2.6.4 Provisional measures and preliminary injunctive relief
The Federal Court of Australia has equitable jurisdiction to grant temporary injunctions restraining an alleged infringer from engaging in certain conduct until the substantive merits of a proceeding can be determined.65 Such injunctions are referred to as interlocutory injunctions or, if they are granted pending an application for an interlocutory injunction, interim injunctions.
Such injunctions can be a useful tool for patentee applicants to preserve the status quo in the market during the preparation period for trial and hearing and while judgment is reserved. It is important to bear in mind that the “price” of an interlocutory or interim injunction is the applicant’s giving of the “usual undertaking as to damages” to the court – a matter which is discussed in Section 22.214.171.124 of this chapter. Another matter for practitioners to bear in mind is that, in lieu of granting an interlocutory injunction, the court may be willing to grant an early final hearing. Such a course may benefit either or both parties, and it removes the need for the patentee applicant to give the usual undertaking as to damages. It is also likely to hasten the final determination of the dispute, including by removing the potential for delay arising from any appeal of the court’s decision to grant or refuse an interlocutory injunction.
Applications for interlocutory injunctions should be brought as quickly as reasonably practicable after an applicant becomes aware of allegedly infringing conduct. The granting of interlocutory injunctions is at the court’s discretion. Factors that militate against the grant of equitable relief generally apply equally with respect to interlocutory injunctions, such as laches (delay). Further, the failure of an applicant to move with haste to seek an interim or interlocutory injunction tends to undercut any submission by the applicant that an interim or interlocutory injunction is urgently required to maintain the status quo to protect the applicant’s position prior to the substantive determination of the rights of the parties.
In circumstances where interlocutory injunctive relief needs to be sought urgently (subject to the practicalities of obtaining evidence to establish a prima facie case of patent infringement), practitioners should be familiar with paragraphs 3.1–3.5 of the Intellectual Property Practice Note (IP-1). It provides that, where urgent relief is sought, once appropriate documentation has been prepared in support of such an application, the associate (or “clerk”) of the duty judge should be contacted in order to allocate a hearing time for such an application. The allocated Federal Court duty judge changes from time to time, and they are identified on the Federal Court daily list on the Federal Court’s website.
When deciding whether to grant an interlocutory injunction, the court will consider whether the applicant has established a prima facie case (often framed by asking whether there is a serious question to be tried) and whether the balance of convenience favors granting the interlocutory injunction).66 Almost invariably, the applicant will also be required to give an undertaking to the court as to damages. These concepts are outlined in more detail below.
126.96.36.199 Prima facie case (or serious question to be tried)
When hearing an application for an interlocutory injunction, the court is not making a final determination as to the parties’ rights and the merits of the case. Instead, the court will seek to determine, on a preliminary basis, the strength of the applicant’s case. The applicant does not have to prove that it is more probable than not that it will make out a claim of infringement at a trial of the proceeding – merely that it has a sufficiently strong case in the circumstances to justify the grant of the interlocutory injunction to preserve the status quo pending trial. As in any substantive proceeding, evidence – and often expert evidence – will be required to make out a prima facie case. However, given the often urgent circumstances in which relief will need to be sought, the evidence may be less detailed and expressed in a more contingent way than would be the case at trial.
While a patentee need only establish a prima facie case, or that there is a serious question to be tried, the stronger the case of the applicant, the more likely it is that the balance of convenience will favor the granting of an interlocutory injunction, as discussed further in Section 188.8.131.52.
As in all patent proceedings, when defending against an application for an interlocutory injunction based on a claim of patent infringement, an alleged infringer may seek to challenge the validity of the patent. However, if all that a respondent can establish is that it has an arguable case that the patent is invalid, that will be insufficient to displace the applicant’s prima facie case of patent infringement. The respondent will need to establish a sufficiently strong case that the patent is invalid with the result that it cannot be said that the applicant has made out a prima facie case, given that an invalid patent cannot be infringed.
184.108.40.206 Balance of convenience
When considering whether the balance of convenience is in favor or against the granting of an interlocutory injunction, the court considers the respective impacts of an interlocutory injunction on the applicant, the respondent and third parties. As referred to at Section 220.127.116.11, the balance of convenience is considered in light of the strength of the applicant’s case. All other matters being equal, a stronger case will suggest the balance of convenience lies in favor of granting an injunction than a weaker case.
