This country-specific Q&A provides an overview of Patent Litigation laws and regulations applicable in Australia.
What is the forum for the conduct of patent litigation?
First instance patent proceedings are conducted in the Federal Court of Australia. Appeals are heard by the Full Court of the Federal Court of Australia (as of right) and after that (with special leave) the High Court of Australia. The Federal Court has recently adopted ‘National Practice Areas’, one of which is ‘Intellectual Property’ with ‘Patents and Associated Statutes’ one of three defined sub-areas. Patent cases are generally allocated to a member of a panel of judges within the ‘Patents and Associated Statutes’ sub-area, each of whom has experience in patent matters, some with a technical background. The party commencing proceedings (either for infringement of revocation) can choose which State or Territory Registry to file in, and this can influence which judge is allocated.
What is the typical timeline and form of first instance patent litigation proceedings?
Australian patent proceedings are not bifurcated. Infringement claims and revocation counterclaims will be conducted together by the same Court at the same time. Generally, all infringement and validity issues in the litigation are heard together at a final hearing. The judge may make an order for separate determination of a preliminary issue, however there is no practice of separate claim construction hearings and this issue will usually be dealt with at the final hearing. In most patent litigation issues of liability (infringement and validity) and quantum (amount of damages or profits) will be split, with a separate hearing on quantum taking place only if liability is found. An average patent infringement proceeding runs for around 18 months to two years from filing to the end of the trial hearing, with judgments usually taking six to twelve months thereafter.
Can interim and final decisions in patent cases be appealed?
Final decisions of the Federal Court of Australia can be appealed as of right, to a Full Court of the Federal Court (comprising judges who are peers of the first instance judge). A Full Court appeal decision will generally be issued within around 6-15 months of the first instance judgment. Leave from the Court is required to appeal an interlocutory judgment to the Full Court, and to appeal any Federal Court decision which is itself a Patent Office appeal. A judgment of the Full Court of the Federal Court of Australia can only be appealed to the High Court of Australia with special leave, generally only granted in significant cases dealing with new or disputed points of law. A judgment which has been appealed will not be automatically stayed. The applicant must show that the stay is necessary to preserve the position.
Which acts constitute direct patent infringement?
A patentee has the exclusive rights to ‘exploit’ the invention and authorise others to do so, including: (a). making, hiring, selling or otherwise disposing of a product, offering to do so, using or importing it, or keeping it for the purpose of doing any of those things; (b) using a method or process, or doing any act mentioned in paragraph (a) in respect of a product resulting from such use.
Do the concepts of indirect patent infringement or contributory infringement exist? If, so what are the elements of such forms of infringement?
Australian patent law has a statutory form of liability for indirect infringement by unauthorised supply of a product. The relevant infringing act is the supply of a particular product in specific circumstances. Generally, liability for indirect infringement by supply will arise where a product is only reasonably capable of an infringing use, where the product is not a staple commercial product and the supplier had reason to believe that the person would put it to an infringing use, or where the supplier provides instructions or inducement for the use of the product in an infringing way. Australia’s patent statute separately provides that authorisation of ‘exploitation’ of the invention constitutes infringement. Liability for patent infringement may also arise under tortious principles such as joint tortfeasorship.
How is the scope of protection of patent claims construed?
Patent claims are construed through the eyes of the skilled person in the art. Experts can give evidence on the meaning of technical or scientific terms and unusual or specific meanings of words. A patent specification is given a purposive, not a purely literal, construction, in the light of the common general knowledge and the art before the priority date. The claims are to be construed in the context of the specification as a whole, but the plain meaning of the claim language is generally decisive and ‘glosses’ from the specification should not be introduced where that language is clear and unambiguous. The prevailing view is that there is no recognised doctrine of equivalents under Australian patent law (or, at least, any such doctrine is very narrow). Rather, the key question is whether the claims can be read sufficiently broadly on the basis of the above principles. The doctrine of prosecution history (or file wrapper) estoppel is not applied in Australia, although in at least one case it has been suggested that this is an open question.
What are the key defences to patent infringement?
