Recent developments in IP remedies

Justice Yates 09 September 2016

As the title of this session suggests, this talk is a miscellany.  There are four topics that I will discuss.  Two relate to damages.  Two relate to injunctions.

The “damages” topics are, firstly, the availability of the so-called “user principle” as an approach to determining damages for infringement of an intellectual property right and, secondly, the current state of play with “additional damages”.

The “injunctions” topics are, firstly, a consideration of the appropriate form of the final injunction after a finding of infringement and, secondly, whether special circumstances apply to final injunctions for infringements arising under s 117 of the Patents Act 1990 (Cth) (the “contributory infringement” provision).

You will appreciate that my topics have focused on Australian concerns.

Damages awarded under the “user principle”

The first topic for discussion is the assessment of damages based on the “user principle”, a description said to have been coined in Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 (a case in which the principle was discussed but, as it happens, not applied). 

Before describing this principle and discussing its origins, I want to make a general observation about damages in intellectual property cases conducted in Australia. 

The observation is this:  relative to the number of intellectual property cases in the Federal Court, we do not see very many cases in which a claim for damages is pursued to final relief.  This is not to say that damages cases are not run from time to time. Generally, when such cases are run, they are for relatively modest claims, where perhaps the cost of pursuing a claim for damages is not significant and involves very little proof.  I should add that, equally, there are very few claims for other pecuniary remedies, such as an account of profits. 

Why is this so?

Claims for profits tend to be quite complex and quite risky in terms of achieving a successful outcome.  I suspect that only the exceptional case would be cost-justified.  I suspect that a similar concern applies to cases for damages.  I think the attitude has been taken that actual loss can be difficult to prove and that, overall, pursuing damages might not be worth the time, effort or cost.

If I have correctly identified the reason for the relatively small number of damages cases that are ultimately pursued, then your acquaintance today with the user principle may herald a change in attitude.

Under this principle, a successful plaintiff is entitled to recover, by way of damages, a reasonable sum from the defendant who has wrongfully used the plaintiff’s property.  The plaintiff may not have suffered actual loss from the use, and the wrongdoer may not have derived actual benefit.  Nevertheless, under the principle, the defendant is obliged to pay a reasonable sum for the wrongful use.  The reasonable sum is sometimes described as a reasonable rent, hiring fee, endorsement fee, licence fee or notional royalty (amongst other expressions), depending on the property involved and the nature and circumstances of the wrongful use.

As I will come to explain, this is not a new principle.  Moreover, intellectual property cases, particularly patent cases, are regarded as a paradigm for the application of the principle.  But, until recently, the view has been taken in Australia that there are limitations on the application of the principle.  I will address that perceived limitation later.  Let me first set the scene by discussing some matters of history.

The user principle seems to find its origin in the wayleave cases.  A wayleave is a right of way over or through land. Examples include the carriage of minerals from a mine or quarry, or the carriage of wires on pylons. 

From the late 1830s, we see courts awarding damages on the user principle where the defendant had trespassed by using the plaintiff’s land (usually by carrying coal under the land), without necessarily diminishing the value of that land.  Damages for the trespass were assessed by reference to a reasonable wayleave rent.  In other words, the defendant was required to compensate the plaintiff for the wayleave that the defendant should have obtained in order to act lawfully in relation to the plaintiff’s land. 

The principle was extended and applied to trespass to real property more generally.  Here are some examples:

(a)   In one case, Whitwham v Westminster Brymbo Coal and Coke Company [1896] 2 Ch 538, the defendants tipped refuse from their colliery onto the plaintiffs’ land.  An injunction was granted to restrain the defendants from further tipping.  In this case, the defendants’ activities rendered the plaintiffs’ land valueless except for tipping purposes.  Damages were awarded for the diminution in value of the land.  But damages were also awarded on the basis that the defendants had made use of the plaintiffs’ land for their own purposes and, for that wrongful use, the defendants should pay.

(b)  In another case, Swordheath Properties Ltd v Tabet [1979] 1 WLR 285,the defendants remained in occupation of property after their lease expired.  Damages were awarded for the trespass and assessed as the ordinary letting value of the property.  The important thing to note is that, in cases of this kind, the plaintiff did not have to show that it could or, indeed would, have let the property to someone else in the absence of the trespass.

(c)  In Inverugie Investments Ltd v Hackett [1995] 1 WLR 713, the Privy Council said that the cases had established beyond any doubt that a landlord of residential property can recover damages from a trespasser who has wrongfully used the property, whether or not the plaintiff can show that it would have let the property to someone else, and whether or not the plaintiff would have used the property itself.  The case involved trespass to a number of apartments in a hotel.  Damages were assessed on the basis that the trespasser had to pay a reasonable rental for the use of each apartment for 365 days of the year, notwithstanding that the occupancy rate in the hotel was no more than 35% at the time.  The Privy Council gave this example (at 718):

If a man hires a concrete mixer, he must pay the daily hire, even though he may not in the event have been able to use the mixer because of rain.  So also must a trespasser who takes the mixer without the owner’s consent.  He must pay the going rate, even though in the event he has derived no benefit from the use of the mixer.  It makes no difference whether the trespasser is a professional builder or a do-it-yourself enthusiast.

The same applies to residential property.  In the present case the defendants have had the use of all 30 apartments for 15½ years.  Applying the user principle, they must pay the going rate, even though they have been unable to derive actual benefit from all the apartments for all the time.  The fact that the defendants are hotel operators does not take the case out of the ordinary rule.  The plaintiff is not asking for an account of profits.  The chance of making a profit from the use of the apartments is not the correct test for arriving at a reasonable rent.

