Redarc Electronics Pty Ltd v B8 Systems Limited - [2019] FCA 3

FEDERAL COURT OF AUSTRALIA
Redarc Electronics Pty Ltd v B8 Systems Limited [2019] FCA 3

File number: SAD 265 of 2018

Judge: BESANKO J

Date of judgment: 9 January 2019

Catchwords:
PATENTS – application for an interlocutory injunction – consideration of the test on an interlocutory injunction – consideration of the prima facie case – where basis of applicants’ claim is infringement of a patent in respect of which the second applicant is the registered owner and (allegedly) the first applicant is exclusive licensee – where patent is an innovation patent – where alleged infringing product is a brake control unit – where respondents’ defence to the applicants’ claim is a denial that their product infringes the claims in the innovation patent and that the innovation patent is invalid on various grounds, including lack of novelty, s 40(2) and (3) of the Patents Act 1990 (Cth) matters, lack of utility, lack of innovative step and not a manner of manufacture

PATENTS – consideration of the balance of convenience – whether balance of convenience favours the applicants’ application for an interlocutory injunction because their product is a leading product in its business and it will suffer harm if it has to compete with the respondents’ product in circumstances where the respondents were aware of the applicants’ product, its pending or actual patent rights, and failed to take an earlier opportunity to oppose patent rights being granted to the second applicant – whether respondents will suffer irretrievable damage if an injunction is granted – whether damage to third persons and public interest is best served by refusing interlocutory injunction

Legislation:
Patents Act 1990 (Cth) ss 18, 20, 40, 43, 101M

Patents Regulations 1994 (Cth) regs 3.12, 5.6, 5.8, 13.13D

Cases cited:
AG Spalding & Bros v AW Gamage Ltd (1918) 35 RPC 101

Apotex Pty Ltd v Cipla Limited [2017] FCA 1627

AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99; (2014) 226 FCR 324

Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498; (2008) 79 IPR 261

InterPharma Pty Ltd v Hospira, Inc (No 3) [2017] FCA 1536

Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [2004] HCA 58; (2004) 217 CLR 274

Novartis AG v Hospira Pty Limited [2012] FCA 1055; (2012) 98 IPR 185

Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238

Date of hearing: 29 November 2018

Registry: South Australia

Division: General Division

National Practice Area: Intellectual Property

Sub-area: Patents and associated Statutes

Category: Catchwords

Number of paragraphs: 89

Counsel for the Applicants/Cross-respondents: Mr E Heerey QC with Mr M Murphy

Solicitor for the Applicants/Cross-respondents: Piper Alderman

Counsel for the Respondents/Cross-claimants: Mr B Fitzpatrick

Counsel for the Respondents/Cross-claimants: Watermark Intellectual Property Lawyers

ORDERS

SAD 265 of 2018

BETWEEN:
REDARC ELECTRONICS PTY LTD (ACN 099 971 794)

First Applicant/First Cross-respondent

REDARC TECHNOLOGIES PTY LTD (ACN 099 971 758)

Second Applicant/Second Cross-respondent

AND:
B8 SYSTEMS LIMITED (ARBN 628 349 502)

First Respondent/ First Cross-claimant

SWD AUST…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Redarc Electronics Pty Ltd v B8 Systems Limited

Details

AGLC: Redarc Electronics Pty Ltd v B8 Systems Limited [2019] FCA 3
Case: [2019] FCA 3
Decision Date: 9 January 2019

CaseChat Overview and Summary

Redarc Electronics Pty Ltd and Redarc Electronics Australia Pty Ltd sought an interlocutory injunction against B8 Systems Limited and Curt Industries Limited in the Federal Court. The applicants claimed that the respondents were infringing their innovation patent through their brake control unit, Curt. The respondents denied infringement and argued that the patent was invalid on various grounds. The court had to decide whether the applicants had established a prima facie case and whether the balance of convenience favoured granting an interlocutory injunction.

The court considered whether the applicants had established a prima facie case. The respondents had reasonable arguments regarding the patent's validity, including lack of novelty, lack of utility, lack of innovative step, and not being a manner of manufacture. However, the court concluded that the applicants had established a prima facie case despite the respondents' arguments. Regarding the balance of convenience, the applicants argued that their Tow-Pro Product was a leading product and they would suffer harm if they had to compete with the Curt Product. The court noted that the respondents could potentially recover profits or damages if the applicants ultimately succeeded. The court also considered the potential loss of sales of other products for the applicants and the difficulty in proving such damages.

The court concluded that the balance of convenience did not favour granting an interlocutory injunction. The applicants' ability to recover profits or damages if they ultimately succeeded, along with the potential difficulties in proving damages for other products, weighed against the grant of an injunction. The court dismissed the applicants' claim for interlocutory relief and directed the parties to be heard as to other orders.

