore, the appeal was dismissed, the cross-appeal was dismissed, and the costs orders as determined by the primary judge were upheld. If either party sought a variation of the costs orders, they could file and serve written submissions and any supporting affidavits within a specified timeframe, after which the issue of costs would be determined on the papers.
Orders
Orders of the court
1. The appeal be dismissed.
2. The cross-appeal be dismissed.
3. The appellant pay the respondent’s costs of the appeal, as agreed or taxed.
4. The cross-appellant pay the cross-respondent’s costs of the cross-appeal, as agreed or taxed.
5. If either party seeks a variation of the costs orders in paragraphs 3 and 4 above, it may, within seven days, file and serve a written submission (of no more than two pages) and any affidavit in support. In that event, the other party may file and serve a responding written submission (of no more than two pages) and any affidavit in support within a further seven days, and the issue of costs will be determined on the papers.
[Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.]
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
Ratio Decidendi
Legal Principle Established
Mr Hood also challenges his Honour’s finding that the proper classification of the relevant product for the purposes of s 117(2)(b) is all essential oils derived from native shrubs.Consideration It is convenient to start with Mr Hood’s challenge to the primary judge’s factual findings before addressing his principal contention that the Oil is not a staple commercial product. Mr Hood identified eight matters from Dr Narkowicz’s evidence that he says were not taken into account, or afforded sufficient weight, by the primary judge. Of these, six matters were expressly noted by the primary judge when discussing Dr Narkowicz’s evidence at [175]-[181] and referred to in the four reasons given by his Honour for his conclusion at [184]-[188]. The eight matters identified by Mr Hood are:(a)the Oil has antibacterial and antifungal properties and may assist in healing and reducing bruising. Consumers with knowledge of these properties usually seek out the Oil because of them;(b)the Oil is considered a niche product in the essential oil market due to its therapeutic properties and exclusivity to Tasmania;(c)the most common commercial use of the Oil is therapeutic use (which includes aromatherapy). Dr Narkowicz was not aware of any other actual commercial uses but if there are any other uses they are uncommon;(d)the Oil is usually incorporated into other goods (such as soaps, lotions, and topical creams) for therapeutic properties and not for its smell;(e)the Oil cannot be used for internal human use or animal uses because of regulatory requirements;(f)because the Oil is not high yielding, it is very expensive. The high cost of producing the Oil makes other potential uses not commercial or practical, such as in household and industrial applications (for example, cleaning agents and disinfectants);(g)the Oil is not a commodity or raw material as, inter alia, it is not readily available and is typically sold to persons who seek it out for its particular properties; and(h)the Oil is not a “raw material” but is rather a “manufactured product, ready for distribution and use as is, or for incorporation into other manufactured products”. At the outset it must be noted that despite not making any challenge to the primary judge’s construction of the claims, Mr Hood’s appeal grounds and his written and oral submissions largely proceed to ignore his Honour’s construction of the claims. Mr Hood’s submissions conflate any asserted “therapeutic use” of the Oil, whatever the method of administration or condition, with a method of treatment falling within the scope of the claims. On Mr Hood’s case, any “therapeutic use” of the Oil is to be excluded from the consideration of whether the Oil is a staple commercial product as it is a use falling within the Patent monopoly. Mr Hood submits that the manner in which the primary judge characterised topical application ignored that the use of the Oil in a bath, for example, involves a topical application to the skin, and that administration by inhalation involves a topical application to the lungs. The primary judge’s contrary construction of topical application is not challenged in the notices of appeal.