Was the patent infringed?

Both A Pty Ltd and R Pty Ltd are located in Australia.

A Pty Ltd has a patent in Australia over a gizmo.

R Pty Ltd has entered into a contract with T LL C to make 100 gizmos for T for delivery to T’s facility in Eritrea. R Pty Ltd won’t make the gizmos itself; they will be made by its manufacturer in Shenzhen, China . Once made, R’s manufacturer will deliver the 100 gizmos FOB to a ship T has chartered in Hong Kong.

Assuming that the gizmos made in Shenzhen fall squarely within the claims of A’s patent, has R Pty Ltd infringed A’s patent? Cast your vote (anonymously) below:

[socialpoll id=”2382621″]

The answer should be posted on Friday.

Selected links from the last week

I am going to try an experiment. With the rise of “week in review” style blogposts and your day job probably means you don’t have all day to watch Twitter streaming by, here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

  • MACCOFFEE? We’re not lovin’ it, says General Court here

    The “Mac” family of trade marks are too well known for someone esle to register MACCOFFEE in the EU

  • “Own Name” defence in Singapore–when “honest practices” does the heavy lifting here
  • CJEU says operators of physical marketplaces may be forced to stop trade mark infringements of market-traders

    although you could contrast that to Dowsett J’s decision

  • Book Review: The law and practice of trademark transactions – A global and local outlook

Not categorised

  • Employees Bound By Clickthrough Agreements–ADP v. Lynch (USA)

Bit of a slow week in the northern hemisphere, but I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Another Infringed Innovation Patent And A Delivery Up Question

Product Management Group (PMG) has lost its appeal from Middleton J’s finding that it infringed Blue Gentian’s innovation patents for a self extending/collapsing garden hose.

The appeal seems like a fairly straightforward application of construction principles and demonstrates, yet again, how slender an innovation need be to secure a monopoly for eight years.

There may, however, be a question for the future whether or not the “substantial contribution” to the working of the “invention” required by s 7(4) must be a positive contribution to the working of the invention.[1]

An interesting point is the Order Middleton J made for delivery up. His Honour did not just require delivery up of PMG’s unsold stock and componentry. In addition, by paragraph 3(c), his Honour ordered that PMG should contact the customers to which it hold sold the infringing products, offer them a refund and request that they return the products to PMG.

Nicholas J considered this travelled well beyond the purpose of an order for delivery up. His Honour considered that purpose was to relieve the infringer from the “temptation” of further infringing and so, in that sense, was in aid of the injunction. Nicholas J considered that an order requiring a party to try and retrieve property to which it no longer had any legal title could not fairly be described as in aid of delivery up and so would have set aside that part of the Order.

In circumstances where the Court had not been favoured with any oral submissions and only brief mention in written submissions, however, Kenny and Beach JJ were not persuaded that his Honour’s discretion miscarried and their Honours would let it stand in this case. However, they warned:

But our rejection of this ground should not be taken as any endorsement of this form of order for the future. We doubt that such an order would ordinarily be appropriate. We do not need to comment further.

This may pose an interesting dilemma for “convicted” infringers: object to such an order or, as the purchasers’ use of an infringing product would itself be an infringement, risk having the successful plaintiff require discovery and then suing the individual customers for infringement too.[2]

Product Management Group Pty Ltd v Blue Gentian LLC [2015] FCAFC 179


  1. Compare Kenny and Beach JJ at [178] to Nicholas J at [284].  ?
  2. On the approach taken vy Yates J in Winnebago (No 4). Of course, the plaintiff might not be willing to pursue individual purchasers of garden hoses, but what about Bunnings and the other hardware chains?  ?

Alphapharm v Lundbeck per se

The Full Federal Court has dismissed yet another appeal in the Alphapharm v Lundbeck (escitalopram) saga:

You will recall that Lundbeck had applied (10 years late)[1] for an extension of the term of its escitalopram patent under s 70 of the Patents Act, escitalopram being the (+) enantiomer of citalopram.[2]

The issue in this appeal was whether escitalopram satisfied the requirement in s 70(2)(a) that:

one or more pharmaceutical substances per se must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification

Alphapharm’s argument was that Lundbeck’s patent was a claim to a pharmaceutical substance – the isolated or pure enantiomer – but it was not a claim to a pharmaceutical substance per se. Rather, Alphapharm characterised the claim as a claim to the substance limited by a requirement of purity of manufacture.

Bennett, Nicholas and Yates JJ rejected Alphapharm’s characterisation.

Claim 1 of the escitalopram patent is to:

(+)–1-(3-dimethylaminopropyl)–1-(4’-fluorophenyl)–1,3-dihydroisobenzofuran–5-carbonitrile and non-toxic acid addition salts thereof.