The user principle applies to the tortious interference with chattels.  Here are some examples:

(a)  In Strand Electric and Engineering Company Limited v Brisford Entertainments Limited [1952] 2 QB 246, the plaintiffs hired portable switchboards for stage lighting to the purchaser of a theatre.  The purchaser was allowed into occupation before completion of the sale.  The purchaser did not complete the sale and left the premises.  The purchaser also left the switchboards behind.  The owner of the theatre did not return the switchboards on demand made by the plaintiffs.  The plaintiffs sued the owner of the theatre in detinue for detention of the switchboards.  The user principle was applied to award damages based on the hiring fee for the switchboards during the period of detention.

(b)  The same principle has been applied in New South Wales on at least two occasions involving the conversion or detention of goods that had been let for hire: Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175; Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420.  In Bunnings, which involved the tortious interference with pallets, Allsop P said (at [175]):

The fundamental principle of damages for tort is compensation for loss caused: Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185; and Haines v Bendall (1991) 172 CLR 60 at 63.  The damage or loss caused to the plaintiff with rights of ownership and possession who is in the business of hiring goods of the kind converted or detained is not limited to the consequences of stock depletion or to cost of replacement, but includes the denial and infringement of its rights.  Those rights have been denied to the plaintiff by the commission of a tort involving the use of the goods by the tortfeasor.  It is entirely logical and in accordance with justice and commonsense that a wrongdoer should pay a price for using the goods of another as a matter of compensation for the denial of the right concerned …

What is the position concerning intangible personal property?  Damages for interference with intangible personal property have been awarded on the same principle.  As I said earlier, the intellectual property cases are, in fact, regarded as a paradigm for awarding such damages. 

The application of the user principle in the area of intellectual property infringement is seen as evolving from remarks made by Fletcher Moulton LJ in Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157.  His Lordship’s remarks were picked up in 1914 by the House of Lords in Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104 and then, much later again, by the House of Lords in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819.  These were patent cases. 

The Watson, Laidlaw case is particularly interesting because it is a very good illustration of the scope of the user principle.  In that case, the infringer manufactured and sold centrifugal machines which infringed the patentee’s patent.  A large number of these machines were sold in Java where the patentee had no trade.  It was accepted that, for commercial reasons, the patentee would never have sold its own machines in Java.  The infringer argued that damages could not lie in respect of sales which the patentee could not have made itself. This argument was rejected.  Lord Shaw said that the patentee was entitled to damages in respect of lost sales and also to damages for those sales which it could not have made.  These damages were assessed on the notion of price or hire.  Lord Shaw said (at 119):

It is at this stage of the case, however, my Lords, that a second principle comes into play.  It is not exactly the principle of restoration, either directly or expressed through compensation, but it is the principle underlying price or hire.  It plainly extends – and I am inclined to think not infrequently extends – to Patent cases.  But, indeed, it is not confined to them.  For wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, either of price or of hire.  If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: “Against what loss do you want to be restored?  I restore the horse.  There is no loss.  The horse is none the worse; it is the better for the exercise.”

This notion was taken up by Lord Wilberforce in General Tire.  Lord Wilberforce identified three main groups of reported cases which exemplified the approach of courts when assessing damages for patent infringement.

The first group relates to manufacturers who exploit an invention by making articles or products which they sell for profit.  Lord Wilberforce said that, in these cases, if the patent is infringed, the effect of the infringement will be to divert sales from the patentee to the infringer.  Therefore, normally, the measure of damages will be the profit which would have been realised by the patentee if the sales had been made by it. 

The second group relates to inventions that are exploited through the granting of licences in return for royalty payments.  Lord Wilberforce said that, in these cases, if the infringer uses the invention without a licence, the measure of damages will be the sums which the infringer would have paid by way of royalty if it had acted legally. 

Lord Wilberforce identified a third group, where it was not possible to prove the normal rate of profit (as in the first group) or a normal or established licence royalty (as in the second group).  In relation to this third group, Lord Wilberforce was clear that damages must be assessed.  He said it was for the plaintiff to adduce evidence which will guide the court, and that this evidence may include evidence of what would be an appropriate royalty in the relevant trade or in analogous trades; perhaps expert opinion expressed in publications or in the witness box; possibly the profitability of the invention; or any other factor on which a judge could decide the measure of loss.  His Lordship accepted that evidence of this kind may be general in nature and probably hypothetical.  He said that the ultimate process is one of judicial estimation of the “available indications”.

The user principle has been applied in a variety of intellectual property cases in the United Kingdom – patent cases, trade mark cases, design cases, copyright cases, confidential information cases, and passing off cases.

It is convenient, at this point, to note a couple of matters.

First, damages in tort are compensatory.  But damages awarded under the user principle have a restitutionary aspect in the sense that the award can be seen to reverse the “use value” of the property in question.  It has been said, nevertheless, that an award of damages under this principle remains compensatory or combines elements of compensation and restitution.  In Attorney General v Blake [2001] 1 AC 268, Lord Nicholls went further and suggested that an award of damages under the user principle is probably best regarded as an exception to the rule that damages are compensatory.  Even so, Lord Nicholls regarded damages awarded under the principle as “established and not controversial”.

Secondly, it should be appreciated that each approach to awarding damages referred to by Lord Wilberforce is not exhaustive of the claims for damages that can be made and awarded in a given case.  As illustrated in the Watson, Laidlaw case, there is no reason why a successful plaintiff cannot recover lost profits on sales made by the defendant which the plaintiff can show it would have made but for the infringement and also damages assessed on the basis of a notional royalty or licence fee (that is, on the user principle) in respect of all other sales made by the defendant.  Other losses, if proved, can also be recovered by way of damages:  see, generally, Gerber Garment Technology Inc v Lectra Systems Ltd [1995] RPC 383.

