Trials, Tribulations & Settlements – an Analysis of Patent Litigation Data from the Federal Court of Australia

This is a guest contribution from Kelvin Tran of Litimetrics.  Further details about the author can be found at the end of the article.

Since 2010, there have been 472 patent proceedings filed in the Federal Court of Australia.  During the same period, there were over 160,000 standard patents granted, and over 1,400 innovation patents certified.  On those numbers alone, the chance that an applicant or even opponent will be involved in Federal Court litigation is therefore rare.  It’s obvious why - litigation is expensive and lengthy, and litigants, for the most part, are sensible.

Most rights-holders know that litigation only makes sense when the commercial value of the rights to be enforced exceeds the costs of litigation.  But rights-holders often can’t accurately estimate the true costs of litigation.  Litigation therefore also occurs because the parties lack information to make fully informed decisions about whether the value of the rights to be protected outweigh the costs to protect them (i.e. the costs of litigation).  This cuts both ways – those who underestimate the cost and length of litigation might litigate where alternatives make better economic sense, while those who overestimate fail to litigate when it is the optimal strategy.

The source of uncertainty is clear – comprehensive and comprehensible data is not readily available. In this piece, I use data compiled by Litimetrics to look at trends associated with Federal Court patent litigation. I rely on data:

1. that Litimetrics collects about Federal Court patent litigation from electronic court dockets;
2. from IP Australia itself (e.g. via IPGOD and AusPat); and
3. from the published judgments, mined by Litimetrics.

I’ll look at numbers related to the typical duration of proceedings and trials, the various stages that they go through and the proportion of cases that proceed to a final judgment (as opposed to settling). Briefly, the data shows that:

1. 2013 and 2014 were the busiest recent years for patent litigation in Australia;
2. the median duration of patent litigation that proceeds to a trial and final judgment is over three years;
3. cases that settle prior to trial, however, have a median duration of 210 days;
4. many events punctuate typical patent proceedings – directions hearings alone, for example, average over 16 per proceeding; and
5. once the trial is over, litigants can expect to wait a number of months for a decision in a patent case.

All of this is useful information for rights-holders who may be considering the commencement of patent proceedings.

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Tags: Australia, Guest article, Litigation, Patent litigation

Appeals Court Throws NPE Upaid a Lifeline in Patent Claims Against Telstra

Back in March this year I wrote about an interlocutory (i.e. provisional, or interim) decision of Justice Yates in the Federal Court of Australia, in which he described claims of patent infringement made by Upaid Systems Ltd against Australia’s largest telecommunications carrier, Telstra Corporation Ltd, as being everything from ‘untenable’ to ‘confusing and embarrassing’.  (As a quick recap, Upaid is a ‘non-practising entity’ (NPE) – or, less flatteringly, a ‘patent troll’ – which sued Telstra back in August 2013 for the alleged infringement of two Australian patents relating to making online purchases of goods and/or services from mobile devices.)

Specifically, Justice Yates found, in relation to Australian patent no. 2008203853, that Upaid failed to particularise, or argue, any tenable case for infringement at any time, while in relation to Australian patent no. 770646, it had failed to particularise a tenable case for infringement, but that its submissions at the hearing departed from the particulars in ways that left unclear whether or not it might be in a position to present an arguable case.  His Honour thus proposed to strike out Upaid’s case on infringement of claim 1 of the ‘853 patent, but generously offered it a further opportunity to amend its particulars of infringement in relation to the ‘646 patent.

Had the court proceeded with these orders, it would, in all likelihood, have eviscerated Upaid’s case against Telstra.  In reporting an earlier ruling in this dispute, I suggested that the reason for Upaid’s extremely poor performance may be that, as an NPE, not itself mired in the business and technology of providing services competing with Telstra’s, it may well have a reduced understanding of the technical operations of a major national telecommunications carrier, and may therefore be reliant upon inference and observation of end results as a basis for its allegations.

Unwilling, it seems, to accept almost certain defeat, Upaid applied for leave to appeal to a Full Bench of three judges of the Federal Court.  The matter was heard before Justices Perram, Jagot and Beach on 14 and 15 November 2016, and judgment handed down on 22 November 2016: Upaid Systems Ltd v Telstra Corporation Limited [2016] FCAFC 158.

The Full Court has delivered a glimmer of hope to Upaid, partially granting leave to appeal, and allowing the appeal in relation to the primary judge’s order in relation to the ‘853 patent.  Instead, the court has ordered that Telstra’s application for summary dismissal of Upaid’s infringement claims against it be dismissed, and that Upaid be given an opportunity to file and serve further and better particulars of its infringement case in relation to the ‘853 patent (albeit that the scope of this opportunity remains to be determined by Justice Yates).

