12 June 2011

Australian Federal Court Revokes Undefended Patent

Huawei Technologies Company Ltd v Al Amri [2011] FCA 503 (13 May 2011)

Practice and Procedure – whether default of respondent patent owner entitles applicant for revocation to summary judgement in favour

In stark contrast to the US Supreme Court’s holding that a US patent can only be invalidated on the basis of ‘clear and convincing evidence’ (see Newsflash - US Supreme Court Upholds 'Clear and Convincing' Standard), Justice Jessup in the Federal Court of Australia has recently ordered a patent be wholly revoked on the basis that the patent owner did not take steps to defend his patent.

The general principle under the Australian law is that, unlike in the US, a granted patent enjoys no presumption of validity.  There is no requirement for ‘clear and convincing evidence’ of invalidity in Australia – in an application for revocation of a patent the court is to apply the civil standard of the ‘balance of probabilities’, which is similar to the ‘preponderance of the evidence’ standard for which Microsoft argued in its dispute with i4i.

However, this decision shows that, in the absence of a defence by the patentee, an applicant for revocation may prevail in the absence of any evidence whatsoever.

BACKGROUND

Moosa Eisa Al Amri, a resident of Dubai, is the patentee of Australian Patent no. 2004288303, entitled ‘System and method to broadcast video with clear sound and picture using the internet’.

On 7 December 2010, Chinese telecommunications equipment giant Huawei Technologies Company Ltd filed an Application and Statement of Claim seeking revocation of Al Amri’s patent.  According to the decision of the court, at [1]:

The substance of the allegation made in the Application was that Australian patent number 2004288303 was, and had at all material times been, invalid.  Particulars of Invalidity were served with the Statement of Claim, and set out clearly the bases upon which it was alleged that the patent was invalid.

Al Amri entered an appearance via his Australian solicitor on 4 February 2011.  On 7 April 2011, the court ordered that Al Amri should file and serve his Defence by 29 April 2011.  However, no Defence had been filed by 13 May 2011, when the matter had been listed for directions.  Al Amri was not represented at the directions hearing.

APPLICATION OF FEDERAL COURT RULES

Under Order 35A Rule 3(2)(c) of the Federal Court Rules, where a respondent is in default (e.g. fails to comply with an order of the court, or fails to attend a directions hearing), the court may:

…if the proceeding was commenced by an application supported by a statement of claim … give judgment against the respondent for the relief that:
        (i)    the applicant appears entitled to on the statement of claim; and
       (ii)    the Court is satisfied it has power to grant

In this case, Justice Jessup was satisfied that the particulars supporting Huawei’s Statement of Claim were sufficient to satisfy requirement (i), and the Federal Court is clearly empowered to revoke a patent, under section 138 of the Patents Act 1990.

The court therefore ordered that the patent be revoked, and that Al Amri pay Huawei’s costs of the proceedings.

COMMENT

It seems harsh that a patent may be revoked without any consideration of the substantive grounds of alleged invalidity, which would typically also involve the consideration of evidence, e.g. relating to interpretation of the specification and claims, or the state of the art relevant to inventive step.  However, if the patent owner fails to defend an application for revocation this is precisely what may happen if the applicant’s Statement of Claim, and supporting particulars, appear complete and credible.  Whether the applicant would ultimately have made out its case for invalidity, on the balance of probabilities or otherwise, is irrelevant.

In case anyone is wondering, it would not have assisted Al Amri to fail to enter an appearance altogether, because Order 35A Rule 2(2)(a) also deems this a default by the respondent.

4 comments:

just wondering said...

What should be asked is why is such a big company, feeding on a small fish.

Patentology (Mark Summerfield) said...

Perhaps Huawei is concerned that today's 'small fish' may be tomorrow's 'patent troll'? If Huawei has reason to fear that it may be sued for infringement of the patent when, and if, it is granted, then it has a strong incentive to oppose the application, whether the applicant is large or small.

just wondering said...

Simple google search of patent holders name and i was able to find this link "http://www.arabianbusiness.com/court-orders-etisalat-pay-abu-dhabi-resident-aed30m-270262.html" so mystery solved.

Patentology (Mark Summerfield) said...

Interesting. Thanks for tracking that down, and for sharing!

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