Until recently, the user principle has not been taken up in Australia as a principle of general application in awarding damages for the infringement of intellectual property rights.  Indeed, there is a line of authority in copyright cases which says that it would be inappropriate to assess damages by reference to, say, a notional royalty or fee, where the owner of the copyright would not have licensed the copyright to the infringer, if asked.  This was the approach of the Full Court in Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (2007) 157 FCR 564.  I will return to this case.

In Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) (2015) 241 FCR 271, I gave judgment for damages based on the user principle in a case where passing off had been established.  I reviewed a large number of cases.  I have mentioned some of them above.  Notwithstanding a number of reasons advanced to the contrary, I was satisfied that the cases and the literature revealed a principled and established basis for awarding damages on the user principle for the tortious interference with property, including intellectual property. 

The brief facts in the Winnebago case were these.  Winnebago carried on business in the United States and some other countries as a manufacturer and supplier of recreational vehicles using various names and logos incorporating the Winnebago name or the letter “W”.  It did not have any registered trade marks in Australia and, indeed, it did not conduct, and had never conducted, any business in Australia.  But the trial judge (Foster J) found that, at relevant times, Winnebago had a reputation in Australia sufficient to support an action for passing off.

Foster J found that the respondent, Knott Investments, had knowingly appropriated the Winnebago marks for its own recreational vehicles, which it manufactured and supplied in Australia.  An appeal from Foster J’s liability findings was dismissed by the Full Court, although the Full Court varied the injunctions which his Honour had granted.  The Full Court also considered that, as a matter of discretion, Winnebago should not be entitled to seek pecuniary relief by way of an account of profits against Knott Investments.  In terms of pecuniary relief, this left Winnebago with damages as its only possible pecuniary remedy.  However, as I have said, it had no trade here and, therefore, could not point to any loss of sales and hence any consequential loss of profits.  It had also made clear that, not only had it not granted licences of the Winnebago marks in Australia, it would never have granted a licence to Knott Investments. 

There was some suggestion made by Winnebago in its evidence at trial that the recreational vehicles made by Knott Investments were of an inferior quality to the vehicles made by Winnebago itself, but this suggestion did not mature into any specific findings of fact by the trial judge.  In the damages case, Winnebago did not pursue a claim for damages based on loss of reputation because of the supply of allegedly inferior products. 

This then left Winnebago with a claim for damages based on the user principle.  It succeeded on that claim and damages were awarded against Knott Investments for nearly $7 million (including pre-judgment interest).

There were a number of arguments advanced against the proposition that user principle damages could lie.  Some of these arguments were raised as matters of principle; some were raised as matters of principle directed to the proposition that the user principle was inapposite for passing off cases.  Some arguments related solely to the facts of the case.  Neither time, nor your patience, would permit me to explore those matters now.  There is, however, one matter to which I should return – the Full Court decision in Aristocrat.

Knott Investments submitted that the Full Court in Aristocrat had rejected the application of the user principle in Australia and that, as a judge sitting at first instance, I was bound to follow Aristocrat in the case before me and likewise reject the application of the user principle.  It was said that the joint reasons of Black CJ and Jacobson J in Aristocrat represented the present state of Australian law in respect of damages for the infringement of intellectual property rights.  Knott Investments submitted that damages, assessed on the basis of a reasonable royalty, are not available where, as a matter of established fact, the owner of the property in question would never have licensed that property to the infringer – and that was certainly the accepted fact in the case before me.

I was not persuaded by these submissions.  To the extent that, as a single Judge, I was bound by what was said by the Full Court in Aristocrat, I reasoned that, in point of principle, I could only be bound on the question of an award of compensatory damages under s 115(2) of the Copyright Act 1968 (Cth) (the Copyright Act), because that was the specific case with which the Full Court was dealing.  I also reasoned that Black CJ’s and Jacobson J’s rejection of the user principle (because the intellectual property owner would not have granted a licence to the infringer) was at odds with the theoretical underpinnings of the principle, which does not depend for its application on the willingness, in fact, of the property owner and the wrongful user to offer and accept a licence or, what is more, on the willingness of the wrongful user to pay a royalty or licence fee.  I was satisfied that the user principle should be understood as proceeding on the basis of a hypothetical negotiation in which both parties are presumed to act reasonably.  Therefore, the fact that one or both parties would in practice have refused to make a deal was simply to be ignored.  I think it is fair to say that this approach is well-recognised in the user principle cases.

An appeal was filed from my judgment.  It raised a large number of grounds.  However, that appeal is not proceeding.  It has been dismissed by agreement between the parties.  So, even though the judgment in Winnebago remains, it may be that the matters that were argued before me will be reagitated at another time.  What we have at the moment is, perhaps controversially, a judgment of a first instance Judge who accepts the general application of the user principle in intellectual property cases (leaving to one side compensatory damages for copyright infringement) and a Full Court judgment dealing with compensatory damages under the Copyright Act which says that it would not be appropriate to apply the user principle where the copyright owner would not have licensed the infringer in the first place.  It will be interesting to see how future cases develop.

Additional damages

The Copyright Act has long-recognised that so-called “additional damages” can be awarded on top of compensatory damages.  The same position is now reflected in the Trade Marks Act 1995 (Cth) (the Trade Marks Act), the Patents Act 1990 (Cth) (the Patents Act) and the Designs Act 2003 (Cth) (the Designs Act), although these provisions are cast in somewhat different terms.  I do not think that these differences are such as to suggest that some different approach should be adopted in making an award of additional damages or in assessing such damages.  I understand the current position in New Zealand to be that additional damages exist for copyright infringement and that amendments to the Trade Marks Act 2002 (NZ) are currently before the Parliament to enact an additional damages provision. 

The various provisions in Australian legislation have at least two common elements.  First, they are expressed in terms which make it clear that an award of additional damages is a discretionary matter – the Court may award additional damages if the Court “considers it appropriate to do so” or “considers it appropriate in the circumstances”, and so on.