Their Honours pointed out that the claim did not itself use the word “isolated” or “pure”. Nonetheless, the skilled addressee would understand the claim to be referring to the substance constituted by the isolated enantiomer, not as existing in the racemate. That substance was a new chemical entity with different characteristics and properties to the racemate.

92 …. the claim is to the (+)-enantiomer and nothing else. The term “pharmaceutical substance per se” simply means the pharmaceutical substance “in itself”. In Boehringer, Heerey J observed that per se meant ‘by or in itself’ ‘intrinsically’ or ‘essentially’ (at [7]). The Full Court approved that approach on appeal (at [37]).

93 Semantics aside, it is clear that the claim describes a pharmaceutical substance per se. The substance was, as explained by Lindgren J at [536], a new chemical entity. The racemate and the (+)-enantiomer had different physico-chemical interactions manifested in different pharmacodynamics and pharmacokinetics (the Decision at [234]). The claim is to (+)-citalopram, irrespective of how it is produced. The isolated (+)-enantiomer plainly qualifies as a pharmaceutical substance per se and the primary Judge was correct in concluding that it satisfies s 70(2)(a) of the Act.

It looks like things are now getting down to the sharp pointy question of how much will have to be paid in terms of pecuniary remedies. As this was an appeal from a single judge who, in turn, was hearing an appeal from the Commissioner, Alphapharm needed leave to appeal.[3] While cases granting “leave” are not quite as rare as hen’s teeth, the Full Court noted leave should be granted because:

35 This application also represents Alphapharm’s only course in challenging the extension of term of the Patent, which has significant consequences to Alphapharm. If Lundbeck is successful, the term of the Patent will be extended and Lundbeck’s infringement proceedings against Alphapharm can proceed.

Alphapharm Pty Ltd v H Lundbeck A/S [2015] FCAFC 138 (Bennett, Nicholas and Yates JJ)


  1. The High Court held that Lundbeck was not “out of time” in making its application last year.  ?
  2. Lundbeck patented the racemate citalopram in 1980 and marketed it in Australia as Cipramil. The racemate being a mixture of both the (+) and (-) enantiomers. Lundbeck marketed escitalopram as Lexapro.  ?
  3. Patents Act s 158(2).  ?

Productivity Commission to review all IP laws

The Harper Review[1] recommended that the Government should direct the Productivity Commission to undertake an overarching review Australia’s IP laws.

The Treasurer and the Minister for Small Business have now announced that review.

According to the Harper Review:

an appropriate balance must be struck between encouraging widespread adoption of new productivity-enhancing techniques, processes and systems on the one hand, and fostering ideas and innovation on the other. Excessive IP protection can not only discourage adoption of new technologies but also stifle innovation.

Given the influence of Australia’s IP rights on facilitating (or inhibiting) innovation, competition and trade, the Panel believes the IP system should be designed to operate in the best interests of Australians.

The Panel therefore considers that Australia’s IP rights regime is a priority area for review. (emphasis supplied)

In reaching that view, the Harper Review flagged concern about entering into new treaties with extended IP protections.

The terms of reference state:

In undertaking the inquiry the Commission should:

  1. examine the effect of the scope and duration of protection afforded by Australia’s intellectual property system on:

    a. research and innovation, including freedom to build on existing innovation;

    b. access to and cost of goods and services; and competition, trade and investment.

  2. recommend changes to the current system that would improve the overall wellbeing of Australian society, which take account of Australia’s international trade obligations, including changes that would:

    a. encourage creativity, investment and new innovation by individuals, businesses and through collaboration while not unduly restricting access to technologies and creative works;

    b. allow access to an increased range of quality and value goods and services;

    c. provide greater certainty to individuals and businesses as to whether they are likely to infringe the intellectual property rights of others; and

    d. reduce the compliance and administrative costs associated with intellectual property rules.

Then follows a catalogue of 9 matters for the Commission to have regard to. These include the Government’s desire to retain appropriate incentives for innovation, the economy-wide and distributional consequences of recommendation and the Harper Review’s recommendations in relation to parallel imports.[2]

The Commission must report within 12 months.


  1. The Competition Policy Review, recommendation 6.  ?
  2. Rec. 13 and section 10.6 of the Competition Policy Review: i.e., repeal any remaining restrictions unless the benefits outweigh the costs and the objectives of the restrictions can only be achieved by restricting competition. Cue diatribe about “restricting competition” especially given the oft mouthed formula that IP rights rarely (if ever) restrict competition.  ?