Beyond arguing non-infringement and invalidity, infringement can be contested on the basis of various statutory defences (a) prior continuing use before the priority date of the relevant claim; (b) exploitation solely for regulatory purposes in Australia or overseas (both pharmaceutical and non-pharmaceutical patents); (c) exploitation for experimental use; (d) use of the invention on board a foreign vessel or aircraft; (e) the patented invention is, or was when the proceedings were started, the subject of a contract containing a provision, inserted by the patentee, that is void for impermissibly prohibiting the defendant from using or acquiring a product or process not the subject of the patent. In certain factual scenarios it may also be possible to rely upon equitable defences such as acquiescence and delay (laches) and promissory estoppels.
What are the key grounds of patent invalidity?
Key grounds of invalidity are: (a) no manner of manufacture (non-patentable subject matter); (b) lack of novelty (anticipation) in light of prior art published documents, ‘whole of contents’ prior-filed patent documents or public acts; (c) lack of inventive step (obviousness) in light of the common general knowledge alone or in combination with prior art (published documents or public acts); (d) inutility (e) Secret use; (f) lack of support (or fair basis for patents governed by pre-Raising the Bar legislation, in force since April 2013); (g) insufficiency; ; (h) failure to disclose best method; (i) lack of clarity; (j) Lack of entitlement (which has not been rectified).
How is prior art considered in the context of an invalidity action?
For the purposes of assessing novelty, the prior art base incorporates any information in a document which is made publicly available anywhere in the world. Acts done in public can also be novelty-defeating, subject to evidence being adduced and accepted in relation to what was done and what it disclosed to a person observing it. In addition, Australia recognises ‘whole of contents’ or ‘novelty only’ prior art patent documents – information in a patent specification published after the relevant priority date, which if claimed, would have a priority date earlier than that of the claim under consideration. Prior art documents and acts can only be combined for novelty purposes where a person skilled in the art would treat them as a single source of information.
The prior art base for inventive step incorporates publicly available documents and acts as for novelty, but not ‘whole of contents’ or ‘novelty only’ documents. For patents governed by the law prior to the Raising the Bar amendments (examination requested before 15 April 2013), to rely on prior art for obviousness purposes, it must be shown that the skilled person could be reasonably expected to have ascertained, understood and regarded the document as relevant. This is a significant additional burden for many prior art documents and even more so for prior art acts. Accordingly, the removal of this requirement by the Raising the Bar amendments has made patents for which examination was requested after 15 April 2013 easier to attack for lack of inventive step. Documents can only be combined for inventive step where the skilled person could be reasonably expected to combine them.
Australia also has a second-tier ‘innovation patent’ system. Innovation patents confer the same rights as standard patents but for a term of 8 years rather than 20 years. The only substantive difference in the validity requirements for an innovation patent is it merely requires an ‘innovative step’, rather than an inventive step. Questions of obviousness do not arise. The invention claimed by an innovation patent need only differ from each prior art document (assessed individually) by way of a feature that contributes substantially to the overall working of the invention. This makes innovation patents more difficult to revoke. The innovation patent system is being phased-out and new innovation patents can only be filed until 26 August 2021, and after that as divisionals from pending standard patent applications filed before 26 August 2021. Existing innovation patents will however be entitled to continue for their full term, subject to payment of renewal fees.
Australia has a number of grace period provisions, which may have the effect of excluding publications from the prior art base for assessing both novelty and inventive step (and innovative step).
Can a patentee seek to amend a patent that is in the midst of patent litigation?
The Court may amend a patent in patent proceedings. The Patent Office cannot amend a patent while relevant litigation is ongoing. Amendments in the Court must meet the usual requirements, namely the amendments must not disclose or claim additional matter beyond that disclosed in the complete specification as filed, the amended claims must in substance fall within the scope of the claims before amendment, and the specification must comply with the usual internal specification requirements. Unlike in the Patent Office, the Court maintains a general discretion as to whether to allow amendments. To satisfy the Court that the amendments should be made (particularly where a granted patent is asserted against another party), the patentee will usually need to explain why the amendment was not sought earlier, including potentially waiving privilege in communications with patent attorneys. Amendments should generally be sought as early as possible in any litigation. An application for amendment must be notified to the Commissioner for Patents and advertised in the Official Journal, with an opportunity for a third party to oppose. Any other party in the litigation may also oppose the application for amendment.
Is some form of patent term extension available?