Secondly, the provisions each refer to the touchstone of “flagrancy” but make it clear that the Court must consider “all other relevant matters”, notwithstanding that, in most cases, a list of considerations is included in the provision itself to which the Court must have regard. 

When the question of additional damages has arisen in the context of trade mark infringement, patent infringement and design infringement, the Court has understandably looked back to the principles developed for additional damages in the Copyright Act for guidance. 

What, then, are the general principles?

Additional damages may be given on principles corresponding to those governing awards of aggravated and exemplary damages at common law.  Aggravated damages are given to compensate the plaintiff when the harm done by the wrongful act has been aggravated by the manner in which the act was done.  On the other hand, exemplary damages are intended to punish the wrongdoer and can be seen to serve the objects of moral retribution or deterrence.  The notion of deterrence extends to both specific deterrence and general deterrence. 

It is important to understand, however, that additional damages are not aggravated damages and they are not exemplary damages.  It has been said that additional damages are “of a type sui generis”: Facton Ltd v Rifai Fashions Pty Ltd (2012) 199 FCR 569 at [36].  Therefore, additional damages are not limited to the circumstances in which aggravated damages and exemplary damages are recoverable in tort: Luxottica Retail Australia Pty Ltd v Grant (2009) 81 IPR 26 at [9].  Generally speaking, however, deterrence is an important factor in considering an award of additional damages.  Further, an element of penalty is an accepted feature of such damages: Autodesk Inc v Yee (1996) 68 FCR 391 at 394. 

The various matters that the provisions specifically identify (as matters to be taken into account) are not preconditions to an award of additional damages.  They are simply matters which the Court must take into account: Pty Ltd v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763 at [17].  So, while we might refer, casually, to additional damages as “flagrancy damages”, and while, in the various provisions, the existence or otherwise of “flagrancy” is a particular matter to be taken into account, an award of additional damages is not dependent on “flagrancy”, as such, being established or, indeed, on any of the other specially identified matters being established.  The abiding question in considering an award of additional damages is the statutory question, which is whether the Court is satisfied that it is appropriate to award additional damages: Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd (No 3) [2014] FCA 909 at [44].

In the case of additional damages under the Copyright Act, an entitlement will not be made out simply by proving copying.  Otherwise, every case of infringement would justify an award of additional damages.  What seems to be in mind is the need to show something extra – some form of scandalous conduct, or deceit or such like.  Thus, cases of deliberate and calculated infringements might be seen as appropriate candidates for the award of additional damages.  By “deliberate and calculated infringements”, I do not mean to suggest that the wrongdoer must have subjective knowledge that, for example, a copyright infringement has taken place. What one is concerned with is a consciousness of wrongdoing: Futuretronics at [20].

I think the same must be true in the case of infringements under the Trade Marks Act, the Patents Act and the Designs Act, but for different reasons.  This is because, as a matter of policy, infringements under those Acts do not depend on the proof of copying.  As Jessup J observed in Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd, which was a case involving the infringement of a registered design, it is no part of the policy of the Designs Act to prevent copying per se: see at [54].  That observation applies equally to the Trade Marks Act and the Patents Act:  see, in the case of the Patents Act, Bennett J’s observations to similar effect in Zetco Pty Ltd v Austworld Commodities Pty Ltd (No 2) [2011] FCA 848 at [267].  So, infringers are not to be punished simply because of copying.  But this does not mean that proof of deliberate copying is irrelevant.  It just means that this consideration needs to be treated with care.  Mere copying, without a consciousness of wrongdoing, is unlikely to weigh materially in the Court’s consideration of whether additional damages should be awarded.

In considering an award of additional damages, the Court will look to see whether the wrongdoer has derived some benefit from that person’s wrongdoing.  This does not necessarily mean a financial benefit, although certainly financial benefit, if it exists, is a relevant factor to be taken into account. Thus, it would be appropriate to inquire into the profits which the wrongdoer might have earned: see, for example, Pacific Enterprises (Aust) Pty Ltd v Bernen Pty Ltd [2014] FCA 1372 at [15] (a patent case).  This does not require an investigation of the kind that would attend the requirement to give an account of profits. 

Other benefits might include, for example, favourable publicity or accretions to goodwill derived by the wrongdoing.  Or the benefit might be seen as the avoidance of an expense.  For example, Halal Certification Authority Pty Limited v Scadilone Pty Ltd (2014) 107 IPR 23 was a case involving the infringement of a registered mark that was deployed commercially by the owner to certify that the preparation of food had been undertaken in accordance with Islamic rights.  In assessing additional damages, Perram J took into account the fact that the infringer would have had to pay a substantial sum to the trade mark owner in order to legitimately use the mark in question and that it had avoided paying that sum.  This has overtones of the user principle.  However, his Honour did not limit additional damages to that sum.  His Honour said that the damages awarded as additional damages must operate as a sufficient deterrent to ensure that the conduct will not occur again.  To limit the additional damages to the fee that would have been paid was insufficient because this would sanction a “use now pay later” state of affairs and eliminate the capacity of the trade mark owner to control who used the mark.  His Honour therefore awarded, as additional damages, a sum calculated as the certification fee with an uplift of 50% . 

In relation to additional damages under the Copyright Act, the Trade Marks Act and the Patents Act, the Court is specifically directed to take into account the wrongdoer’s conduct after the act constituting the infringement, and after the wrongdoer has been informed of its wrongdoing.  There is a difficult question about how far this kind of direction extends into the conduct of the infringement proceedings themselves.  In Flags 2000 Pty Ltd v Smith (2003) 59 IPR 191, Goldberg J distinguished an infringer’s conduct of its defence in relation to procedural matters and the like, including putting the plaintiff to proof of the existence of the rights in question and their infringement, from conduct attending the infringement itself.  His Honour regarded matters relating purely to matters of practice and procedure as outside the concern of the additional damages provisions and more as a question of costs.  However, the line is not always easy to draw. 