Innovation patent consultation on the consultation

IP Australia has issued a consultation paper seeking the public’s view on (the now departed) ACIP’s recommendations for the innovation patent. Specifically:

IP Australia is seeking feedback from interested stakeholders on:

  • the ACIP recommendation that the government should consider abolishing the innovation patent system
  • any alternative suggestions to encourage innovation amongst SMEs.

Get your comments in by 25 September 2015

IP Australia’s consultation paper here (pdf or word). The ACIP report being “consultated” upon, via here and updated here.

Australian Intellectual Property Report 2015

IP Australia has released its Australian Intellectual Property Report 2015.

In addition to reporting on a range of statistics and some commentary, the report includes a number of “interactive” graphs that you may explore. Much, if not all, of the data is available through the Government Open Data initiative.

The headline point is that applications for trade marks and plant breeder’s rights increased over 2013, while applications for patents and registered designs decreased. The report attributes the decline in patent applications to the increased threshold arising from the commencement of most of the substantive reforms in the Raising the Bar and the rush to file before their commencement.

Australians are the largest source of filings for trade mark, registered designs and pbr. US-based applicants the largest source of patent applications; Australian residents being the second largest.

There were 25,947 applications for standard patents in 2014, a decrease of 13% on 2013. 19,034 standard patents were granted; an increase of 13% over 2013. Over 94% were granted to non-residents. The average number of months from filing to request for examination fell from 16.3 to 13.6 months; the average time from request to first report is just over 9 month and, on average, the time from first examination report to acceptance was a further 14 months. Australians filed 9,012 patent applications abroad in 2013 (41% in the USA), up 3% on 2012.

There were 1523 applications for innovation patents, down from 1676 in 2013. Australians accounted for 66% of the filings.

There were 64,381 trade mark applications filed in Australia in 2014, up 2% from 2013; correspondingly, Australians filed 16,267 applications overseas (in 2013). The top 3 filing destinations were the USA, China and NZ – accounting for 50%. The USA supplanted China as the “top destination”. Apparently, this is in line with a global trend.

6550 designs were registered in 2014, and 1452 were certified – almost double the number certified in 2013. IP Australia speculates that there are few applications to register designs because:

According to Lim et al (2014) the role of IP rights in the market for designs is limited.9 Buyers and sellers in the market view designs as a service that is co-created. As IP rights protect the artefact, not the service, IP rights are perceived as a secondary issue in the marketplace. This view of design rights provides insights into the low volume of design registrations relative to patents and trade marks.

The number of applications for plant breeder’s rights skyrocketed from 330 in 2013 to 341!

The report notes that IP Australia is aiming in 2015 to complete research projects into innovation trends in the mining industry, who and in which areas in the textile, clothing and footwear industry is filing patents and the role of geographical indicators.

Springboard injunctions and patents

In December, Beach J found AUG infringed Streetworx’ innovation patent for a street light fitting. Now, his Honour has granted an injunction restraining AUG from further infringing the patent, but has refused to grant a “springboard injunction” or order delivery up.

Before the trial, AUG had secured contracts with two municipal councils, Monash and Moonee Valley, to supply, respectively, 8,000 and 6,000 infringing light fittings. The lights have yet to be supplied. AUG couldn’t negotiate a royalty or licence fee with Streetworx so it could supply. Therefore, it sought to modify its fittings so they no longer infringed. Streetworx sought the “springboard injunction” to block that supply on the basis that AUG secured the contracts with the infringing product and should not be allowed to take the benefit of that infringement.

Beach J accepted that the Court does have power to order a “springboard injunction” of the kind sought.

Beach J accepted Streetworx’ argument that but for the infringing conduct there would not have been any contract to supply.[1] However, that was not enough to secure the “springboard injunction” as his Honour considered it was also necessary to consider the quality of the advantage obtained by the infringement.

[81] …. The quality of the unwarranted advantage needs to be considered. In the scenario where the relevant integers had no causal significance (ie absent the relevant integers the contract would have been awarded for the product in any event), the nature and quality of the unwarranted advantage is less egregious than if the presence of the relevant integers in the product played a critical role in the decision to award the contract. So, in that more nuanced fashion, it is relevant to consider the causal significance of the presence of the relevant integers to the decision to award the contract. The more the unwarranted advantage is causally tied to the significance of the presence of the relevant integers, the stronger the basis for the injunction and vice versa. The concept of unwarranted advantage contains within it a normative aspect and has a spectrum quality rather than Streetworx’s simplistic binary characterisation of it either being established or not established. In other words, there are degrees of unwarranted advantage which are to be considered and which are not foreclosed from consideration by merely demonstrating “but for” factual causation as Streetworx has demonstrated in the present case.

