31 March 2012

Patent Worth Paper It’s Written On, and Then Some!

Jonker v Platform Solutions Pty Ltd [2012] FCA 237 (15 March 2012)

Interlocutory injunction – strength of prima facie case of infringement – strength of prima facie case of invalidity – irreparable injury – balance of convenience

Jonker Mobile LightA Federal Court judge has granted a preliminary injunction against a Brisbane-based supplier of industrial work platforms and telehandlers after one of the company’s directors told a patent-holder to ‘just do what you want’ because ‘patents aren’t worth the paper they’re written on.’

In retrospect – and particularly in the year that Apple managed to keep Samsung’s Galaxy Tab 10.1 out of the Australian market for four months based on its patent rights – this seems like a brave challenge.  In the event, it has cost Mitchell Ely and his company Platform Solutions Pty Ltd a trip to the Federal Court, where they have been unsuccessful in defending against an application for an urgent interlocutory injunction brought by John Jonker and his company Jonker Plant Hire Pty Ltd.  The injunction will prevent Platform Solutions from commercially exploiting a mobile lighting apparatus said to infringe an innovation patent owned by Mr Jonker.

To a considerable extent, Ely was his own worst enemy in this case.  His response to initial contact from Jonker became the primary basis for the court’s finding that there was a sufficient probability of patent infringement to support an injunction.  There is a lesson in this about the dangers of making any form of reply to a threat of patent infringement proceedings without the benefit of legal advice.

Reference to the Apple/Samsung case is apposite, because the appeal decision in Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156 is now the primary binding authority on judges of the Federal Court of Australia regarding the principles to be applied when determining whether or not to grant preliminary injunctions in patent matters (see Samsung v Apple – A Closer Look at the Appeal Decision). 

Since the Samsung decision, there have been a number of hearings regarding applications for preliminary injunctions in cases involving the pharmaceuticals CRESTOR and ABILIFY (see Generics Unsuccessful in CRESTOR Injunction Challenges, Preliminary Injunction for CRESTOR—Not All ‘Tablets’ are Equal and Australian Federal Court Blocks Generic ABILIFY (Aripiprazole)).  In all of these further decisions, the balance of convenience has strongly favoured the grant of an injunction, due to specific workings of the Australian regulatory and subsidy schemes covering pharmaceuticals.  However, the Jonker case is the first since Samsung to consider a more typical commercial situation.

BACKGROUND

Certified Australian Innovation patent no. 2011100275, in the name of John Jonker, is entitled ‘Mobile lighting apparatus’.

As the court summarised it (at [3]), claim 1 defines a mobile light (the ‘Jonker Mobile Light’ or ‘JML’) having the following key features (among others):
  1. its own means of driving the apparatus along the ground;
  2. its own separate means of generating electricity;
  3. a boom that is able to be extended, raised and lowered and pivoted from right to left and vice versa; and
  4. lights attached to the end of the boom.
There is no doubt – indeed it is the subject of claim 5 – that the JML can be, and is, made by conversion of an existing lifting apparatus having a rotatable and extendible boom balanced by a counterweight.  The conversion involves fitting lights to the end of the boom, installing a generator in place of all or part of the original counterweight, and connecting the generator to the lights using suitable conductive cables.

This all seems pretty trivial when stated so simply, but there is obviously more involved than meets the eye because, as the court states (at [6]):

To date, Jonker has manufactured 46 Jonker Mobile Lights and claims to have 10 such lights in various stages of production at any one time. Each Jonker Mobile Light costs Jonker about $200,000–$250,000 to manufacture. Thus far Jonker claims to have invested $10 million in the production of its Jonker Mobile Lights.

In around November 2011, Jonker learned from a candidate in a job interview that Platform Solutions was advertising that it was able to supply mobile lighting units similar to the JML.  Mr Jonker contacted Mr Ely, and it was during this initial conversation that Jonker stated ‘You know we’ve got a patent on this’ and Ely replied ‘Patents aren’t worth the paper they’re written on so just do what you want.’  (At [10].)