For example, in Halal Certification Authority, Perram J said (at [105]) that the Court could not ignore the fact that the infringer had defended the proceeding on a basis that his Honour found to be false, including the maintenance of factual allegations that his Honour found to be ridiculous, which caused the proceeding to continue needlessly.

Similarly, in Truong Giang Corporation v Quach [2015] FCA 1097 (a trade marks case), Wigney J said that conduct of a proceeding that involved “high-handedness, dishonesty, recalcitrance or flagrant disregard of, or deficiencies in compliance with, discovery orders or notices to produce, might, at the very least, suggest a greater need for an award of additional damages that would deter future infringing conduct by the respondent”.

In the same case, his Honour said that, in setting the appropriate amount of additional damages, some regard must be had to the size and nature of the infringer’s operations and the scale of the infringing conduct.  His Honour said that a “broad evaluative judgment is required”: see at [142]; see also Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589 at [58].

The impact of infringing conduct upon others may also be a relevant consideration.  In Halal Certification Authority, Perram J noted a submission that, in assessing additional damages, regard should be had to the fact that the infringer had set in play a chain of events which must have culminated in observant Muslims eating food which was not halal under the misapprehension that it was.  In the end result, his Honour rejected that submission, but not because it was wrong in principle.  Rather, his Honour was not satisfied that the food to which the mark had been applied was not, in fact, halal: see at [110].  I think, however, that the submission throws up a helpful illustration of when the impact of infringing conduct on third parties might constitute a circumstance to be taken into account in awarding additional damages.

Importantly, there need not be proportionality between the amount of additional damages awarded and the amount of compensatory damages that might be awarded.  It is not uncommon to see cases in which compensatory damages have been awarded for a nominal amount ($1) but additional damages have been awarded in a very large amount.  This reflects the fact that the Court is satisfied that significant wrongdoing has occurred even though the plaintiff might not have been able to establish, on the civil standard of persuasion, the extent or amount of damage necessary to sustain a significant award of compensatory damages.  If the awarding of damages on the user principle takes hold, then we may see, more commonly, significant awards of compensatory damages.  If that be so, then I cannot help but think that this will have an effect on the amount of additional damages that might be awarded in a given case.  In other words, although there need not be proportionality between the amount of compensatory damages awarded and the amount of additional damages awarded, one element in calculating additional damages might disappear, namely the difficulty in calculating compensatory damages. 

When an award of additional damages includes a punitive component, the individual circumstances of the infringer must be taken into account and the award tailored accordingly.  These circumstances include the burden that additional damages will visit on the infringer: Amalgamated Mining Services Pty Ltd v Warman International Ltd (1992) 111 ALR 269 at 286-287; Facton at [46].

Before departing from this topic, I should make reference to the significance of certain observations in the Explanatory Memorandum to the Intellectual Property Laws Amendment Bill 2006 (Cth) which introduced additional damages into the Patents Act.  On one reading, the Explanatory Memorandum seems to suggest that additional damages may be available where an account of profits is sought.  For example, after referring to the insertion of the additional damages provision, para 122 of the Explanatory Memorandum says:

This would be in addition to the court’s ability to order either ordinary compensatory damages or an account of profits.

Paragraph 123 of the Explanatory Memorandum says that the new s 122(1A) “will allow a court to award exemplary damages where a patent has been infringed, in addition to damages or an account of profits”.

I think that these paragraphs in the Explanatory Memorandum are, with great respect, poorly worded.  They are ambiguous.  (They also reflect a lack of awareness that additional damages are not exemplary damages.) I think that what the Explanatory Memorandum is endeavouring to say is that, apart from pre-existing provisions dealing with compensatory damages and an account of profits, there is a new provision dealing with additional (“exemplary”) damages.  I would not, myself, read the “additional damages” provisions as authorising additional damages in a case where the plaintiff had elected to take an account of profits.

What is the appropriate form of a final injunction in intellectual property cases?

The form of the injunction is a matter that is always within the discretion of the Court.  There are no hard and fast rules, other than that the discretion must be exercised judicially.  No-one doubts that the form of the injunction can and should be moulded to meet what might be called “the justice of the case”.  This is the same with all forms of discretionary relief.  It is, of course, the hallmark of equitable relief.

But there is a degree of conflict in the Australian cases as to the scope and focus of final injunctive relief that should be granted in the ordinary run of intellectual property cases when infringement is found.

For the purposes of this discussion, I leave aside cases in passing off; misuse of confidential information; and misleading/deceptive conduct cases.  I will focus purely on what can be described as the main statutory monopolies – patent, trade mark and design cases.  I also include within that description copyright cases, although the word “monopoly” might not be completely apt when dealing with matters of copyright.  (Economists would regard it as a monopoly right; but that is another story.)

There are two broad approaches in framing the final injunction.

The first is a restraint by reference to the claimant’s rights.  Under this approach in, say, a patent case, the unsuccessful defendant will be restrained from infringing patent “X”.  An injunction in this form has two principal features:  the restraint is in statutory language (“be retrained from infringing”) without further elaboration, and the restraint is by reference to the registered right, described by the patent number.  The same form can be, and generally is, adopted for injunctions against trade mark infringement or design infringement.  The same approach also applies to copyright infringement, although the copyright work needs to be identified with some specificity.  In the other cases (patents, trade marks, designs), that element of specificity is provided by the registered number appearing in the relevant public register.  This form of restraint can be, and often is, coupled with a restraint defined by the actual infringing conduct, but it always contains a restraint by reference to the claimant’s rights.  So, the focus of this form of injunction is the assertion of the intellectual property owner’s statutory right.  Sometimes this form of injunction is referred to casually as a “broad form” of injunction.  I think this is a misdescription.  The injunction in this form might be “broad” in the sense that it covers the field of the right holder’s statutory monopoly.  But I would respectfully suggest that the injunction in this form is not unclear or indefinite, despite what are, or can be taken to be, observations to the contrary in some of the cases. 