This ruling is undoubtedly a lifeline to Upaid, for which all hope had appeared to be lost.  Indeed, it now seems quite likely that the case will proceed to a full trial, unless it is settled in the meantime.

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Tags: Australia, Infringement, Litigation, NPEs, Summary judgment, Trolls

After US Loss, Sequenom Takes Its Patent Battle With Ariosa Down-Under

One of the many benefits of genetic testing is the ability to carry out prenatal diagnosis of genetic disorders, most notably including (but certainly not limited to) Downs Syndrome.  This can be particularly valuable when one or both parents are known to be carriers of a genetic mutation such that the baby may be at significant risk of developing a serious condition or abnormality.  The conventional method of obtaining foetal DNA in order to conduct such tests is via amniocentesis, which is an invasive procedure in which a small amount of amniotic fluid is sampled from the amniotic sac surrounding the developing foetus using a needle.  Unfortunately, amniocentesis presents a risk to both foetus and mother.

A test that would enable screening of foetal DNA in a noninvasive manner would therefore be an important breakthrough.  Fortunately, just such a breakthrough was made in 1997 at Oxford University, when researchers Stephen Wainscoat and Dennis Lo discovered the presence of cell-free foetal DNA (cffDNA) in maternal blood serum, and developed techniques to isolate this DNA for testing.  Their discovery led to the grant of patents in a number of countries, including US patent no. 6,258,540 and Australian patent no. 727,919.  Oxford University, through its commercialisation arm Isis Innovation (now renamed as Oxford Innovation, for sadly obvious reasons), licensed the technology exclusively to US company Sequenom, Inc.

Last year, the US Court of Appeals for the Federal Circuit (CAFC) found the US patent to be invalid on the basis that the claimed invention was essentially the discovery of the pre-existing, but hitherto unknown, natural phenomenon of cffDNA being present in maternal blood: Ariosa Diagnostics, Inc.v. Sequenom, Inc. (Fed. Cir. 2015).  The claims were therefore considered to be directed to ineligible subject matter under the standards established by the US Supreme Court in its Myriad and Mayo decisions.  The CAFC subsequently declined to rehear the case en banc.  However a number of the Federal Circuit judges, including Judge Linn on the original panel, and Judges Lourie and Dyk in the decision refusing en banc rehearing, indicated that they felt bound by the Supreme Court precedents, but did not agree with the result in this case.  Judge Newman went further, stating her view that the case had been wrongly decided, and was distinguishable from the facts in Myriad and Mayo.

Many observers therefore felt that the Sequenom case was ripe for review by the Supreme Court, which would then have an opportunity to further develop and clarify its Myriad and Mayo guidance.  However, on 27 June 2016 the Supreme Court denied Sequenom’s petition, sealing the US patent’s demise once and for all.

However, in the meantime (on 7 June 2016) Sequenom has commenced proceedings in the Federal Court of Australia, also against Ariosa Diagnostics, Inc, for infringement of the equivalent Australian patent.  This raises the question of whether the invention that was found ineligible for patent protection in the US may nonetheless be upheld under Australian law.  This will be the second time in recent history (the other being the Myriad BRCA breast cancer gene case) that subject-matter eligibility has been considered for corresponding patents in the US and Australia.

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Tags: Australia, Biotechnology, Diagnostic methods, Litigation, Patentable subject matter, US

Upaid v Telstra – Here’s How We Deal With NPEs in Australia!

Upaid Systems Ltd is a ‘non-practising entity’ (NPE) – sometimes referred to as a ‘patent troll’ – which sued Australia’s largest telecommunications carrier, Telstra Corporation Ltd, back in August 2013 for the alleged infringement of two Australian patents relating to making online purchases of goods and/or services from mobile devices.  More specifically, Upaid alleges that various subscription operations performed in relation to Telstra’s MOG online music streaming service (formerly Bigpond Music) infringe its patents when conducted using a mobile device.

Some two-and-a-half years later, Justice Yates in the Federal Court of Australia has issued an interlocutory, i.e. provisional, decision comprising more than 500 paragraphs (Upaid Systems Ltd v Telstra Corporation Limited (No 3) [2016] FCA 227) in which Upaid’s various allegations of infringement are largely described in unflattering terms along a spectrum from ‘untenable’ to ‘confusing and embarrassing’!

Furthermore, even where the court has determined that Upaid may have some prospect of overcoming Telstra’s objections, it has found that Upaid’s corresponding case, even after all this time, still does not correctly or adequately identify details of Telstra’s alleged infringements.

It is not that Upaid has not been given ample opportunity to develop its case.  It has had multiple opportunities to address deficiencies identified by Telstra.  It has been granted access to internal documentation of how Telstra’s relevant operational and billing systems work.  It has even been given the opportunity to question Telstra employees on these factual matters.  Yet still the NPE is struggling even to outline an arguable case for infringement.