Certain standard Australian patents for pharmaceutical substances are eligible for patent term extension of up to 5 years. The pharmaceutical substance must be included in the Australian Register of Therapeutic Goods (ARTG) and there must be at least 5 years between the filing date of the patent application and the first approval of any product containing the pharmaceutical substance. The term extension can be opposed on the basis that the requirements are not met. The rights of the patentee are more limited during the term extension.
How are technical matters considered in patent litigation proceedings?
Expert evidence on technical matters is key in Australian patent litigation and its preparation represents a significant proportion of total costs. The evidence is usually given by affidavit, which serves as an expert’s evidence in chief. Experts will also be cross-examined at trial Expert witnesses are usually independent and retained (and typically paid for their time) by the parties. Such experts must be informed and acknowledge in their evidence that their duties are to the Court. Joint expert evidence processes are commonly encouraged by the Court. This can include expert conclaves in the absence of lawyers, during which the experts produce a written joint expert report setting out matters of agreement and disagreement, and concurrent expert evidence (‘hot tubs’) at trial, with the parties’ respective expert witnesses giving evidence together addressing an agreed set of topics. The Federal Court of Australia also actively encourages use of summary documents, such as agreed technology primers, process descriptions and position statements on infringement and validity.
Is some form of discovery/disclosure and/or court-mandated evidence seizure/protection (e.g. saisie-contrefaçon) available, either before the commencement of or during patent litigation proceedings?
Discovery is common in Australian patent litigation, but is not available as of right. A party applying for discovery must show that the discovery is relevant and proportionate to the proceeding. General discovery is not usually available; discovery will be ordered by reference to specific categories of documents. “Preliminary discovery” can also be sought before commencing proceedings, either to determine whether a cause of action exists or the potential value of a claim. There are no product seizure provisions under Australia’s patent law. While it is technically possible to obtain orders for urgent seizure of products to prevent destruction (“Anton Pillar orders”) or freezing of bank accounts to capture proceeds (“Mareva orders”), such processes are uncommon in patent litigation.
Are there procedures available which would assist a patentee to determine infringement of a process patent?
The preliminary discovery process described above can be used to determine infringement of a process patent. In existing proceedings, standard discovery or interrogatories can also be sought with regard to an allegedly infringing process. The Court may also require a respondent to file a process description, detailing the steps of the allegedly infringing process.
Are there established mechanisms to protect confidential information required to be disclosed/exchanged in the course of patent litigation (e.g. confidentiality clubs)?
Parties routinely agree “confidentiality club” arrangements, either in an agreement between the parties, or by formal court orders. Often the confidentiality club includes only external lawyers, patent attorneys and independent experts, but sometimes in-house lawyers may be included. The Federal Court of Australia may make interim confidentiality orders over specific documents while proceedings are ongoing, and continuing confidentiality orders after trial, the latter requiring the confidentiality claim to be justified more rigorously.
Is there a system of post-grant opposition proceedings? If so, how does this system interact with the patent litigation system?
Australia has a pre-grant patent opposition system for standard patents, but no post-grant opposition. As such the question of interaction with patent litigation does not arise for a standard patent. Occasionally litigation is commenced while a post-grant amendment to a is being considered by the Patent Office or opposed by a third party, or where the Patent Office is undertaking re-examination (either at the request of a third party (with no standing requirement) or on its own initiative (such as following an opposition that settled commercially)). If Court proceedings are ongoing in respect of a patent, the Patent Office cannot revoke a patent following re-examination or allow any amendment of the patent. Innovation patents are granted without substantive examination, and can only be opposed after grant and subsequent examination and certification. If infringement proceedings are commenced by the patentee, any opposition to the certified innovation patent will be stayed before the Patent Office.
To what extent are decisions from other fora/jurisdictions relevant or influential, and if so, are there any particularly influential fora/jurisdictions?
The Australian legal system is based on the common law, and Australian courts consider decisions of UK courts, as well as decisions of other common law jurisdictions such as Canada and New Zealand. Decisions of US courts are sometimes considered. However, there is no requirement for Australian courts to follow decisions of any foreign court. Decisions of foreign courts are likely to be more influential where there is no relevant precedent in Australian law. Where an Australian Court has a similar legal test on a question such as novelty, a foreign decision on an equivalent patent can be influential, but not binding, in an appropriate case. That is particularly so with respect to the new support and sufficiency requirements introduced by the Raising the Bar amendments in 2013, which were expressly intended to emulate the corresponding tests in Europe.