The second approach is a restraint by reference only to the infringer’s conduct.  Here, the approach is to cast the injunction not as a general restraint couched in statutory language, but as one conditioned on the specific conduct that has been found to be the infringing conduct.  This means that the drafting of the injunction is quite often (although not necessarily) more elaborate, and engages more closely with the particular facts of the case.  The school of thought that informs this approach says that it is rarely, if ever, appropriate to grant the injunction in the form of a general restraint against infringement of the designated property right.  The focus of this form of injunction is the identification of the specific conduct that has been found to be infringing conduct.  I will provide examples of this form of injunction later.

I have deliberately set these two approaches as extremes to illustrate particular aspects of the framing of injunctions. 

The second approach is the one that echoes general concerns that Judges express from time to time about the width of injunctions and how injunctions cast in general terms might either lack sufficient definition or exceed the bounds of what might be proportionate in the circumstances of the case.  However, I think it can be argued that the second approach is not on all fours with precedent and previous practice in intellectual property cases. 

By saying this, I do not mean to suggest that it is not appropriate to draft an injunction in (what might be described as) factually confined terms.  I do, however, take issue with the notion that it is rarely, if ever, appropriate, to grant an injunction in accordance with the first approach.  Indeed, I would suggest that the form of restraint that focuses on the claimant’s rights has been the orthodox approach and that injunctions directed solely to the infringer’s conduct, without reference to the claimant’s rights, is a departure. 

Although time does not allow me to explore this question in depth, I will attempt to draw together some broad strands of thought to explain the issue and leave it to you for further reflection and consideration.

Let me start, firstly, with this observation: a survey of the leading English texts reveals the view, quite strongly I would suggest, that the “usual form of injunction” simply restrains infringement of the patent or registered mark or registered design or copyright concerned, without further ado.  In other words, the “restraint by reference to the claimant’s rights” is “the usual form of injunction”.  Sometimes, as I have said, this is coupled with an injunction directed to restraining the particular infringing conduct that has been found.  The important thing for present purposes is to note that the tenor of the cases and the relevant literature is that it is entirely orthodox to grant an injunction in the general form to which I have referred and that such an injunction represents “the usual form”, no matter what other injunction might be coupled with it. 

I will illustrate this position with the modern leading case on this topic in the United Kingdom, Coflexip S.A. v Stolt Comex Seaway MS Ltd [2001] RPC 9 (Court of Appeal).  This was a patent case.  The patent related to a device and process for unrolling tubular conduits.  The device’s main use was in laying deep sea cables.  The patent was found to be valid and infringed.  One of the issues before the Court of Appeal was the form of the injunction granted by the trial judge.  In short, the trial judge refused to grant an injunction in the form of a general restraint by reference to the patentee’s rights – in other words, the “usual form of injunction” referred to in the cases and the texts. 

I will not read out the form of the injunction.  It is quite lengthy.  It was cast in terms directed specifically to the defendant’s Product and Process Description served in the proceeding.

The Court of Appeal was critical of the injunction that was granted.  I do not need to go into all the details of the criticisms made.  I simply want to refer to what the Court of Appeal said on the question of the trial judge’s departure from the “usual form of injunction”.

On this question, the leading judgment was given by Aldous LJ (Chadwick and Buxton LJJ agreeing).  His Lordship said (at [19]):

The judge seemed to believe that injunctions which restrained infringement of a patent were broad injunctions: but they equate to the statutory right given; a right which has been held to have been validly granted and infringed.  The injunction granted by the judge would allow the defendant to do other acts even though they may infringe.  The defendant in those circumstances would be better off in that a change from that which is described and shown in the process description would allow him to continue in business without having to seek guidance from the court before adopting the change.  The advantage to the defendant of only having the injunction cover a particular article or process is clear.  If he makes a change he will not be in breach and it will be up to the patentee to bring another action.  However, the disadvantage to the patentee is equally clear.  To obtain an injunction he has to establish his monopoly and that it has been infringed, and the judge must conclude that further infringement is apprehended.  From his point of view, it is the infringer who should seek guidance from the court if he wishes to sail close to the wind. In the normal course of events that would be reasonable.

It is important to note that his Lordship was dealing with the case of a statutory monopoly – specifically, a patent right, although his Lordship’s observations would apply equally to the other statutory monopolies where the scope of the monopoly has been construed by the Court in the course of dealing with the question of infringement.  His Lordship was careful to distinguish such a case from injunctive relief for misuse of confidential information and injunctive relief for passing off, which do not fit, and cannot fit, into the pattern of the general restraint I have been describing.

Cases in the United Kingdom, since Coflexip, have continued to adopt this approach.  In Sun Microsystems Inc v Amtech Computer Corp Ltd [2006] FSR 35 (a trade mark case), Warren J accepted that, in a trade mark case, authority indicated that the “usual form of injunction” should apply.  However, he took the view that, in cases of parallel importation, a more limited form of injunction might be warranted which would provide a framework for inquiry to be made of the trade mark owner as to whether it had put the relevant goods on the market.  That particular approach is based on considerations of proportionality.