In this case, Beach J considered that damages or an account of profits would be an adequate remedy.[2] Secondly, the qualitative advantage gained by the infringement was low. So far as the evidence went, the infringing features were not a selling point in AUG achieving the sales. Although there was no evidence directly from the Councils themselves, this was supported by the fact they were prepared to accept the non-infringing products in place of the infringing fittings. Thirdly, his Honour took into account the impact of the proposed injunction on the innocent Councils in a market where there were limited suppliers.

His Honour also refused to order delivery up as the fittings had been modified so that they no longer infringed.

Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (No 2) [2015] FCA 140


  1. If the fitting to be supplied had not been itself the infringement – a holistic infringement, but rather merely a component such as the brake of a car, Beach J may have been prepared to take the more nuanced approach advocated by AUG at the causation stage.  ?
  2. This is an unusual consideration at the final injunction stage as typically the Courts will not condone future infringing conduct. Here, of course, his Honour found the conduct would not be infringing. His Honour did order that the price of escaping the injunction would be an undertaking from AUG to pay its gross margin from the sales into a trust account pending the damages/account inquiry.  ?

ACCC loses antitrust case against Pfizer

Flick J has ruled that Pfizer did not breach antitrust rules by trying to maintain sales of Lipitor after it came off patent.

Pfizer’s patent on atorvastatin (Lipitor) was due to expire on 18 May 2012.[1] Its analysis showed it was facing a revenue cliff: from $771 million a year in 2011 to $70 million a years by 2015. Pfizer came up with a 3-part plan:

  1. in the 18 months prior to expiry, it stopped supplying Lipitor through wholesalers and started supplying pharmacies directly (thereby earning the wholesale margin for itself);
  2. it offered a 5% discount to those pharmacies it supplied + a 5% “rebate” credited to an accrual fund. The “rebate” was repayable to the pharmacy if it committed to buy from Pfizer a specified proportion of its anticipated generic atorvastatin needs after the patent expired – the amount of “rebate” repaid would vary according to the proportion of generic needs committed to and the time frame for the commitment. For example, the pharmacy would receive 100% if it committed to taking 75% of its anticipated needs for 12 months. but only 50% if it committed to taking 75% for only 6 months.
  3. Pfizer also made a bundled offer – it could offer to supply both Lipitor and its generic product “atorvastatin Pfizer”.

The ACCC brought action alleging by implementing this plan, Pfizer had contravened:

  • section 46 of the Competition and Consumer Act (CCA), which prohibits a corporation with a substantiall degree of power in a market from taking advantage of that power for proscribed anti-competitive purposes; and
  • section47 of the CCA which prohibits exclusive dealing that has the purpose or effect of substantially lessening competition in a market.

Flick J has dismissed the ACCC’s action.

Relevant market

His Honour found that the relevant market was the market for the supply to community pharmacies in Australia of atorvastatin as the ACCC contended. Pfizer argued the market was the market for the wholesale supply of pharmaceutical products and over the counter products to community pharmacies.

Substantial degree of power in the market

His Honour also found that Pfizer had a substantial degree of power in that market until late 2011 and had taken advantage of that power by implementing its scheme. Pfizer did not have a substantial degree of power in the market from January 2012 on wards.

Before January 2012, Pfizer was the only supplier of atorvastatin and the constraints on the price it could charge imposed by the PBS was “not sufficient to render its market power anything other than “substantial”.” Flick J recognised that there was no precise date which could be identified as the point where Pfizer’s market power ceased to be substantial. By late 2011, however, that power was no longer “enduring” as the expiry date of the patent loomed closer. By February 2012, Ranbaxy was able to enter the market offering its generic atorvastatin for sale[2] and the other intending generic suppliers had registered their products on the Therapeutic Goods Register and were starting sales discussions with potential customers.

Flick J found Pfizer took advantage of its power to impose the direct sales to pharmacies model because the pharmacies were opposed to it, but Pfizer was able to impose it on them as the only possible source of atorvastatin. Similarly, the rebate scheme took advantage of that power because it created an expection of payments in the future on terms that were unclear and yet to be decided. Flick J found that the amount of money accumulated within the rebate scheme by the time the patent expired was very substantial – $35 million – a powerful incentive to buy product from Pfizer. One might wonder, however, why the position would have been any different if the terms on which the rebate could be claimed had been clear.

No anti-competitive purpose

Even in the period before January 2012 when it had a substantial degree of power in the market, however, there was no contravention of 2 46 because it did not take advantage of its market power for a proscribed anti-competitive purpose.

