2019

Invalidity cross-claim blocks interlocutory injunction

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The Full Court has upheld Burley J’s refusal to grant Sanofi-Aventis an interlocutory injunction over Alphapharm’s SEMGLEE insulin solution for an injector pen. The significance here is that this is an unusual case where the (alleged) infringer’s cross-claim has negatived the patentee’s prima facie case of infringement. The Full Court also affirmed his Honour’s approach to balance of convenience issues.

Burley J found a clear case that Alphapharm’s product fell within claim 1 of Sanofi-Aventis’ patent. His Honour found, however, that Alphapharm’s cross-claim that the patent was invalid for lack of novelty was sufficiently strong that “it was doubtful” Sanofi-Aventis had made out a prima facie case of infringement.

Since the Interpharma case, cross-claims by alleged infringers that the patent is invalid have not enjoyed much success as the Court has approached matters on the basis that it is the patentee’s “title” to interlocutory relief which is in issue.

What was different here was that the invalidity cross-claim was not “merely” a triable issue. It was of such strength that Burley J considered (provisionally) the patent was invalid. The Full Court explained the correct approach at [14]:

…. A case for invalidity which is merely arguable, of itself, does not undermine the existence of a prima facie case of infringement which has otherwise been found to exist. However, a sufficiently strong case of invalidity may well qualify the conclusion that there is a prima facie case of infringement at all. Far from reasoning contrary to the approach in Interpharma and Janssen, the primary judge was applying the same reasoning, albeit with an outcome not to Sanofi’s liking because his Honour was satisfied that Alphapharm’s case on invalidity was sufficiently strong to qualify (indeed, virtually to negate altogether) Sanofi’s prima facie case of infringement. Further, it is Sanofi’s submissions which have conflated the relevance of the competing cases on invalidity. What is relevant is the strength of the case that the claim or claims said to be infringed are invalid. The primary judge at [118] found that “the lack of novelty case advanced by Alphapharm is sufficiently strong (at the provisional level) to qualify (in the sense contemplated in Interpharma at [17]) the conclusion that Sanofi has a probability of success”. ….

Sanofi-Aventis argued that the weight of the balance of convenience in its favour was a factor in considering its prima facie case of infringement. This argument failed both at the level of principle and on the facts.

First, the Full Court accepted that the strength of a plaintiff’s prima facie case is relevant to consideration of the balance of convenience. Balance of convenience, however, did not affect the assessment of the strength of the prima facie case of infringement. At [8], the Full Court explained:

…. The strength of the prima facie case is relevant to the balance of convenience, but the weighing process involved in evaluating where the balance of convenience lies does not affect the assessment of the existence or strength of the prima facie case. As was said in Samsung at [59] “[t]he critical integer in the test …is the need for the Court to assess the strength of the probability of ultimate success on the part of the plaintiff. The strength of that probability will depend upon the nature of the rights asserted and the practical consequences likely to flow from the grant of the injunction which is sought”. ….

Secondly, Burley J had apparently considered the respective losses relatively finely balanced on the question of balance of convenience, but had ultimately considered the difficulties of calculating Alphapharm’s losses outweighed the difficulties in calculating Sanofi-Aventis’.

In particular, the Full Court considered that Burley J had not inappropriately undervalued Sanofi-Aventis’ position as a long standing incumbent. For example at [51], their Honours explained:[1]

… Sanofi had not demonstrated a sufficient likelihood of success in all of the circumstances to justify the preserving of the status quo. Each case turns on its own facts so it is not the point that in GenRx and Warner Lambert the preservation of the status quo was given considerable weight. In neither case was the strength of the prima facie case undermined in the same way as in the present case. In neither case was there a suggestion of market circumstances similar to the present case given the primary judge’s reference in [174] to the real possibility of Alphapharm’s prospective market disappearing as a “significant aspect” of this matter. Faced with the primary judge’s reasons, Sanofi’s submission that his Honour failed to take into account the disruption of the status quo as a material consideration is untenable. His Honour weighed all those matters but the balance favoured Alphapharm not Sanofi.