In Interflora Inc v Marks and Spencer plc (No 2) [2014] FSR 3, (a trade mark case) Arnold J also raised the issue of proportionality.  Arnold J noted that the issue before him arose in this way (see at [14]):

The conventional form of injunction to restrain trade mark infringement granted by this Court is a general injunction: “the defendant must not infringe Trade Mark No -”.  It is not usual to specify the particular acts which are restrained.  It will be noted, however, that both of the rival drafts set out above do specify the particular acts which are to be restrained.  When I asked counsel for Interflora about this, he stated that Interflora would be content with an injunction in conventional form and did not pursue the request for a more specific injunction.  By contrast, counsel for M&S resisted the grant of an injunction in conventional form.

Arnold J noted Article 3 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the Enforcement of Intellectual Property Rights, which required that remedies should be, amongst other things, proportionate and applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. 

Counsel for Marks and Spencer argued that, in light of the Directive, a general restraint was disproportionate.  Arnold J rejected that submission.  He accepted that the Article applied, but said that it did not follow that the High Court’s normal practice of granting a general restraint was contrary to the dictates of the Article.  He did say that there might be specific circumstances in which a general restraint would be disproportionate.  His Lordship appears to have had in mind cases about parallel imports.  His Lordship said (at [24]):

It is not easy to discern from the decided cases the principles which the courts have applied when granting a specific injunction of this kind. In my view the key principle is that of proportionality. In parallel import cases, the courts have recognised that a general injunction may be disproportionate because the defendant is dealing in genuine trade marked goods and because in some circumstances it may be difficult for the defendant to be sure whether the goods are in free circulation within the EEA or not. Thus a general injunction may operate as a barrier to legitimate trade.

I flag the question of proportionality because it has relevance to something I want to say later about injunctions in patent infringement cases arising under s 117 of the Patents Act.

So, what is the position in Australia?

In Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578 (a copyright and trade mark case), Branson J followed the Coflexip approach and expressed her preparedness to award injunctions in general terms.  However, in coming to this conclusion, it is clear that her Honour was influenced by what she found to be the flagrancy of the infringements, which she said justified the awarding of “broad” injunctions. 

In Welcome Real-Time SA v Catuity Inc (No 2) [2001] FCA 785 (a patent case), Heerey J observed (at [9]) that there was no basis for the contention that the applicant was only entitled to an injunction restraining the respondent from conduct of the kind considered at the trial.  His Honour described the draft order which had been put to him as restraining “various forms of behaviour expressed in complicated alternatives”.  Importantly, his Honour noted that it was the “invariable practice in the High Court” to grant injunctions which “simply restrained infringing the patent” (i.e., injunctions in statutory language): see Commonwealth Industrial Gases Ltd v MWA Holdings Pty Ltd (1970) 180 CLR 160 at 171; Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 606, 622; Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 at 489; Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 299.  I would add to this list a reference to Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) [2007] HCA 21 at [74].  Importantly, the High Court also granted an injunction in statutory language inColbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 (a trade mark case) (the order in that case was that “(t)he defendant is enjoined from infringing trade mark no [X]”).

In K-Aire Pty Ltd v Polyaire Pty Ltd (2007) 74 IPR 460 (a designs case) the Supreme Court of South Australia was asked to grant an injunction in the form of a general restraint.  It refused to do so.  On appeal, the Full Court of the Federal Court referred to the Supreme Court’s refusal to grant an injunction in the form of a general restraint as “controversial” (see at [11]), although the refusal to grant the “general” form of injunction was not a matter that fell for consideration in the appeal.

Moreover, in Universal Music Australia Pty Ltd v Sharman Networks Ltd [2006] FCAFC 41 at [49], Branson J (with whom the other members of the Full Court agreed) rejected the contention that an order in the form of a general restraint was incapable of founding a case in contempt because the order was drawn in terms that reproduce the requirements of the Copyright Act rather than in terms that proscribe particular conduct.

In Hunter Pacific International Pty Ltd v Martec Pty Ltd (No 2) [2016] FCA 1041, Nicholas J granted an injunction in a design case based on the design owner’s rights.  The injunction specifically restrained the supply of the infringing product coupled with a general restraint conditioned on the registered design itself.  

Pausing there, the High Court authorities, and the Full Court and first instance authorities to which I have briefly referred, support the appropriateness of awarding injunctions cast in the form of a general restraint conditioned on the owner’s rights – what is regarded in the United Kingdom as the “usual form of injunction”. 

There are, however, decisions which go the other way.  I will mention some of them. 

Starr Partners Pty Ltd v Dev Prem Pty Ltd (2007) 71 IPR 459 was an appeal from a finding of non-infringement. The appeal was allowed on the question of infringement and the Full Court was asked to impose an injunction in the form of a general restraint.  Their Honours were not prepared to do so and instead granted an injunction which focused specifically and solely on the respondent’s conduct and not on the trade mark owner’s statutory right.  This form of injunction exhibited features of the injunction that the Court of Appeal in the United Kingdom had criticised in Coflexip (i.e., it contained no general restraint couched in the statutory language and focused solely on the infringing conduct).  I do not know, but I doubt that the Full Court would have been ignorant of the Court of Appeal’s decision.

In Solahart Industries Pty Ltd v Solar Shop Pty Ltd (No 2) [2011] FCA 780 (a trade mark case) Perram J considered Coflexip, but distinguished trade mark cases from patent cases.  His Honour said (at [11]):

… The drawing of injunctions in such a form is not a practice which is to be encouraged any more broadly than is necessary.  The careful parsing of the claims made in patents litigation is far more closely involved in a dissection of what the patent means than that which takes place in a trade mark suit. I do not accept, therefore, that a general injunction against infringing is appropriate.