While the court has not yet completely killed-off Upaid’s case, in my view it certainly seems likely to have been mortally wounded.  While there remains a possibility of appeal (the time for either party to apply for leave has been extended until 12 April 2016), the recent judgment leaves Upaid with very little scope to make out a case with any reasonable prospects of success.  The court has all but struck out Upaid’s entire case in relation to one of the two Upaid patents at issue, and has offered only a limited opportunity for Upaid to try to rectify the deficiencies in its case in relation to the other.

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Tags: Australia, Federal Court practice, Infringement, Litigation, NPEs, Trolls

I Don’t Care How ‘Efficient’ It Is, It’s Still Infringement!

On 23 October 2015, New York Times op-ed columnist Joe Nocera published a piece entitled The Patent Troll Smokescreen, in which he wrote that ‘according to Robert Taylor, a patent lawyer who has represented the National Venture Capital Association, a new phrase has emerged in Silicon Valley: “efficient infringing.”’

In fact, as we shall see, the term ‘efficient infringing’ is not new – it first emerged in 1998 – and, furthermore, there have been ‘efficient infringers’ outside the realm of patents for much longer than this.  Indeed, I personally know people who have indulged in a little efficient infringements, and maybe you do too.

As one everyday example of efficient infringing, consider an office-worker in an area with limited free on-street parking, restricted to a maximum stay of one hour.  If the local paid parking garage charges $12 per day, and the fine for exceeding the maximum on-street parking time is $120, it does not take an Einstein to work out that it is cheaper overall to park on the street every day if the average frequency with which parking inspectors patrol the area is less than once every 10 business days.  That is efficient infringement!  There are, no doubt, other areas of everyday experience in which a similar analysis can be applied, e.g. payment of fares on public transport.

In some cases – such as the trouble-plagued electronic transport ticketing system in Victoria, Australia – well-advised efficient infringers may be able to tip the scales further in their favour by challenging the validity of their fines.

Of course, for most people this economic rationale cannot be taken too far.  For example, stealing your groceries rather than paying for them might well pay off in the long term from a purely financial perspective, but is liable to land you with a criminal record and possible jail-time.  Efficient infringement, as an economic strategy, is effective only when the worst consequences of getting caught can themselves be expressed in purely economic terms.

Efficient patent infringement is just the same.  As described by Nocera:

That’s the relatively new practice of using a technology that infringes on someone’s patent, while ignoring the patent holder entirely. And when the patent holder discovers the infringement and seeks recompense, the infringer responds by challenging the patent’s validity.

I object less to the practice of so-called ‘efficient’ patent infringement, at least in some of its more benign forms, than I do to the terminology itself, and the way it is being used by some very powerful organisations.  And here is why.

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Tags: Economics, Infringement, Litigation, Patents and society, Public policy

‘Springboard Injunctions’ Considered by Federal Court of Australia

You may have read the title of this article and wondered, ‘what, exactly, is a “springboard injunction”?’  If so, I am sure you are not alone.  I encountered the term for the first time myself this past week, when I read a recent decision of the Federal Court of Australia, Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (No 2) [2015] FCA 140.

The background to this decision, very broadly speaking, is as follows.  Streetworx is the proprietor of two innovation patents relating to street lighting assemblies (also known as ‘luminaires’).  In a judgment handed down on 18 December 2014 (Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd [2014] FCA 1366), Justice Beach found that Artcraft had infringed the Streetworx patents by the supply of its own luminaires, which it had manufactured in China, and imported for sale in Australia. 

Artcraft has pre-existing contracts to provide luminaires to the Monash City Council and Moonee Valley City Council (which cover significant areas of Melbourne’s South East and North West, respectively).

After the December judgment was handed down, Artcraft determined that it was able to modify its existing stocks of luminaires such that they would no longer infringe the Streetworx patents, and could therefore be used to meet its obligations to supply luminaires under the council contracts.

Not surprisingly – considering its success in establishing the validity and infringement of its patents – Streetworx was not impressed by Artcraft’s ‘solution’ to its infringement problem.  Among other relief, Streetworx therefore sought an injunction restraining Artcraft from supplying its modified, non-infringing, luminaires to the Monash and Moonee Valley Councils.  It also sought orders requiring Artcraft to hand over all infringing luminaires in its possession for destruction by Streetworx.  The court has now denied both of these requests.

The so-called ‘springboard injunction’ is the requested order restraining Artcraft from supplying non-infringing products, on the basis that they have been produced by way of the importation and use of infringing products.  Acquisition of the infringing products may thus be regarded as a ‘springboard’ from which the non-infringing products are made and supplied.

