13 June 2016

The Effectiveness of ‘Virtual Marking’ of Patented Products in Australia

Patented StampIn many jurisdictions there are advantages to marking patented products to indicate that they are, in fact, patented.  However, the benefits of marking – or the disadvantages of not doing so – can very greatly from country-to-country.  In the United States, for example, the marking statute (35 USC § 287) provides that in the absence of marking, the patentee bears the burden of proving the date upon which an infringer was made aware of the existence of a patent in order to recover any damages for past infringement.

The provisions in the Australian patent law relating to marking are, fortunately, less onerous.  Indeed, in Australia the patentee has an advantage, in the case that products are not marked as being patented, and it is the infringer that must satisfy the court that it lacked relevant awareness of the existence of a patent.

Even so, there are clear benefits in marking products as patented in Australia.

However, marking can create problems of its own.  For example, if a product is patented in multiple countries, and/or is protected by multiple patents, is it practical to mark it with the relevant details of every one of those patents?  What are the rules for marking products while an application is pending, i.e. before a patent is actually granted?  Are there penalties where products continue to be marked after the patent has expired?  These may not be trivial matters, because changing the marking on products themselves – or even only upon the packaging – may involve substantial costs and administrative overheads.

And what about patented methods, e.g. services or manufacturing processes – should these be ‘marked’ in some way?

A solution to many of these problems is so-called ‘virtual marking’, which refers to making patent information available via the Internet and marking the product with the corresponding address.  Such information can, of course, easily be updated without requiring any changes to products, packaging, or other materials.  Express provision was made for virtual marking in the US in the America Invents Act of 2011 (legislation better known for converting the United States from a ‘first-to-invent’ priority system to ‘first-inventor-to-file’).  By way of example, TiVo maintains its patent information at www.tivo.com/legal/patents, and marks its products accordingly.

But what about Australia?  Is virtual marking an effective and useful option here?  I think so, and I will explain why.

Patent Marking In Australia

There are two provisions in the Australian Patents Act 1990 that relate to marking. 

On the beneficial side of the equation, section 123(2) provides that, where a product has been duly marked with a notice that it is patented in Australia, an infringer will be deemed to have been aware of the patent, unless proven otherwise.

On the punitive side, section 178(2) makes it an offence to falsely represent that an article is patented, or is the subject of a patent application, in Australia, while subsection (3) provides that marking a product as ‘patented’ or ‘patent pending’ (or equivalent terms) constitutes such a representation. 

Marking and ‘Innocent Infringement’

In contrast with the position in the US, in Australia an infringer is not ‘presumed innocent’ in the absence of marking.  Section 123(1) provides that:

A court may refuse to award damages, or to make an order for an account of profits, in respect of an infringement of a patent if the defendant satisfies the court that, at the date of the infringement, the defendant was not aware, and had no reason to believe, that a patent for the invention existed.

There are three points to note in this provision:
  1. it states only that the court may refuse pecuniary relief, i.e. it is a matter of discretion, even if the defendant was unaware of the patent;
  2. the onus lies with the defendant/infringer to satisfy the court of its lack of knowledge, i.e. there is a presumption of awareness; and
  3. it is not enough that the defendant did not actually know about the patent, it must not have had any ‘reason to believe’ that the patent existed.
So, while subsection (2) raises the bar on ‘innocent infringement’ even higher where products have been marked to indicate that they are patented in Australia, the patentee is at a distinct advantage even in the absence of marking.

This is perhaps just as well, considering that subsection (2) applies only to ‘patented products’, i.e. there is no provision for marking in relation to patented processes, where there are no physical products that can be ‘marked so as to indicate that they are patented in Australia’.

The Offence of ‘False Marking’

In practice the ‘false marking’ provisions in section 178 difficult and impractical to enforce.  Under subsection (4), a prosecution for false marking requires Ministerial consent, while the penalty applied to a person found guilty of false marking is currently a mere A$10,800 (60 ‘penalty units’).  Furthermore, as I understand the provision, prosecution would be a criminal matter, and therefore subject to the ‘beyond reasonable doubt’ standard of proof and the requirement of mens rea, i.e. an intention to commit the offence.  To my knowledge, there has never been a false marking prosecution in Australia.

Nonetheless, the law prohibits false marking, and a diligent applicant or patentee will certainly make all reasonable efforts to comply!

Virtual Marking in Australia?

Overall, the difficulties and potential costs associated with marking in Australia reflect those that arise elsewhere:
  1. marking of products is desirable, in view of the added burden it places upon an infringer;
  2. however, there are no express provisions for marking in relation to methods or processes, or any form of ‘intangible’ product; and
  3. marking should always reflect the true position and, in particular, should be updated when an application matures into a granted patent, and again when the patent expires.
This is where virtual marking can assist.  But how effective is it in Australia?

My opinion is that virtual marking should be very effective, firstly in view of subsection 123(1).  Bearing in mind that the onus is already on the infringer to satisfy the court that it was ‘not aware, and had no reason to believe, that a patent for the invention existed’ at the date of infringement, a suitably prominent notification by the patentee which is freely available on the Internet would present a significant additional barrier in this regard.

Furthermore, if the address at which the patent information can be found is prominently marked on products, promotional materials, user manuals, packaging, order forms, web pages, and/or any other pertinent documentation, an infringer may be hard pressed to argue effectively that it had ‘no reason to believe’ that a patent existed.  All it had to do was look! 

Where the notification is made by marking the product itself with the address, I think it quite likely that this would be found to be sufficient to satisfy the requirement in subsection 123(2) that products be ‘marked so as to indicate that they are patented in Australia’, so long as the address leads directly to a page on which the Australian patent information is suitably prominent.

Finally, the court’s discretion is also relevant.  If the patentee has made a substantial effort to notify the public of its patent rights, via detailed information on its web site along with prominent pointers to that information wherever practical, a court is quite likely to regard any claim by an infringer that it was unaware of the patentee’s rights as careless at best, and flagrantly negligent at worst!  In such circumstances, it is quite likely that the court would exercise its discretion in favour of the patentee.

Conclusion – Virtual Marking is a Useful Option

In summary, although the Australian law relating to patent marking predates the rise of the Internet, in my view it is well-adapted to deal with the modern convenience of virtual marking.

The emphasis of the Australian legislation is on holding an infringer responsible for establishing that its infringement was ‘innocent’, in the sense that it did not know, and could not reasonably have been expected to know, that a patent existed.  This is appropriate, considering that the patent Register itself is supposed to provide a public notice function.  Where a patentee also makes diligent efforts to ensure that relevant patent information is readily available to interested parties, it is not reasonable that it should be deprived of the full relief for which the patent law provides.

While ‘traditional’ marking remains the established benchmark, I would have no hesitation in recommending the use of virtual marking in cases where the traditional approach is inconvenient or impractical.


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