How does a court determine whether it has jurisdiction to hear a patent action?
Australian patent rights are generally limited to acts in the Australian patent area. In some cases, a party can be liable for acts outside Australia, for example, importation and sale in Australia of a product made outside the jurisdiction by a method claimed in an Australian patent. An Australian Court would not generally consider questions of validity of a foreign patent. However it may consider questions of infringement of a foreign patent in some cases if there is a connection to Australia (such as under some other area of law).
What are the options for alternative dispute resolution (ADR) in patent cases? Are they commonly used? Are there any mandatory ADR provisions in patent cases?
The Federal Court of Australia may order mediation of IP disputes. The majority of court ordered mediations are conducted by Judicial Registrars who are trained and accredited by the Court, although parties can and often do choose to engage private accredited mediators. While it is possible to oppose mediation, if it is ordered by the Court, the parties must attend.
What are the key procedural steps that must be satisfied before a patent action can be commenced? Are there any limitation periods for commencing an action?
Patent proceedings are generally commenced by filing of an application (setting out the relief sought) and statement of claim (pleading and particularising the grounds relied upon). The applicant must also file a ‘genuine steps statement’ setting out the steps it has taken to attempt to resolve the dispute. An action for infringement must be brought by the later of either three years from patent grant or six years from the date of infringement. Generally, an action can be brought any time within this period, subject to the possible application of doctrines such as acquiescence and laches. Delay is an important factor when an application for an interlocutory injunction is made. In this case the applicant must act as quickly as possible after learning of the infringing activity, as failure to do so will be relevant to consideration of the balance of convenience.
Which parties have standing to bring a patent infringement action? Under which circumstances will a patent licensee have standing to bring an action?
An action for patent infringement can be brought by either the patent owner or the exclusive licensee of a patent. An exclusive licensee must have exclusive rights with regard to all aspects of exploitation e.g. manufacture and sale, which has proven a strict and harsh test in recent years.
Who has standing to bring an invalidity action against a patent? Is any particular connection to the patentee or patent required?
Any party can seek revocation of a patent in the Federal Court of Australia. Any party can oppose the grant of a patent or request re-examination of a patent in the Patent Office.
Are interim injunctions available in patent litigation proceedings?
Interlocutory injunctions (akin to interim or preliminary injunctions) are available in Australian patent infringement cases. They are most common in the area of pharmaceutical patents where “irreparable” harm is easier to demonstrate, although even in that area it is becoming less predictable whether such injunctions will be granted in a given case on its own facts. Outside of this field, interlocutory injunctions are not common in patent cases. Interlocutory injunction applications are usually dealt with inter partes, unless there is a case of special urgency (an ex parte injunction is usually referred to in Australian practice as an interim injunction). An inter partes interlocutory injunction application will generally be heard within 6-8 weeks. Ex parte interim injunctions can be granted on application, but will usually only be in place for a short period of time before the injuncted party can contest the injunction. The requirements for an interlocutory injunction to be granted are that: there is a serious question to be tried; damages will not be an inadequate remedy; and the balance of convenience and justice favour grant of the injunction. Delay is an important factor for an interlocutory injunction. It is important that the applicant act as quickly as possible after learning of the infringing activity, as failure to do so will be relevant to consideration of the balance of convenience. An applicant for an interlocutory injunction must provide an undertaking as to damages, which requires it to compensate the party against which the injunction is sought if the applicant is ultimately unsuccessful at final trial. Recent cases in which the restrained parties and affected third parties have made damages claims under such undertakings have demonstrated the complexities in calculating the losses of parties who it is ultimately proven were improperly restrained, and the Court has noted this as a potential factor weighing against the grant of interlocutory injunctions.
What final remedies, both monetary and non-monetary, are available for patent infringement? Of these, which are most commonly sought and which are typically ordered?
The primary remedies typically ordered for patent infringement are: damages or an account of profits, at the election of the successful patentee (such election can be deferred until relatively late in the proceeding, especially if there is a separation between liability and quantum); permanent injunction restraining the respondent from infringing conduct; delivery up or disposal of infringing goods; and declaration that the relevant conduct has infringed the patentee’s patent rights.