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Tags: Australia, Injunctions, Litigation, Penalties for Infringement, UK

Apple v Samsung Ends, Not With a Bang But a Whimper

As is being widely reported this morning, Apple and Samsung have agreed to settle all of their ongoing patent disputes outside of the US. This means that the Australian proceedings, which have occupied, by my estimate, over 150 days of court time, and the attention of two Federal Court judges, will now be terminated, presumably without judgment.

The only thing that is surprising about this is just how freakin' long it took!

I hate to say I told you so (actually, I don't), but I kind of did tell you so, way back at the beginning of August 2011, when Apple first commenced its Australian litigation against Samsung. I made four predictions on day one, and was more right than wrong in everything but the time frame. In my defence, the duration and scope of the case was completely unprecedented, and the assumption that Apple and Samsung would reach a rational commercial resolution failed to take into account the intransigence and emotional investment of the late Steve Jobs.

Here, briefly, are those four predictions, and an assessment of how they stack up against the outcome.

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Tags: Apple-v-Samsung, Australia, Litigation, News, Smartphone wars

Do You Have a Licence to Sue?

It is very common to establish a corporate structure including two or more entities, in which one entity holds the assets of the business, while another entity acts as the operating or trading company.  I am not a corporate lawyer or a financial advisor, so I do not propose to go into the pros and cons of such arrangements in general.  The only important point to make for the purpose of this article is that ‘assets’ generally include intangible assets, and that intangible assets include patents.

This raises the issue of authorisation: if one entity owns a patent, and a different entity exploits the patented technology, then the operating entity must be licensed by the holding entity.  It may be that the two entities are companies with common ownership and/or directorship, in which case the terms of the licence may not be set out fully (or perhaps even at all) in writing.  It is not uncommon for an operating company to carry on business without any formal written licence agreement with its related holding company, with the effect that an ongoing royalty-free licence to exploit the patent rights would usually be implied from the circumstances.

There are all sorts of reasons why this is an undesirable situation.  For example, a formal licence agreement can set out in detail what happens to the licence in the event that the operating company is sold or becomes insolvent.  An implied licence, or verbal agreement, will never be sufficiently clear to address such situations without ambiguity.

However, I am concerned here with one very specific issue that arises under the Australian Patents Act 1990.  Section 120 of the Act provides that ‘infringement proceedings may be started … by the patentee or an exclusive licensee.’  Thus, if the operating company is not an exclusive licensee it will not have standing to sue for infringement.  An exclusive licence is one which grants to the licensee a right to exploit the patented invention to the exclusion of all others, including the patentee.  By comparison, a licence limited to a single licensee where at least some rights are retained by the patentee is known as a sole licence, while a non-exclusive licence leaves the patentee free to grant further licences to other parties.

In the case of the holding/operating company structure, the operating company is likely to be the entity suffering damage as a result of infringing activities, and with the funds to take action.  Thus an inability to do so on its own behalf may place it at a disadvantage.

This issue arose recently in a series of decisions issued by Justice Middleton in the Federal Court of Australia, Damorgold Pty Ltd v JAI Products Pty Ltd [2014] FCA 150, Damorgold Pty Ltd v JAI Products Pty Ltd (No 2) [2014] FCA 377 and Damorgold Pty Ltd v JAI Products Pty Ltd (No 3) [2014] FCA 651.  It is the third of these judgments that relates specifically to the issue of standing.  Despite what might be described as some degree of informality in past licensing arrangements, Justice Middleton was prepared to find that Damorgold’s operating company, Vertilux Corporation Pty Ltd, had been, at all relevant times, an exclusive licensee of the patent at issue.

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Tags: Australia, Licensing, Litigation

Taming the Trolls – Awarding Attorney Fees in Patent Cases

The big patent-related news in the US this past week has been the Supreme Court’s dual decisions in Octane Fitness, LLC v. ICON Health & Fitness, Inc. [PDF, 112kB] and Highmark, Inc. v. Allcare Health Management System, Inc. [PDF, 80kB], in which the court confirmed that district courts have discretion to determine whether a case is ‘exceptional’, such that attorney fees may be awarded against a losing party under section 285 of the US patent code. 

Furthermore, the Supreme Court has ruled that the the role of an appeals court (i.e. the US Court of Appeals for the Federal Circuit), in reviewing a decision of a district court to award attorney fees, is to determine whether or not the lower court has abused its discretion.

These decisions of the Supreme Court overturn a standard set by the Federal Court in 2005, which started from a presumption that patent cases are litigated in good faith, and then required that a party show, by ‘clear and convincing evidence’ either that ‘there has been some material inappropriate conduct’ or that the litigation is both ‘brought in subjective bad faith’ and ‘objectively baseless’ before an award of attorney fees can be made.

