Kimberley-Clark Australia Pty Ltd v Arico Trading International Pty Ltd

[1995] FCA 1101

CATCHWORDS

PATENTS - Infringement - interlocutory relief - whether a serious issue of infringement to be tried - whether a serious issue of validity of the patent to be tried - whether the balance of convenience favours the granting of interlocutory relief - no question of principle involved.

KIMBERLEY-CLARK AUSTRALIA PTY LIMITED v ARICO TRADING INTERNATIONAL PTY LIMITED, MR ARIE KLIGER, FRANCISCO MARTIN OTERO T/AS KOALA NAPPY EXPRESS

No. NG 861 of 1995

FOSTER J
30 NOVEMBER 1995
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )    No. NG 861 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:KIMBERLEY-CLARK AUSTRALIA PTY LIMITED

Applicant

AND:ARICO TRADING INTERNATIONAL PTY LIMITED

First Respondent

MR ARIE KLIGER

Second Respondent

FRANCISCO MARTIN OTERO T/AS KOALA NAPPY EXPRESS

Third Respondent

JUDGE MAKING ORDERS:    FOSTER J

DATE:     30 NOVEMBER 1995

PLACE:    SYDNEY

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1.The application for interlocutory relief be dismissed.

2.Costs be the respondents' costs in the cause.

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

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )    No. NG 861 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:KIMBERLEY-CLARK AUSTRALIA PTY LIMITED

Applicant

AND:ARICO TRADING INTERNATIONAL PTY LIMITED

First Respondent

MR ARIE KLIGER

Second Respondent

FRANCISCO MARTIN OTERO T/AS KOALA NAPPY EXPRESS

Third Respondent

CORAM:    FOSTER J

DATE:     30 NOVEMBER 1995

PLACE:    SYDNEY

REASONS FOR JUDGMENT
  (Extempore)

HIS HONOUR:   I have been greatly assisted by the careful arguments of counsel in this matter and the comprehensive nature of the material that has been placed before me.  The applicant seeks an interlocutory injunction restraining the respondents from importing, selling or otherwise disposing of, or offering to sell or otherwise dispose of certain disposable nappies which the respondents are currently selling in the market in Australia.
         It is alleged by the applicant that the respondents, by so doing, are infringing a patent held by the applicant in respect of nappies of that type.  The patent in question describes the nappies as being a disposable diaper with elasticised leg openings.  The summary of the invention portion of the patent reads as follows:-

"According to this invention an elastic legged unitary disposable diaper is provided which has an elasticized flap extending inwardly from each side of the diaper and extending its entire length.  This flap has elasticization means near the inner most portion, so that when the diaper is worn, the flap tends to form a second inwardly facing barrier, particularly adapted to contain diarrhetic bowel movements."

The respondents' allegedly infringing article has been described in the evidence and I have had placed before me an example of it.  It is, of course, claimed that this article is, in every respect, an infringement of the patent that has been awarded to the applicant.  I have heard considerable argument as to whether any infringement can be demonstrated.  There is evidence placed before the Court that particular descriptions of the inner lining which form part of the patented invention when they are compared with the inner lining of the alleged infringing article, necessarily lead to a conclusion that no infringement has occurred.

It is unnecessary for me to go into these arguments.  There has been clearly demonstrated, in my view, that there is a serious issue to be tried as to whether, in fact, the article does infringe.  Indeed, neither side has contended the
absence of a triable issue.  The respondents, however, urge upon me that there is so little evidence of an infringement that I should come to the conclusion that the issue is not relevantly a serious one.  I am not prepared to accept that proposition. 

There is also an issue between the parties as to whether the patent itself is valid.  That argument is based upon the state of the art prior to the granting of the patent.  It is alleged that an earlier patent covered the field to the extent that the patent fails or should have failed for want of novelty.  Again, in my view, the material that has been placed before me and the arguments that have been put before me indicate quite clearly that there is a serious issue to be tried in this regard.  That being so, the only matter that falls for consideration by the court at this stage is whether the balance of convenience favours the granting or refusal of the interlocutory relief sought. 

On the issue of balance of convenience, the applicant relies upon the fact that it currently has a proprietary right in relation to the production of nappies or diapers which are the subject of this patent.  It also submits  that if the importation and sale of the nappies currently being marketed by the respondents is not restrained, damages will accrue which will be very difficult to quantify in the event that they are successful in the final determination of these proceedings.  On the other hand, the respondents have tendered to the court undertakings in writing to the effect that separate records and accounts of all disposable nappies, the subject of these proceedings, will be kept until the further order of the Court.  That is an undertaking given to the Court, the breach of which is a very serious matter and is enforceable in the usual way.

It was also put on behalf of the applicant that should it ultimately succeed in these proceedings, there may be a serious question as to whether the respondents or any of them, would be able to meet an award of damages.  I have considered this, but the material placed before me does not satisfy me that there is a serious question in this regard.  Although the material is somewhat sparse, on balance I am of the view that the resources of the respondents are sufficient to meet an award of damages in the event that the applicant is successful.

It has also been put, on general principles, that the respondents have entered into the importation and sale of these products with their eyes open.  Clearly, of course, the respondents were aware that the applicant claimed a patent and that it also claimed that any sale of these nappies would be an infringement.  This appears from earlier negotiations which took place between the parties in respect of the importation of other forms of nappy.  It may well be that the respondents have, with some care, sought to arrive at a design of nappy which would not, in their view, have the effect of infringing the applicant's patent.  To that extent, of course, the respondents would be taking the risk that a court might ultimately hold that an infringement had in fact occurred.  These are matters which have to be taken into account.

On the other hand, the applicant is a substantial company with considerable resources.  The evidence discloses that it has a share of the disposable nappy market of some 66%.  In contrast, the respondents are a small business.  They assert that they are not infringing the applicant's patent in conducting their business.  As I have already found, they have raised a serious issue in relation to this assertion.  I am also of the view that the granting of an injunction could well have the effect of putting the third respondent out of business and of seriously interfering with the profitability of the first respondent's business. 

On the whole, I have come to the conclusion that the interests of justice require that no order of an interlocutory kind be made restraining the respondents in the manner sought.  I therefore dismiss the application for interlocutory relief.

I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Justice M. L. Foster.

Associate:

Date:     30 NOVEMBER 1995

A P P E A R A N C E S

COUNSEL FOR THE APPLICANT:     MR D. CATTERNS Q.C.

INSTRUCTED BY:               SPRUSONS SOLICITORS

COUNSEL FOR THE RESPONDENT:    MS K. HOWARD

INSTRUCTED BY:               BANKI PALOMBI HADDOCK & FIORA SOLICITORS & INTELLECTUAL PROPERTY ATTORNEYS

DATE OF HEARING:             30 NOVEMBER 1995

DATE OF JUDGMENT:             30 NOVEMBER 1995