As a starting point, a key factor to consider in determining where the balance of convenience lies is whether damages would be an adequate remedy for the applicant. That is to say, determining whether, if an interlocutory injunction were not granted and the respondent carried out the actions of which the applicant complains, the applicant would be adequately compensated for that conduct by an order for damages if the matter is ultimately determined in the applicant’s favor. If damages are an adequate remedy, an interlocutory injunction will not be granted because there is no need to preserve the status quo pending trial.
Factors that militate against such a finding include (a) the respondent not being in a financial position to pay any damages awarded, (b) the likely difficulty in quantifying damage, (c) whether some of the damage likely to be suffered by the patentee is unlikely to be recoverable as damages for patent infringement, and (d) the irreversibility of the effect on the applicant of the respondent’s conduct even if the respondent is ultimately injuncted at trial (e.g., if the respondent’s entry into a market will irrevocably change the nature of the market).
In respect of pharmaceutical patents, the operation of the Pharmaceutical Benefits Scheme, being the vehicle by which the Australian Government subsidizes the purchase of pharmaceutical products in Australia, has important effects on the balance of convenience. Under the Pharmaceutical Benefits Scheme legislation, the entry of a second brand of pharmaceutical product into the Australian market has the effect of reducing the price at which the first brand of pharmaceutical product may be sold by the patentee in Australia and, therefore, the quantum of the subsidies paid by the Australian Government under the Pharmaceutical Benefits Scheme. The court may be willing to grant an interlocutory injunction to restrain the exploitation of the second brand on the basis that, if the second brand enters the market, the patentee will suffer irrevocable damage because the price at which the patentee may sell the first brand will be reduced.67
As well as considering how the applicant will be affected if an interlocutory injunction is not granted, the court will also consider the effect upon the respondent and third parties if the interlocutory injunction is granted. In so doing, the court will bear in mind that the respondent and third parties may have the benefit of the usual undertaking as to damages given by the applicant to the court. If the interlocutory injunction would, in practical effect, bring the dispute to an end (e.g., because the respondent’s business would be irreversibly affected, or the fast- moving nature of the market is such that, by the time the dispute is ultimately determined, the respondent’s product will no longer be commercially valuable), then this is a matter that can weigh against granting the injunction or at least suggest that the applicant has to make out a stronger prima facie case. Equally, if third parties would be adversely affected in a way that is unlikely to be compensated by the usual undertaking as to damages, then this can also be a matter weighing against an interlocutory injunction.
Ultimately, the balancing exercise is a discretionary one and an exercise that depends on the particular circumstances of each case.
18.104.22.168 Undertaking as to damages
If an applicant seeks an interlocutory injunction, it will almost always be required to give an undertaking as to damages. The form of the undertaking is as set out in the Usual Undertaking as to Damages Practice Note (GPN-UNDR).68 In essence, the undertaking requires the applicant to undertake to the court to submit to such order as the court may consider to be “just” for the payment of compensation to any person (whether or not that person is a party) affected by the operation of the interlocutory injunction and to pay such compensation. That is, if at the final hearing (and after exhausting appeals) the applicant is unsuccessful in establishing an entitlement to a final injunction for patent infringement, it will be required to compensate those who have been adversely affected by the interlocutory injunction, which may be the respondent and any third parties, in the period in which it operated.
In pharmaceutical patent matters, the Australian Government has adopted a practice of making substantial claims on the usual undertaking as to damages in circumstances where a patentee applicant has succeeded in obtaining an interlocutory injunction to restrain exploitation in Australia of a second brand of the patentee’s product but has ultimately failed (whether at trial or on appeal) to secure a final injunction.
Claims on the usual undertaking as to damages in the context of pharmaceutical patent cases have tended to become protracted and difficult, with the result that it cannot be assumed that claims on the usual undertaking as to damages will be successful. This is relevant to assessing the balance of convenience.
22.214.171.124 Quia timet injunctions
It may be the case that a patentee applicant becomes aware that a respondent is taking preliminary steps toward undertaking actions that would infringe a patent, but the respondent has not yet undertaken any act that infringes the patent. In that case, an applicant can seek an interlocutory injunction on a quia timet basis – that is, an injunction to stop threatened patent infringement. The same principles as outlined above apply, but, in this case, the applicant will also have to establish with some degree of probability that a respondent intends to ultimately do something that will infringe the patent. Quia timet injunctions are often sought in the context of pharmaceutical patents, where the highly regulated nature of the market is such that certain public steps have to be undertaken before a product can be launched on the market.