On what basis are damages for patent infringement calculated? Is it possible to obtain additional or exemplary damages?
The patentee/applicant must elect whether it wishes to pursue damages (compensation for the damage suffered by the patentee/applicant) or an account of profits (an accounting of the profits made by the infringer/respondent). Damages are most frequently calculated by reference to lost sales and/or price suppression as a result of the infringing conduct and/or lost licensing fees where the patentee/applicant is not selling products or services itself. In some intellectual property cases the Australian courts have also applied the ‘user principle’ to award damages for use of the relevant intellectual property more generally. The jurisprudence in this area is still developing. The court has the discretion to award additional damages which go beyond merely compensating the patentee for actual damage suffered, in cases of flagrancy or where other circumstances justify additional damages. The amount of additional damages is not limited by statute. Case law suggests that additional damages are not available if the patentee chooses to obtain an account of profits from the infringer. An account of profits is generally calculated according to established accounting principles, such as discounted cashflow models taking into account overheads and other costs.
How readily are final injunctions granted in patent litigation proceedings?
Although the Court has a discretion whether to grant a permanent injunction, permanent injunctions prohibiting an infringer/respondent from engaging in specific activities in relation to a patent for the duration of its term are usually imposed following findings of infringement. Unlike the position under United States law, there is no requirement that the Court must find that an award of damages would be an inadequate remedy before a permanent injunction is granted.
Are there provisions for obtaining declaratory relief, and if so, what are the legal and procedural requirements for obtaining such relief?
Declarations of patent infringement are usually made where patent infringement is found, provided some other relief (injunction or damages) is also ordered. Non-infringement declarations (NID) are also available and protect against liability for damages or an account of profits even where the NID is later revoked. There is no precedent in Australia for an ‘Arrow declaration’; however, the Federal Court has a general power to grant declarations and so there may be scope to argue for this type of relief in Australia.
What are the costs typically incurred by each party to patent litigation proceedings at first instance? What are the typical costs of an appeal at each appellate level?
Costs in the Federal Court will vary widely depending on the nature of patent proceedings. The importance of expert evidence in patent proceedings is a factor in costs. Costs on appeal are typically much lower than at first instance because no new evidence is generally allowed.
Can the successful party to a patent litigation action recover its costs?
The successful party in Australian patent litigation is generally entitled to an award of costs. Generally the costs will amount to around 50-75% of the actual costs incurred. Formal offers of compromise compliant with Court Rules have specific costs consequences. In addition, less formal ‘Calderbank’ letters of offer may be taken into account by the Court in a discretionary manner with regard to costs. Security for costs may be sought in appropriate circumstances, particularly where an applicant does not appear to have sufficient means to meet a costs award, or such means are not located in Australia.
What are the biggest patent litigation growth areas in your jurisdiction in terms of industry sector?
Mining is among the biggest industries in Australia. During the past decade there has been a significant increase in the number of patent cases between suppliers to mining companies, many of which go through to trial. Computer-implemented methods: the patent-eligibility of computer-implemented methods has proven controversial in Australia in recent years. Prominent cases are currently pending in the appellate levels of the Federal Court and it is hoped they will provide increased certainty to the industry and patent practitioners. Biologics, biosimilars, antibodies and other new therapies: there is an increasing volume of patent cases in which they are being litigated to test aspects of patent law and procedure.
What do you predict will be the most contentious patent litigation issues in your jurisdiction over the next twelve months?
Patent-eligibility of computer-implemented methods. The scope of permanent injunctions for indirect infringement of a patented method where a product supplied is capable of both infringing and non-infringing uses. There is yet to be an authoritative decision on this and indirect infringement allegations are increasingly prominent in Australian patent litigation.
Which aspects of patent litigation, either substantive or procedural, are most in need of reform in your jurisdiction?
Ensuring appropriate limits on discovery, which can prove one of the most time-consuming and expensive aspects of patent litigation.
What are the biggest challenges and opportunities confronting the international patent system?
A major challenge is the multiplication of litigation costs where proceedings on corresponding patents are run in multiple jurisdictions. A major opportunity is for centralised or regionalised enforcement and revocation of granted patents, as is planned for the Single European Patent – a model that could be emulated, for example, in South-East Asia.
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