Pfizer also did not contravene s 47 because in implementing the scheme it did not have the purpose of substantially lessening competition.

Rather than having a purpose of deterring competition by the generics, Flick J accepted that Pfizer was motivated by rationale business objectives. For example, selling directly to pharmacies rather than through wholesalers:

But my question, Mr Latham, was directed to Lipitor and generic atorvastatin, not some dream of establishing a generics business? — But once again you’re asking me to make a decision on – on one product, when I have seven products, over $1 billion, coming off patent. And it’s not just Pfizer Australia. It’s around the world. And to try to get the best business organisation that’s going to deliver continuing operations through those generic products, plus, they have these additional benefits of being closer to pharmacy. Going through the licensee doesn’t tick that important box.

The requirement to take 75% of the pharmacies needs to qualify for the “rebate” also did not have an anti-competitive purpose. Rather, Flick J found that the requirement had been reduced from 100% to 75% – sacrificing $30 million in potential revenue – to enable the pharmacy to establish a second source of supply.

s 51(3)

Section 51(3) exempts from s 47 conditions in, amongst other things, licences of patent to the extent they relate to the invention to which the patent relates or articles made according to the invention.

Although its operation did not fall to be determined because there was no contravention of s 47, Flick J would have found it did not apply in this case. His Honour considered that the sale of atorvastatin to the pharmacies would not involve any licence. More importantly, his Honour would have held that the condition was collateral to the patent and so outside the scope of the exemption.

What actually happened

In the event, Pfizer went from selling 100% of the prescribed atorvastatin (as Lipitor) in March 2012, to 32% of prescription in April and settling around 22 – 23% by June 2012. While Pfizer antiticpated marketing advantages in being the only supplier likely to supply generic atorvastatin in pills the same shape, size and colour as Lipitor, the evidence showed it held 100% of the generic market until September 2012, after which its share fell away to 16 – 17% by March/April 2013.

Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 113


  1. PBS figures for the year to June 2012 showed Lipitor was the highest cost to the scheme ($593 million) followed by rosuvastatin ($359 million) and ranibizumab ($308 million).  ?
  2. Pfizer and Ranbaxy had settled other litigation on terms which enabled Ranbaxy to enter the market before the patent expired.  ?

The statutory right to terminate a patent licence

Section 145 provides the licensee of a patent with a statutory right to terminate the licence on 3 months’ written notice after the patent has expired. What happens, however, if more than one patent has been licensed?

MPEG LA is the patent pool vehicle which licenses the essential patents for the production of DVDs, DVD players and some other video codecs.[1] It granted a licence of a number of patents to Regency Media. In June 2012, after some, but not all, of the patents had expired, Regency Media sent a notice seeking to exercise its right to terminate under s 145. By the trial, some other patents had expired, but some of those licensed were still extant.

Section 145 provides:

Termination of contract after patent ceases to be in force

 (1)  A contract relating to the lease of, or a licence to exploit, a patented invention may be terminated by either party, on giving 3 months’ notice in writing to the other party, at any time after the patent, or all the patents, by which the invention was protected at the time the contract was made, have ceased to be in force.

(2)  Subsection (1) applies despite anything to the contrary in that contract or in any other contract.

The short answer: according to Flick J it appears the licensee has to wait until all the licensed patents have expired before the licensee can exercise the right under s 145.

A bit longer answer: Acknowledging the force of Regency Media’s argument that each patent could be described as being for a patented invention (a term not otherwise defined in the Act), Flick J accepted MPEG LA’s argument. According to MPEG LA, the licence granted rights over three groups of technologies:

  • the MPEG–2 Decoding Products;
  • the MPEG–2 Encoding Products; and
  • the MPEG–2 Packaged Medium,

each of which groups constituted a patented invention for the purposes of s 145 and so s 145 could not be triggered until all had expired.

At [40], Flick J appears to arrive at this conclusion because each of the three groups constituted a “manner of manufacture” in the NRDC sense irrespective of how many patents fell within the particular group. His Honour also thought s 145 was drafted before modern licensing administrators came on to the scene and so may well be inaptly worded to deal with such creatures. However, his Honour considered at [43]:

A court, should be slow to prefer a construction which would permit the termination of an agreement in respect to patents which have not ceased to be in force and which would deny to a patent holder the benefit of the payment of royalties in amounts that have been the subject of agreement. Section 145 manifestly does not permit a contract to be terminated where “all of the patents, by which the invention [is] protected” have not ceased to be in force.

MPEG LA, L.L.C. v Regency Media Pty Ltd [2014] FCA 180


  1. A modern day American antitrust miracle: the official version; Wikipedia’s version.  ?