Sanofi-Aventis Deutschland GmbH v Alphapharm Pty Ltd [2019] FCAFC 28 (Jagot, Yates and Moshinsky JJ)

  1. One can only speculate how the 1336 paragraphs Jagot J had to write to work out the quantum on an undertaking as to damages in Sigma v Wyeth concentrated her Honour’s appreciation of this issue!  ↩

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A designs case – spare parts

Leave a Comment / Because I felt like it / /

Burley J has handed down our first case dealing with the “spare parts” defence in the Designs Act 2003.

At 709 paragraphs, any considered analysis will have to wait for another day (or days). In the meantime, here are his Honour’s conclusions:

707. In these reasons, I conclude that GMGTO has failed to establish the bulk of its claim for design infringement. Despite extensive forensic examination of the business of SSS, it has not established infringement in respect of the importation, keeping for sale or offering for sale of the impugned SSS products in respect of any of the SSS respondent companies. In its claim for infringement by selling, GMGTO has established infringement in respect of 4 representative transactions made by SSS Sydney, 2 representative transactions entered into by SSS Melbourne (but only in part in relation to Transaction 17) and 2 representative transactions entered into by SSS Queensland. The parties must now, on the basis of these reasons, attempt to agree on a formula by which the balance of the transactions the subject of GMGTO’s claim might be resolved. They should also confer and attempt to agree to directions to bring these proceedings to a close. 


708. I have concluded that SSS has substantially failed to establish its case on the cross-claim. It has established that there were unjustified threats insofar as they relate to designs that were never certified, which involves the threats made to Panel House, Carparts and Torq. SSS has also established an unjustified threat in relation to copyright infringement in the case of Holmart. I will hear submissions from the parties as to the appropriate relief to grant, if any.

GM Global Technology Operations LLC v S.S.S. Auto Parts Pty Ltd [2019] FCA 97

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Cartel conduct and IP licences and assignments

1 Comment / Antitrust, Copyright, Designs, Franchising, Patents, PBR, Trade marks, Trade Practices / / / , , , , , , , , , , , ,

Will your assignments and licences of intellectual property, such as in a typical franchise agreement, expose your client to liability for cartel conduct or will you be ready to apply for an authorisation?

One of the bills pending before Parliament contains the long pursued (by the ACCC) repeal of s 51(3) of the Competition and Consumer Act 2010.

Section 51(3) exempts from most of the prohibitions in Pt IV of the Competition and Consumer Act terms and conditions in assignments and licences of intellectual property which most of us take for granted.

The rationale for repeal is that most transactions involving IP do not have anti-competitive effects or purposes and, if they do, they should not be exempt from the competition laws.

Rodney De Boos, a consultant at DCC with many years’ experience in licensing and commercialisation of IP, however, points out that this explanation was developed before the provisions banning cartel conduct were introduced into the Act. And, he contends, typical arrangements in IP agreements which allocate, for example, territories or customers will constitute cartel conduct and so need authorisation if the parties are not to be in breach of the cartel provisions.

As Rodney explains, a cartel provision are certain types of specified provisions between competitors.

Now, it may well be that an assignor and assignee, or a licensor and licensee, will not be competitors. There are many types of arrangements, however, where the Competition and Consumer Act will deem them to be competitors. An obvious example is the case of a franchisor who has retail outlets (either itself or through a related body corporate) as well as retail franchisees. Other arrangements involving IP could also be similarly problematical.

You can read Rodney’s concerns in more detail here.

The bill repealing s 51(3) has already passed the House of Representatives and is due to be debated by the Senate in the sittings coming up.

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Prosecco, GIs and the possible EU FTA

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The last few weeks have seen increasing rumblings within Australia about some of the consequences if a possible Free Trade Agreement with the EU goes through.

One of the main features the EU is seeking is expanded protection for the thousands of “GIs”, or geographical indications, recognised in the EU.

The potential impact of the EU FTA requiring Australian producers to stop calling their non-Italian products ‘prosecco’, a GI in the EU, has been generating some media excitement: see:

Professor Mark Davison and colleagues have a paper forthcoming in the AIPJ exploring the validity of the claims to protection [SSRN paper here]

We have been here before – when the EU-Australia Wine Agreement knocked out use of names like ‘champagne’ in return for greater access to the EU for Australian sparkling and other wines.

