Additional damages fail to flow from infringing valve

Additional damages fail to flow from infringing valve - Griffith Hack

12 December 2011

Zetco Pty Ltd v Austworld Commodities Pty Ltd (No 2) [2011] FCA 848

What you need to know



  • The Federal Court of Australia has considered the award of additional damages in a patent infringement case for the first time.
  • Unless infringement is blatant and a defence of invalidity is hopeless or not properly pursued, the Court will not make an award of additional damages.

Background



Zetco commenced proceedings against Austworld alleging patent infringement, misleading and deceptive conduct and passing off in respect of Austworld’s sale of plumbing valves. Austworld cross-claimed for revocation of Zetco’s patent on the ground that it was not valid. In addition to the usual remedies for patent infringement, Zetco also sought additional damages pursuant to s122(1A) of the Patents Act 1990 (Cth) (the Act) for what it alleged was deliberate and calculated patent infringement by Austworld.

While Zetco successfully established that its patent was infringed, it failed to establish that the infringement should attract additional damages. Zetco also failed to establish its claims for misleading and deceptive conduct and passing off.

Additional damages



Since 2007, pursuant to s122(1A) of the Act, a Court may award ‘additional damages’ for patent infringement if it considers appropriate, having regard to issues such as the flagrancy of the infringement. The Zetco decision is the first time that an Australian court has considered the application of this provision. In this case, Zetco claimed that Austworld was liable for additional damages as it had deliberately copied Zetco’s valves and knowingly continued to infringe Zetco’s patent after having been put on notice.

In assessing whether additional damages should be awarded, the Court held that as in the application of equivalent provision of the Copyright Act 1968 (Cth), ‘there must be an additional element to the infringing conduct to warrant additional damages’. The Court indicated that although deliberate copying may be considered in a decision to award additional damages, more than copying was required for additional damages to be awarded for patent infringement.

The Court had regard to the fact that at all times during the proceedings, Austworld had denied infringement of Zetco’s patent, and had maintained its claim that the patent was invalid. Although Austworld was unsuccessful in its defence of invalidity, the Court held that an unsuccessful defence was not sufficient to warrant an award of additional damages.

Implications



Following this decision, it will be difficult for a patentee to establish grounds for an award of additional damages in patent infringement cases unless infringement is blatant and a defence of invalidity is hopeless or not properly pursued.

By Derek Baigent, Principal, and Vanessa Farago-Diener, Paralegal

For more information, please contact:

Derek Baigent, Principal
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