By coincidence, the Federal Court of Australia has also issued a decision in the past few days relating to a ‘special case’ of fee awards which is provided for under the Australian Patents Act 1990.  Specifically, in AstraZeneca AB v Alphapharm Pty Ltd [2014] FCA 419, the patentee has been awarded a higher level of attorney fees under section 19 of the Patents Act, which relates to Certificates of Validity.

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Tags: Attorney fees, Australia, Costs, Litigation, Patent law, Patent litigation, Trolls, US

Should Australian Patent Attorneys Be Allowed to Litigate?

As I regularly remind people, Australian patent attorneys are not generally lawyers.  Of course there are examples of patent attorneys who also have general law degrees, and some of them (though not all) also practice as solicitors.  But, for the most part, patent attorneys (including me) are people with relevant technical qualifications (a mandatory requirement in Australia) plus specialised training and experience in the laws and official practice relating to patents, trade marks and registered designs.

The profession in Australia therefore differs from some other countries.  In the US, for example, the title ‘patent attorney’ is reserved for practitioners who have a law degree, and are registered to practice law before the courts in one or more states.  The term for a practitioner who is qualified to practise before the US Patent and Trademark Office, but not in any broader legal capacity, is ‘patent agent’. 

Even so, it is not quite correct to equate an Australian ‘patent attorney’ with a US ‘patent agent’.  Chapter 20 of the Australian Patents Act 1990 authorises patent attorneys to provide intellectual property advice not only with regard to registered rights, but also ‘related matters’, including advice on validity and infringement of patents.  My understanding is that a US patent agent is not authorised to provide legal advice of this kind.

Unsurprisingly, given the historical connections, the UK profession is organised and regulated similarly to the Australian profession.  However, I recently learned that since 1999 it has been possible for a UK patent attorney to apply for a ‘Litigator Certificate’.  Initially, these were granted by the Chartered Institute of Patent Attorneys (CIPA) to ‘suitably qualified and experienced members’.  Since 2012, however, the Intellectual Property Regulation Board (IPReg) has administered the grant of three levels of practising certificates, based on completion of accredited qualifying courses and ongoing continuing professional development (CPD).  The highest level of IPReg certification confers full rights of audience in the UK High Court, Court of Appeal and the Supreme Court in certain classes of proceedings relating to IP rights.

My question today is: should Australia be looking at introducing a similar system to permit patent attorneys to appear, and to instruct counsel, in proceedings before the Australian Federal Court and the High Court?

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Tags: Australia, Law reform, Litigation, Patent attorney profession, Public policy

Australia – No Country for Troll’d Men (or Women)?

Upaid Systems Ltd v Telstra Corporation Limited [2013] FCA 1441 (23 December 2013)

Upaid Systems Ltd, a company which some regard as a patent troll, has stumbled at the first hurdle in its infringement case against Telstra (which I first reported back in August).  Specifically, a judge of the Federal Court of Australia has found that Upaid has failed to meet its obligations to provide an adequate statement of its case, i.e. to identify, with sufficient particularity, at least one instance of each type of infringement alleged to have been committed by Telstra.

The court has given Upaid until 28 February 2014 to file amended documents, stating its allegations in sufficient detail.

I have said before that I do not consider Australia to be a fertile hunting ground for patent trolls, because the patent litigation system in this country lacks a number of the characteristics that make the trolls’ enforcement-based business models so effective in the US.  And while Upaid may not qualify as a classic ‘troll’, the court’s finding that it has failed to plead its case adequately highlights some of the challenges that a true patent troll would face in Australia.

Two things are particularly notable about the court’s decision:

1. Upaid’s particulars were found to be inadequate despite what appears to have been a reasonable effort to describe specific examples of alleged infringement by Telstra, confirming that the court was not willing to ‘bend’ or relax the rules simply because the task of particularising the infringement case might be regarded as difficult; and
2. as a result of its failure, Upaid has been ordered to pay Telstra’s costs (i.e. necessary expenses and reasonable attorney fees) of its application to compel Upaid to provide an adequate statement of its case.

As a result, four months after commencing proceedings Upaid has yet to make any real progress in its infringement case against Telstra.  On the contrary, by the time it has paid its own legal bills, and the costs ordered in favour of Telstra, Upaid will certainly be out-of-pocket to the tune of at least some tens of thousands of dollars, and possibly more, just for dealing with this preliminary aspect of the case.  A true patent troll, hoping for a quick win in the form of a settlement at a cost below that of proceeding to trial, would have to be considering cutting its losses at this point.

Making this decision even more interesting – and the case worthy of watching from an international perspective – is that the two notable features listed above, i.e. a high standard for pleading a case of infringement, and fee-shifting, are both key elements of the Goodlatte Innovation Act 2013 which was recently passed by the US House of Representatives.