When the second version of that agreement replaced the 1994 version, the National Interest Assessment pointed out:

8. In 2006-07, Australia exported 421 million litres of wine to the EC with a value of $1.3 billion, and imported 10.2 million litres with a value of $168 million. Key regulatory and intellectual property issues related to trade in wine between Australia and the EC are currently regulated by the 1994 Agreement. 

9. The Agreement offers a number of advantages to Australian wine-growers, which will help consolidate their access to the EC market at a time when the domestic industry still faces concerns about an over-supply. The new Agreement also resolves several outstanding issues not covered by the 1994 Agreement, and thus will help maintain a mutually beneficial trade relationship with the EC.

10. In particular, the Agreement obliges the EC to permit the import and marketing of Australian wines produced using 16 additional wine-making techniques. It also sets out a simpler process for recognition of further techniques, with an option for disputes to be resolved by a binding arbitration. Under the 1994 Agreement, by contrast, the process for authorisation of new wine-making practices has no binding dispute settlement procedure, and no new practices have been authorised under the 1994 Agreement. This has been particularly problematic for Australian wines produced with an important wine-making technique involving the use of cation exchange resins to stabilise the wine. This technique was provisionally authorised for 12 months under the 1994 Agreement, and this authorisation has since had to be periodically extended for 12-month periods.

11. The Agreement also obliges the EC not to impose any new wine labelling requirements that are more restrictive than those which apply when the proposed Agreement comes into force. This means that industry will not face the difficulties and additional costs that might arise if the EC was permitted to introduce more onerous wine labelling requirements.

12. Finally, the Agreement obliges the EC to recognise and protect new Australian wine Geographical Indications. A Geographical Indication is a label or sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due to that place of origin.

How it will play out this time, who knows? As usual, the Australian government is keeping its position largely secret from us. The EU, however, is quite open about what it is seeking (Compare DFAT here and here and here to EU proposed text here see esp. article X.22 and from X.31 and generally).

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Section 105(1A) passes its test

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While some of us have been sweltering on the beach or disporting in the northern snows, Beach J has granted Branhaven’s application to amend its patent application for compositions and methods of inferring bovine traits following Meat & Livestock Australia’s opposition.

You will recall that Beach J had earlier rejected MLA’s attack based on manner of manufacture, novelty and inventive step. However, his Honour upheld the challenges based on lack of clarity and, to an extent, utility.

Branhaven applied to amend under s 105(1A) of the Patents Act 1990.

MLA opposed; in broad terms arguing that Branhaven was too late, there was no power to amend at this stage; the amendments were not permissible in any event and, as a matter of discretion, should not be allowed even if the Court did have power.

Prior to the Raising the Bar Amendments, the Court had power under s 60(4) to hear an appeal from the Commissioner’s decision in an opposition. The Court was restricted, however, to dealing with the application in the form the subject of the opposition before the Commissioner. If the opposition was successful but on grounds that could be cured, any application to amend had to be remitted to the Commissioner.[1] Two of the amendments introduced by Raising the Bar were s 105(1A) and s 112A. Section 105(1A) provides:

If an appeal is made to the Federal Court against a decision or direction of the Commissioner in relation to a patent application, the Federal Court may, on the application of the applicant for the patent, by order direct the amendment of the patent request or the complete specification in the manner specified in the order.

MLA argued that, after such a hotly contested ‘appeal’ and detailed reasons, Beach J was in effect functus officio. Amongst other things, MLA’s application was not made during the appeal and the Court therefore had no power to deal with the amendment application.

Beach J has rejected all these attacks. In the course of doing so, his Honour recognised it would not be appropriate to remit the matter to the Commissioner (even if there were power). His Honour also found that s 105(1A), like s 105(1) but unlike the Commissioner’s powers under s 60, was discretionary. His Honour’s reasons also explored the types of considerations that might affect the exercise of that discretion in the context of an application instead of a granted patent.

At this stage, it is not known if MLA will seek to appeal.

Meat & Livestock Australia Limited v Cargill, Inc (No 2) [2019] FCA 33

  1. See e.g. Airsense Technologies Ltd v Vision Systems  ?

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