Could've said it letter 4 min read
We previously reported on the unjustified threats regime (see here). Now, the Federal Court has provided further guidance regarding the regime by finding that an exclusive licensee contravened the Australian Consumer Law (ACL), but not the unjustified threats regime, when it sent letters to third parties regarding its claimed patent rights and the existence of patent infringement proceedings. In particular, the court reiterated that the unjustified threats regime does not exist in isolation.
How does this affect you?
- An entity can contravene the prohibitions against misleading or deceptive conduct under the ACL when it makes misleading assertions in relation to its IP rights.
- In commercial communications, patentees and exclusive licensees must provide accurate (not exaggerated) descriptions of their patent rights.
- Ultimately, the ACL should be considered whenever communications are sent to, or received by, alleged infringers or third parties that might have a commercial relationship with the alleged infringers.
Who in your organisation needs to know about this?
Legal counsel; IP teams; patent and trade mark attorneys
The proceedings
Context
This Insight reports on Rakman International Pty Limited v Boss Fire & Safety Pty Ltd [2022] FCA 464 insofar as it relates to letters that an exclusive licensee of an innovation patent sent to third parties regarding its claimed patent rights in circumstances where the letters made clear that the exclusive licensee would not bring infringement proceedings against the recipients of the letters (see here).
Broadly, the judgment concerns three concurrent Federal Court proceedings with common parties. The first relates to claims of patent infringement whereas the latter two relate to trade mark oppositions.
Trafalgar Group Pty Ltd (Trafalgar Group) is the exclusive licensee to an innovation patent entitled 'A Firestopping Device and Associated Method' (the Patent).
Trafalgar Group alleged that Boss Fire & Safety Pty Ltd (Boss) and its sole director infringed the Patent. In response to a cross-claim by Boss, the court considered whether Trafalgar Group contravened the ACL and the unjustified threats regime by sending letters (in substantially the same form) to particular groups in the building industry.
The letters
Although none of the letters threatened patent infringement proceedings against the recipients of the letters, generally they included the following features:
- a heading: 'Notice of patent rights – Innovation Patent No. 217101778';
- a statement that the letter(s) were intended to provide the recipient with information regarding the Patent and the existence of proceedings against Boss, rather than assert patent rights against the recipient's use of the method that was protected by the Patent (the First Statement);
- a statement that Trafalgar Group believed that a particular product supplied by Boss (the Boss Product) would infringe the Patent whenever it is used to construct a fire barrier (the Second Statement); and
- a statement that Boss infringes the Patent whenever it supplies the Boss Product (the Third Statement).
The judgment reproduces a representative sample of the letters at paragraph 473.
Findings
Justice Yates found that all of the claims of the patent were invalid on the basis of either lack of novelty or innovative step. Accordingly, Boss and its sole director were not liable for patent infringement.
Justice Yates also found that by sending the letters, Trafalgar Group did not make unjustifiable threats under section 128(1) of the Patents Act 1990 (Cth) (the Patents Act), but did contravene section 18(1) of the ACL for engaging in conduct that was misleading or deceptive.
Unjustified threats
The court found that the letters did not enliven the unjustified threats regime because there was no threat of infringement proceedings – being a necessary requirement under the regime.
The court found that the First Statement made sufficiently clear that Boss was the object of Trafalgar Group's complaint, and that there would be no court proceedings against the recipients of the letters.
The court made this finding notwithstanding that it had identified that Boss was aggrieved by the letters, noting the letters sent a clear and intended signal to potential business partners of Boss that any dealings of the Boss Product were jeopardised and faced a real risk of interruption.
Misleading or deceptive conduct
Although the letters did not contravene the Patents Act, they did contravene s18(1) of the ACL. For example:
- The Second Statement was misleading because not each and every use of the Boss Product would be use of the patented method. The Boss Product could be used to construct a fire barrier in other ways that would not involve the steps of the claimed method.
- The Third Statement was also misleading. The Patent was invalid and therefore could not be infringed. Further, given the Boss Product could be used in a way that would not infringe the claimed method, it was misleading to assert that any supply of the Boss Product was an infringement.
Overall the court cautioned against communications that contain a 'generalised, unqualified and incorrect assertion as to the extent of' patent rights.
Actions you can take now
- Entities should exercise caution whenever they communicate with others regarding their rights.
- Entities whose businesses have been interrupted by communications that make representations about IP rights should assess whether relief is available to them under the unjustified threats regime and other avenues (such as the ACL).