This case suggests that raising the requirements for pleading an infringement case can have a significant impact on the ability of patent trolls – and perhaps on inadequately-prepared non-practising entities (NPEs) in general – to bring unreasonable and disruptive lawsuits.

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Tags: Australia, Federal Court practice, Infringement, Litigation, Trolls

Upaid – Another Candidate for a Down-Under Troll?

Upaid Systems Ltd, a company incorporated in the British Virgin Islands, has sued Australia's largest telecommunications carrier, Telstra, for infringement of two patents relating to making online purchases from mobile devices.

To my knowledge, the law suit filed on 21 August 2013 was first reported in the Australian Financial Review by technology journalist James Hutchinson (@j_hutch), who avoided the term ‘troll’.  Others, however (e.g. at ZDNet and iTWire have shown less restraint.

So, is Upaid a patent troll?

I have expressed the opinion previously that the classic patent troll business model is a form of litigation abuse which is not viable within the Australian system.  I also firmly believe that it is not productive to define ‘patent troll’ so as to broadly encompass all so-called ‘non-practising entities’ (NPEs).  Just because a company does not actually make and sell products embodying its patented inventions should not preclude it from nonetheless monetising them through licensing to others who do. 

To insist upon this is akin to requiring songwriters either to sing their own songs, or to give them away freely for others to record and profit from.  Just as you do not need to have a pleasant singing voice to write a good song, you do not need to have the capability to successfully commercialise your ideas in order to come up with good inventions.

Upaid actually developed the inventions covered by the patents on which it is suing Telstra back in the late 1990's and early 2000's, but failed to bring any product of its own to market.  Only then did it turn to an alternative business model based on licensing and enforcement of its patents.  So in this sense, at least, Upaid is certainly not the worst kind of troll, which is an entity that acquires dubious patents from others (often at fire-sale prices) and then uses them to extort payments from operating companies under threat of expensive litigation, regardless of the strength or applicability of the patents.

But, even so, is Upaid any kind of troll?  And if so, what are its prospects of making money in Australia?

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Tags: Australia, Business processes, Computer programs, Litigation, Trolls

Federal Court Throws Self-Represented Litigant a Life-Line

Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306 (2 April 2013)
Enviro Pak Pty Ltd v New Horticulture Pty Ltd (No 2) [2013] FCA 624 (25 June 2013)

It is not common for the Federal Court of Australia to allow a corporation to be represented by a non-lawyer.  Nor is it common for the court to cede authority to an administrative decision-maker.  So when a judge of the Federal Court does both in the course of the same litigation, there is no avoiding the fact that the court is doing the beneficiary of these decisions a significant favour.

The dispute between Enviro Pak Pty Ltd and New Horticulture Pty Ltd (trading as Green Pack, which is how I shall refer to the company) relates to Australian registered design no. 304960, owned by Enviro Pak.  The registration protects the design of a corrugated paper coffee cup, which Enviro Pak claims to be unique in that the corrugations are aligned vertically, which in turn requires that the width of the corrugations increases from the bottom to the top of the cup (since the circumference of the base of the cup is smaller that that of the lip).  Notwithstanding this functional aspect of the design, it is important to keep in mind that a registered design protects only the visual appearance of the coffee cup, and not its functionality or associated benefits.

Enviro Pak is suing Green Pack, and its sole director and shareholder, for alleged infringement of the registered design.  Initially, Green Pack had legal representation, however the financial circumstances of the company appear to have resulted in termination of this representation in February 2013.  In the meantime, two applications challenging the validity of the registered design had been filed with the Designs Office at IP Australia.

While an individual (i.e. a ‘natural person’) is entitled to represent him- or herself in court, a corporation normally is not, and must be represented by a qualified legal practitioner.  Furthermore, the Designs Act 2003 is structured such that when proceedings are on-foot both in court, and at IP Australia, in relation to the same registered design, the Registrar of Designs is generally unable to proceed without permission from the court.  (The Patents Act 1990, incidentally, is similarly structured.)

This state of affairs creates potential difficulties for a party with financial limitations, once a court action has commenced.  In this case, however, the court has made exceptions for Green Pack.

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Tags: Designs, Federal Court practice, Litigation, Stay of proceedings

Innovation Patent Claims Found Invalid in Dynamite Decision

Dynamite Games Pty Limited v Aruze Gaming Australia Pty Limited [2013] FCA 163 (4 March 2013)

Australia’s innovation patent is widely considered to have an unreasonably low threshold of validity – so much so, in fact, that last year IP Australia put forward a proposal to eliminate the ‘innovative step’ standard entirely, and require that innovation patent claims meet the same test for ‘inventive step’ as a standard patent.  You could therefore be forgiven for thinking that pigs might sprout wings and take to the air before an innovation patent would be found invalid on grounds of lack of innovative step.

