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  • Making threats of court proceedings

    Threatening your competitors with court proceedings for patent infringement may effectively stop competition. There may be, however, significant damages and embarrassment to yourself if the threat is found to be unjustified by a court (an “unjustified threat”).

    It is important that before a threat is made that you ask a patent attorney to confirm that an allegation of patent infringement is likely to be justified. For example, the making of a threat with respect to a patent application before grant may be unjustified (See for example the decision U and I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd [1995] FCA 1581). Making threats in relation to a patent that is invalid may also be an unjustified threat.

    The courts do not require that an unjustified threat be direct. For example, merely the use of language that by implication conveys the intention of bringing infringement proceedings may be considered by a court to be a threat. Consequently, you must take great care with communications in relation to your patents. A recipient of your indirect threat may be able to initiate court proceedings against you. The outcome of the court proceedings may not be in your favour.

    An example of an unjustified threat is discussed in DSI v GARFORD, which is a decision of the Federal Court of Australia cited as DSI Australia (Holdings) Pty Ltd v Garford Pty Ltd [2013] FCA 132.

    Prior to involvement of the court, the patentee, GARFORD, alleged infringement of their patent by DSI. In response, DSI sought from the court relief against GARFORD for unjustified threats. The dispute was escalated by GARFORD seeking confirmation from the court of the alleged infringement.

    The court found that the relevant claims of the patent were, in fact, invalid for either being obvious or defining an invention secretly used by the patentee before a patent application was filed. The court ordered that the patentee stop making unjustified threats, and that the invalid claims of the patent be revoked. In this case, the unjustified threats by GARFORD precipitated court proceedings that on the face of it have considerably weakened their position within their industry.

    Making a threat in relation to an innovation patent that has not been examined and certified is always an unjustified threat, by section 129A of the Australian Patents Act (1990)

    Section 128 of the Australian Patents Act (1990) states to the effect that a person threatened with infringement proceedings by circulars, advertisements, or otherwise may ask a court for a declaration that the threats are unjustified, an injunction against further threats, and the recovery of any damages sustained by the applicant as a result of the threats.