In subsequent exchanges of correspondence via the parties’ legal representatives, Platform Solutions eventually acknowledged that it had been commissioned by a company called SE Power Pty Ltd to construct a mobile lighting apparatus similar to the Jonker Mobile Light, and grudgingly agreed to give interim undertakings which were, among other things, not to deliver, hire out, sell or otherwise dispose of its mobile lighting apparatus to SE Power Pty Ltd, or to anyone else.  Those undertakings expired on 20 February 2012, however the dispute had not yet been resolved, and Jonker then proceeded to make the application for an interlocutory injunction.  (At [11]-[12].)

BASIS FOR GRANT OF INJUNCTION

In this case, the court found that the grant of an interlocutory injunction is justified because:
  1. Jonker had made out a prima facie case of infringement ([26]-[28]);
  2. Platform Solutions, on the other hand, failed to present any kind of case of invalidity, let alone a prima facie case ([15]-[25]); and
  3. the balance of convenience favours Jonker, due to the fact that it holds a patent (which has not been shown to be invalid), and due to its significant investment in R&D in relation to the JML, whereas the financial harm to Platform Solutions is limited to the lost profit from its $20,000 contract with SE Power ([29]-[30]).
Prima facie case by admissions?
An interesting aspect of the decision is the fact that the judge decided in favour of Jonker on the likelihood of infringement without, apparently, any direct evidence of the construction of the Platform Solutions lights against which to compare the Jonker claims.

The primary basis for the judge’s conclusion was the conversation between Jonker and Ely which, according to Jonker’s affidavit evidence, went as follows:

Jonker: I hear you’re building my lights now.
Ely: I’m building one for a customer.
J: You know we’ve got a patent on this.
E: Patents aren’t worth the paper they’re written on so just do what you want.
J: I’ve heard that you’re advertising them for sale.
E: I’m making them to order.

The judge was particularly taken (at [26]) with the fact that Ely did not deny Jonker’s assertion that ‘you’re building my lights now’, and the fact that Ely knew about the patent but claimed not to care (rather than, for example, that Platform Solutions did not infringe).  He was also influenced by the fact that Ely did not seek to deny, qualify or explain the content of this conversation in his own evidence (at [27]).
‘Irreparable injury’ not an antecedent factor
This is a case in which damages would seem to be an adequate remedy if Platform Solutions were found to infringe valid patent claims in a final judgement.  Both companies operate in the same market, and any sale made by platform solutions is, for all practical purposes, a lost sale to Jonker.

Prior to the Samsung appeal decision there were two distinct lines of reasoning followed by the Federal Court regarding the relevance of ‘irreparable injury’, or whether damages would be an adequate remedy if an injunction were not granted.  According to one line, this is a ‘threshold issue’, such that if damages would be adequate, an interlocutory injunction will not be granted, regardless of other factors.  According to the other, the adequacy of damages is just one of the factors to be weighed up in assessing the balance of convenience.

The Full Court in Samsung settled this divergence, finding ([2011] FCAFC 156 at [61]) that there was no High Court authority to resolve the question, but (at [63]) that to ‘elevate these matters into a separate and antecedent inquiry as part of a requirement in every case that the plaintiff establish “irreparable injury” is, in our judgment, to adopt too rigid an approach.’

While the injury to Jonker if an injunction were not granted would clearly not be ‘irreparable’, this was also not a case (as in Samsung) where the grant of an injunction would amount to a final determination of the entire case (at [14]).

CONCLUSION

If there is a take-home message from this decision it is to emphasise the inadvisability of responding to any threat of patent infringement proceedings – whether formal or informal, written or verbal, veiled or direct – without the benefit of legal advice.

Jonker presented no direct evidence of infringement.  Platform Solutions was effectively ‘convicted’ on the basis of Ely’s own admissions, which he failed to deny or qualify in court.  It is not out of the question that if the conversation set out in Jonker’s affidavit had never taken place, he would not have succeeded in establishing a prima facie case of infringement to the court’s satisfaction.

The other lesson is that enforceable patents are to be taken seriously in Australia.  Federal Court judges are generally experienced in intellectual property matters, and the court is not unfriendly towards rights-holders.  Not only is a granted patent which covers a commercially-valuable product worth more than the paper it is written on, it is worth more than the few thousand dollars it might have cost to have a patent attorney prepare, file and prosecute the original patent application.  And it may be worth more than the tens, or even hundreds, of thousands of dollars it may cost to enforce in court.

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