Restored patents and licences to exploit

Mr Law has a patent, Australian Patent No. 784051 titled “Conveyor Belt Cleaner”. For some reason, the renewal fees were not paid and the patent became a “ceased patent” (presumably). Almost 2 years later, he applied for an extension of time (I’m guessing here and here) and paid the renewal fees and his patent became a “restored patent“. So, Mr Law’s patent wasn’t on the register between 27 September 2007 and 26 October 2009.

From 1 September 2008, Razer started selling products which it appears fell within the claims of Mr Law’s (at that time ceased) patent. It would appear it did so at the behest and encouragement of someone glorying in the name of TuffStuff. After Mr Law’s patent was restored, Razer kept on selling.

Mr Law sues for infringement. (Mr Law doesn’t sue for infringements committed during the period while his patent was a ceased patent – see s 223(10).) Razer then applied to the Commissioner for a licence to exploit the patent (and an extension of time to make the application).

Mr Law applied for an interlocutory injunction to stop Razer continuing to sell. Razer applied for a stay of the proceeding pending the outcome of its application for a licence. Bennett J refused the stay and granted the injunctions –

[31] Mr Law has a presently enforceable right by reason of the valid and existing Patent to exploit the invention and to prevent others from doing so without a licence. A stay until the licence application is determined necessarily interferes with Mr Law’s rights under the Patent. On the facts as agreed between the parties and as led in respect of the two notices of motion, Razer is not a person to whom s 223(9) of the Act and reg 22.21 of the Regulations applies. That being the case, Razer’s likelihood of success in obtaining a licence from the Commissioner is such that it is not appropriate, in my view, to stay the proceedings, let alone for the substantial length of time that would be necessary for the Commissioner to determine the licence application under the Act.

The interesting thing is why Razer was not likely to get a licence: Razer did not satisfy the jurisdictional requirement under s 223(9).

Under s 223(9) the licence is (potentially) available to someone who exploits the patent (or took definite steps … to exploit the patent) as a result of the patentee’s failure to pay the renewal fees (do a relevant act) or the ceasing of the patent.

The problem for Razer was that it had a patent search conducted before it embarked on its enterprise. Unfortunately, the search criteria did not reveal the patent (even in its “ceased” state). This seems to have been largely because the search criteria included searching for patents owned (or in respect of which an interest was registered0 by Mr Law’s company, ESS. ESS, however, was only a licensee and the interest as a licensee had not been registered. (Little digression for the technically minded amongst us down this garden path).

Her Honour noted:

[21] A search using the appropriate parameters would have revealed both active and ceased patents. It is apparent that, because the search terms did not include “Law” or the title of the Patent and ESS was not a registered licensee, the search failed to reveal the Patent.

[22] It is not in dispute that Razer was unaware of the existence of the Patent or its ceased status when it entered into the agreement and subsequently took the steps to manufacture and sell the infringing products. Razer relied on the result of the searches of the Register, the statements made by officers of TuffStuff to the effect that ‘there are no patent issues associated with the product’ and warranties in the agreement. It is also not in dispute that TuffStuff was not aware of the existence of the Patent at the time of entering into the agreement. (her Honour’s emphasis)

In other words, with TuffStuff’s assurances and the results of the patent search Razer thought there were no patents because there had never been (at least Mr Law’s) patent. It didn’t embark on this enterprise because it thought Mr Law had abandoned (let lapse) his patent.

Also, Razer did not monitor the Official Journal, so it did not discover the advertising of Mr Law’s application for an extension of time to restore his patent and (consequently) it did not oppose his application for an extension.

Then, the hammer was dropped: Razer was not protected from infringement by being unaware that the Patent had ceased.

[27] Section 223(9) of the Act is not designed to protect a person who by happenstance takes steps to exploit a patent during a period in which it is ceased. It cannot be that a person who manufactures and sells products within the scope of the claims of a patent can be protected simply because that person is lucky enough to have commenced those steps while that patent was not in force through an error or omission of the patentee. There must be a link between the fact that the particular patent has ceased and reliance upon that fact by the person seeking to obtain the protection. Regulation 22.21 of the Regulations does not specifically refer to that necessary link but the regulation can rise no higher than the subsection to which it refers and for which it is prescribed.

At this point, I am rather glad I am not a patent searcher.

Law v Razer Industries Pty Limited [2010] FCA 1058

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