Yet – until and unless there is a successful appeal – you may need to keep your eyes peeled for porcine aviators, because a judge in the Federal Court of Australia has done just that, striking down all asserted claims of an innovation patent held by Dynamite Games Pty Ltd (‘Dynamite’) for failing to meet the innovative step threshold.  Dynamite had sued Aruze Gaming Australia Pty Ltd (‘Aruze’) for infringement of various claims of a standard patent relating to gaming machines, along with a number of claims of a related innovation patent.

Aruze, in turn, sought revocation of the patents on numerous grounds available under the Patents Act 1990 – that none of the claims is for a manner of manufacture; that the claimed invention is not novel; that the claimed invention does not involve an inventive step or an innovative step; that the claims are not clear and succinct; and that the claims are not fairly based on the matter described in the body of the respective specifications.

The decision is interesting for a number of reasons, starting with the fact that it is a judgment of Justice Emmett, the same Federal Court judge who recently found the ‘business method’ claims of a patent application filed by Research Affiliates, Inc, to be invalid on the basis that they were not patent-eligible under the ‘manner of manufacture’ test.  Justice Emmett considered all of the asserted grounds of invalidity of Dynamite’s patent claims, but declined to formally rule on any of the others after first finding the standard patent claims to be obvious, and the innovation patent claims to lack an innovative step.  However, he did indicate that, had he needed to do so, he would have been inclined also to rule against Dynamite on the grounds of lack of novelty and lack of ‘manner of manufacture’.  In doing so, he reprised some of the themes of his Research Affiliates decision.

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Tags: Australia, Infringement, Innovation patent, Litigation, Novelty, Obviousness, Patentable subject matter, Revocation

Apple v Samsung—Legal Privilege and the In-House Lawyer

Apple Inc. v Samsung Electronics Co. Limited (No 2) [2012] FCA 1358 (10 December 2012)

According to an affidavit sworn by a senior legal counsel for Samsung, the number of potentially relevant documents collected by the company’s Australian solicitors, for possible disclosure to Apple in the ongoing litigation, is by now in excess of 500,000.  That is, there are over half a million documents produced by, or on behalf of, Samsung, which somebody has had to consider for the purposes of satisfying discovery notices issued by Apple!

So far Apple has identified 128 ‘categories’ of documents which, by agreement or court order, Samsung is required to produce.  It is generally up to Samsung and its lawyers to find all of the documents in their possession which fall into the specified categories.  Of the half million documents which have been collected for this purpose, over 3,000 have already been supplied to Apple.

As part of this process, a disagreement arose between Apple and Samsung over whether or not a particular selection of 154 documents was immune from production, on the basis that these documents are covered by the exclusion commonly known in Australia as legal professional privilege (sometimes also known as ‘client-solicitor privilege’, and in the US as attorney-client privilege).

This dispute has been adjudicated separately from the main litigation, by Justice Cowdroy in the Federal Court of Australia, who has inspected over half of the documents for himself in order to conclude that they are indeed protected by privilege.  However, there were also two documents, which have previously been tendered in redacted form by Samsung as evidence in the main proceeding, in respect of which Justice Cowdroy found that the privilege had therefore been waived.  Samsung is therefore now required to furnish these documents in full.

Quite aside from the general interest generated by any Apple/Samsung decision, Justice Cowdroy’s judgment should be essential reading for all in-house lawyers within companies operating in Australia.  Continuing a line of cases in which the assessment of privilege by in-house counsel has been treated as inherently suspect, Justice Cowdroy determined that sworn statements by a lawyer employed by Samsung could not be relied-upon for the purposes of determining whether or not they were properly the subject of privilege.  Fortunately for Samsung, however, he considered that there was sufficient reason to think that they might be privileged that it would be appropriate for him to take a look for himself before rendering judgement.

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Tags: Apple-v-Samsung, In-house counsel, Litigation, Privileged communications

Could Apple and Samsung CEOs Reach a Global Settlement?

As has been widely reported over the last 24 hours, United States District Court Judge in the Northern District of California, Lucy H. Koh, has issued orders for Apple and Samsung to participate in a ‘Magistrate Judge Settlement Conference’.  (See, e.g., US judge sends Apple, Samsung to settlement talks, via Reuters.)

On the face of it, the two companies are going willingly to mediation, although it is quite likely a case of Judge Koh having made clear that they could either attend voluntarily, or else she would make them go!  Nonetheless, the discussions will be taking place at the absolute highest levels of the two companies, with each being represented by their respective CEOs (i.e. Tim Cook of Apple, and Choi Gee-Sung of Samsung) and General Counsel. 