Orders

Orders of the court

1. The applicants’ claim for interlocutory relief be dismissed.

2. The parties be heard as to other orders.

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

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Decision

Reasons for decision

The other pleaded particulars of invalidity were not the subject of detailed evidence or submissions. They are lack of innovative step and that the invention does not involve a manner of manufacture.Conclusion with Respect to Invalidity In my opinion, the respondents have shown that they have reasonable arguments with respect to issues of validity I have identified. However, their case does not rise to the level of sufficiently strong to qualify the conclusion that overall, the applicants have established a prima facie case (Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498; (2008) 79 IPR 261 at [17]; Novartis AG v Hospira Pty Limited [2012] FCA 1055; (2012) 98 IPR 185 at [52] per Yates J; InterPharma Pty Ltd v Hospira, Inc (No 3) [2017] FCA 1536 at [21]-[22] per Kenny J).THE BALANCE OF CONVENIENCE The applicants submitted that the balance of convenience favoured the grant of an injunction because their Tow-Pro Product is a leading product in their business and they will suffer harm if they have to compete with the Curt Product in circumstances where the respondents were aware of the applicants’ product, its pending or actual patent rights, and failed to take an earlier opportunity to oppose patent rights being granted to the second applicant. If an interlocutory injunction is not granted and the applicants ultimately succeed, they may seek an account of profits or damages. The profits made by the respondents by the sale of the Curt Product should be relatively easy to calculate, assuming proper records are kept. Insofar as damages involve the loss of sales of the applicants’ Tow-Pro brake controller, there is a historical sales pattern for the product. However, the applicants claim they may also suffer a loss of sales of other products should the respondents continue to sell the Curt Product. Mr Kittel said, and I accept, that the Tow-Pro brake controller is one of two flagship products for the REDARC Group. He estimates that 75% of the Group’s Tow-Pro brake controller products are sold to wholesale distributors. The product is a “lead in” product. Mr Kittel explained that this meant that it was a unique product that attracted buyers and made it more likely that the seller can sell other complementary products and accessories to distributors which may not be unique to the Group’s range. Furthermore, it means that the distributors that have the Tow Pro Product in their range of products are more easily able to sell add-on products (including other REDARC Group products) at trade and retail levels. Mr Kittel said that there are some distributors and retailers who will only stock the product range of a limited number of manufacturers. He said that by including the Curt Product in its full range, both respondents are more readily able to promote and sell to distributors, retailers and online customers, their broader range of products in competition with the applicants’ product and range. In the applicants’ favour, it may be said that, assuming an entitlement to relief for damages in relation to other products, proving the damages will be difficult and, in those circumstances, an injunction should be granted. In the respondents’ favour, it may be said that the obstacles in terms of causation in establishing an entitlement for loss in relation to other products may be significant (AG Spalding & Bros v AW Gamage Ltd (1918) 35 RPC 101 at 117 per Swinfen Eady LJ).

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File number:	SAD 265 of 2018
Judge:	BESANKO J
Date of judgment:	9 January 2019
Catchwords:	PATENTS – application for an interlocutory injunction – consideration of the test on an interlocutory injunction – consideration of the prima facie case – where basis of applicants’ claim is infringement of a patent in respect of which the second applicant is the registered owner and (allegedly) the first applicant is exclusive licensee – where patent is an innovation patent – where alleged infringing product is a brake control unit – where respondents’ defence to the applicants’ claim is a denial that their product infringes the claims in the innovation patent and that the innovation patent is invalid on various grounds, including lack of novelty, s 40(2) and (3) of the Patents Act 1990 (Cth) matters, lack of utility, lack of innovative step and not a manner of manufacture PATENTS – consideration of the balance of convenience – whether balance of convenience favours the applicants’ application for an interlocutory injunction because their product is a leading product in its business and it will suffer harm if it has to compete with the respondents’ product in circumstances where the respondents were aware of the applicants’ product, its pending or actual patent rights, and failed to take an earlier opportunity to oppose patent rights being granted to the second applicant – whether respondents will suffer irretrievable damage if an injunction is granted – whether damage to third persons and public interest is best served by refusing interlocutory injunction
Legislation:	Patents Act 1990 (Cth) ss 18, 20, 40, 43, 101M Patents Regulations 1994 (Cth) regs 3.12, 5.6, 5.8, 13.13D
Cases cited:	AG Spalding & Bros v AW Gamage Ltd (1918) 35 RPC 101 Apotex Pty Ltd v Cipla Limited [2017] FCA 1627 AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99; (2014) 226 FCR 324 Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498; (2008) 79 IPR 261 InterPharma Pty Ltd v Hospira, Inc (No 3) [2017] FCA 1536 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [2004] HCA 58; (2004) 217 CLR 274 Novartis AG v Hospira Pty Limited [2012] FCA 1055; (2012) 98 IPR 185 Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238
Date of hearing:	29 November 2018
Registry:	South Australia
Division:	General Division
National Practice Area:	Intellectual Property
Sub-area:	Patents and associated Statutes
Category:	Catchwords
Number of paragraphs:	89
Counsel for the Applicants/Cross-respondents:	Mr E Heerey QC with Mr M Murphy
Solicitor for the Applicants/Cross-respondents:	Piper Alderman
Counsel for the Respondents/Cross-claimants:	Mr B Fitzpatrick
Counsel for the Respondents/Cross-claimants:	Watermark Intellectual Property Lawyers