An International Guide to
Patent Case Management for Judges

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2.8 Other patent-related actions

2.8.1 Actions for declarations of non-infringement

A person who has done, is doing or is intending to do an act may apply to the court for a declaration that the doing of the act does not or would not infringe a patent.135 An application may be made whether or not the patentee has made any assertion to the effect that the doing of the act has or would infringe the claim.136

The court must not make a non-infringement declaration unless

  1. (a) the applicant for the declaration:

    1. (i) has asked the patentee in writing for a written admission that the doing of the act has not infringed, or would not infringe, the patent; and
    2. (ii) has given the patentee full written particulars of the act done, or proposed to be done; and
    3. (iii) has undertaken to pay a reasonable sum for the patentee’s expenses in obtaining advice about whether the act has infringed or would infringe the claim; and,
  2. (b) the patentee has refused to make the admission.137

Where a declaration has been made, and the patentee later obtains an injunction restraining the person from doing the act, or the declaration is revoked, the holder of the non-infringement declaration is not liable to account to the patentee for any profits made, or pay damages for any loss suffered, as a result of doing the act as specified in the declaration before the date on which the injunction was granted or the declaration was revoked.138 The same applies if an admission is made by the patentee.139

2.8.2 Actions for threats of infringement proceedings

Section 128 of the Patents Act 1990 (Cth) permits a person who is aggrieved by unjustified threats of patent infringement to apply to a court for an injunction against the continuance of those threats, declaratory relief and recovery of any damages sustained as a result of the threats. A person “aggrieved” includes any person adversely affected by the threats. This may be the direct recipient of the threat (e.g., a competitor of the patentee receiving a letter of demand) but may also include others that may be indirectly affected by such threat, including the person’s customers or suppliers.

However, “threat” is not defined in the Act. Whether a communication or an act constitutes a threat is a question of fact considered objectively. A court will consider the relevant communication and the context in accordance with “the understanding of an ordinary recipient, standing in the position of the actual recipient, reading the letter or communication said to contain the threat, in the normal cause of business.”140 However, the threat must pertain to an Australian patent and proceedings in Australia. Importantly, the “mere notification” of the existence of a patent does not constitute a threat for the purposes of Section 128.141 The onus is on the party making the threat to prove that the threat was justified, by satisfying the court that the relevant acts infringed (or would infringe) a valid claim.142 If this onus is not dislodged, the threats are considered unjustified.

Damages may be sought; however, it must be shown that such damage was caused “as a result of the threats.” A court also has the discretion to award additional damages, taking into account various matters, including the flagrancy of the threats.143 Finally, in practice, an action under Section 128 will often result in a cross-claim for infringement.144 The recipient of the threat can then also elect to seek revocation of the patent.145