While pre-trial mediation is frequently unsuccessful, top executives of large corporations are not known for wasting their time on pointless exercises, and the fact is that the people in the room will actually have the power to make decisions which could terminate, or dramatically alter, the course of litigation between the two companies not only in the US, but in the other eight countries (including Australia) in which they are suing one another for infringement of patents and other intellectual property rights.

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Tags: ADR, Apple-v-Samsung, Litigation

Don’t Let the Bed Bugs Bite (or ‘A Fool for a Client’)

Abrahams v Biggs [2011] FCA 1475 (23 December 2011)

Confidential Information – disclosure of information regarding potential improvements to invention – whether use of information by recipient is a breach of confidence – whether ‘information’ or merely ‘idea’ – whether identified with sufficient specificity – whether information had necessary quality of confidence – whether circumstances of imparting information imported obligation of confidence

If there were ever a case to prove the hoary old chestnut that the person who acts as their own lawyer has a fool for a client, then this is it.  Especially when they do so in a higher court, such as the Federal Court of Australia.

But we will return to the issue of self-representation towards the end of the article.  Our interest in the case of Abrahams v Biggs, decided by Justice Jessup just before the holidays, lies not so much in the conduct of the parties before the Federal Court, but rather in the aspect of the dispute relating to an alleged breach of confidence.  The case involves invention (and, peripherally, patent applications), and serves as a useful reminder that inventors need to be careful of what they disclose, to whom, and the circumstances in which they make disclosures, especially when potentially valuable ideas are involved.

And to add to the interest, the applicant in the proceedings, Tony Abrahams, was a winner in the episode of the ABC television program The New Inventors which aired on 20 May 2009.

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Tags: Australia, Confidential information, Litigation, Non-disclosure agreements

Apple v Samsung Down Under – 2011 Redux

The opening gambit in the Australian arm of the global dispute between Apple and Samsung finally drew to a close earlier this month, neatly typing up a few loose ends in what must surely be the biggest Australian patent story in recent memory. The stage is now set for the main event – full trials on infringement and validity of various Apple and Samsung patents – during the course of next year.

A review of the story so far is therefore timely, as the Australian courts close down for an extended break over the holiday season, before getting back into full swing for the new year in February 2012.

THE END OF THE BEGINNING

On 9 December 2011, the High Court of Australia refused Apple's request for special leave to appeal from a decision of a Full Bench of the Federal Court denying a preliminary injunction against the launch of the Galaxy Tab 10.1. (Article: Breaking: High Court Rejects Apple Appeal Bid.)

In what turned out to be a temporary win for Apple, an injunction had originally been granted by a single judge of the Federal Court, pending a full trial in relation to Apple’s claims of patent infringement. (Article: Samsung’s ‘Eyes Wide Open’ Sinks Australian Galaxy Tab 10.1.)

Samsung’s tablet is now on sale in Australia, just barely in time for Christmas, and four months after the originally-planned launch in mid-August.

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Tags: Apple-v-Samsung, Australia, Litigation, Smartphone wars

Breaking News – Apple and Samsung Back in Australian Court

Apple and Samsung were back in the Federal Court of Australia in Sydney this morning, to continue their ‘discussions’ over the fate of Samsung’s iPad-challenging Galaxy Tab 10.1.

The purpose of today’s ‘directions hearing’ was to set the timetable for the next stages of Apple’s patent infringement suit against Samsung, which commenced at the beginning of August, and resulted in a delay in the launch of the Galaxy Tab 10.1, originally intended for 11 August 2011 (see It’s Apple vs Samsung Down-Under as Smartphone War Escalates).

As we predicted, it is being reported in the Fairfax press today that Samsung has indeed already complied with its undertaking to provide Apple with three samples of its proposed Australian product.  However, while Samsung had apparently been planning a new launch date of 12 September 2011, it seems that this may now be further delayed to permit a more substantive hearing to take place in relation to Apple’s request for an injunction, sometime in late September.

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Tags: Apple-v-Samsung, Australia, Computer programs, Infringement, Interlocutory injunction, Litigation, Smartphone wars

Dutch Courts Will Issue ‘Pan-European’ Injunctions: We Were Wrong!

Last Thursday we stated that reports of a cross-border injunction issued by a Dutch court were incorrect, because the European Court of Justice (ECJ) has previously ruled that national courts do not have the power to issue such injunctions in patent matters.

We could follow the lead of the mainstream media, and call this post a ‘clarification’.  But we will not.  Instead, we will call a spade a spade, and admit the simple truth – we were wrong.

Quite aside from anything else, the truth is far more interesting, and only serves to reinforce the main point of our previous article – the Netherlands is a really good place to validate a European patent relating to products that are imported to, or exported from, continental Europe.

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Tags: Apple-v-Samsung, Europe, Infringement, Injunctions, Litigation, Smartphone wars