In QS Holdings Sarl v Paul’s Retail Pty Ltd (No 2) [2011] FCA 1038 (a trade mark and copyright case) Kenny J said (at [14]) that the “considerations affecting the grant of injunctions in patent infringement cases are, however, to some extent peculiar to patent cases”.  Her Honour referred to Perram J’s observations in Solahart but concluded that the circumstances in that case which led his Honour to grant injunctions in narrow and specific terms were different in the case before her.  Nevertheless, her Honour said that she had sought to confine the injunctions flowing from the trade mark infringements more narrowly than the applicant’s draft: see at [15].  Her Honour then reviewed a number of cases dealing with copyright infringement and noted (citing Branson J in Universal Music) that “it may be permissible to incorporate in an injunction the terms of a statutory prohibition”: see at [23].  However, her Honour said that it did not follow that it is permissible to include in injunctions prohibitions against forms of infringing conduct that have not been proven, let alone alleged.  It is important to understand what her Honour meant by that observation.  Her Honour was referring to the granting of relief for infringements that were never in issue in the case.  In the end result, her Honour granted injunctions in terms incorporating the statutory language but also in a form which, her Honour reasoned, was “substantially designed to guard against the infringing conduct that has been proven”.  As a matter of analysis, I would regard her Honour as having applied the orthodox approach.  However, I think the important thing is that her Honour did seem to regard patent cases as raising different considerations.

Finally, and more recently, the Full Court in Christian v Societe des Produits Nestle SA (No 2) (2015) 327 ALR 630 at [181] (a trade mark case), expressed the view that an order “which merely repeats the prohibition in the Act” is “not appropriate”.  The Full Court reasoned that the general form of order was uncertain and susceptible to subjective determination as to whether the order had been complied with.  The Full Court acknowledged that while an injunction in the form of a general restraint could be made, the “practice of granting injunctions in a form which reproduces, with the risk of sanctions for contempt, that which an act forbids is to be discouraged”.  In the end, the Full Court granted an order which was directed solely to the infringer’s conduct and not to the trade mark owner’s statutory right.  In other words, it was cast in the form of the injunction in Starr, although there was no reference to Starr in the Full Court’s reasons for judgment.

This approach has been picked up in at least one Australian text, the second edition of which has been recently published: Robert Burrell and Michael Handler, Australian Trade Mark Law (Oxford University Press Australia, 2nd ed, 2016).  In that text, the authors state that the general form of the injunction “should probably be regarded as inappropriate”.  I think that that proposition may be a matter of contention, although it is completely understandable that the authors would express that view on the basis of a recently and carefully expressed judgment by the Full Court to that very effect.

From what I have just said, it can be seen that, in the Australian cases, there is a clear difference in approach between various Judges of the Federal Court. And, of course, on one view of things, that is a clear difference in approach between the general position in the United Kingdom and the position in Australia.

Why is there a difference between the United Kingdom cases and some of the Australian cases?

I think the first thing to be said is that, so far as the Federal Court is concerned, the form of injunctions granted in intellectual property cases has been heavily influenced by the observations made with respect to the form of injunctive relief that is appropriate in cases involving competition law and consumer protection law.  Trade mark cases in particular are heavily infused with other causes of action, the most ubiquitous being causes of action based on misleading or deceptive conduct.  No one doubts that, in the latter kind of case, the injunction should be carefully crafted to fix upon the precise conduct that is said to be misleading or deceptive.  No one doubts that it would be quite inappropriate to grant an injunction which merely says that the respondent is restrained from engaging in, for example, conduct that is “misleading or deceptive”. 

The early cases dealing with the grant of injunctions under s 80 of the Trade Practices Act 1974 (Cth) reveal the Court’s concern that “injunctions should be granted in clear and unambiguous terms which leave no room for the persons to whom they are directed to wonder whether or not their future conduct falls within the scope or boundaries of the injunction”:  In other words “contempt proceedings are not appropriate for the determination of questions of construction of the injunction or the aptness of the language in which they are framed.”:  ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 at 259.  That has been an abiding concern.  It does not raise any contentious question of principle.

My feeling (it is no more than that) is that the pervasive influence of misleading or deceptive conduct cases, which are not appropriate cases for granting general restraints in statutory language, is the reason why a more cautious approach in framing injunctive relief in intellectual property cases has been adopted by some Judges.

I think that the divergence of opinion in the Australian cases raises significant issues of policy and principle that may justify further exploration.  I think that, on further analysis, it might be seen that injunctions in the form of a general restraint may not truly have the deficiencies they are perceived to have and that injunctions directed solely to the infringer’s conduct without reference to the claimant’s rights, in some of the forms granted, do not have the virtues they profess to have. 

Do special circumstances apply in relation to final injunctions awarded for infringement arising under s 117 of the Patents Act?

This brings me to the next matter I want to discuss about the scope of injunctions in certain patent cases.  It is a matter that I have been specifically asked to address although, given the pendency of cases in which this consideration may be live, it is not a matter that I propose to discuss in any great detail. 

The starting point is s 117(1) of the Patents Act.  That subsection provides that if the use of a product by a person would infringe a patent, the supply of that product by one person to another is also an infringement (unless the supplier is the patentee or a licensee).  Subsection 117(2) of the Patents Act sets out what is meant by “use” of a product:

  (2)  A reference in subsection (1) to the use of a product by a person is a reference to:

(a)  if the product is capable of only one reasonable use, having regard to its nature or design—that use; or

(b)  if the product is not a staple commercial product—any use of the product, if the supplier had reason to believe that the person would put it to that use; or

(c)  in any case—the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the

person by the supplier or contained in an advertisement published by or with the authority of the supplier.

This species of infringement focuses on an act that is one step removed from what would otherwise be an infringement.  The infringing act is not the act of infringing a claim, but an act anterior to that – supplying the product which might be used to infringe a claim.  

The question I want to focus on now is this:  what is the appropriate form of injunction for that particular species of infringement?  Does the fact that s 117(1) has been engaged mean that there is a special type of case where special considerations should apply in drafting the injunction?

Let me try to “unpack” s 117 to explain why it might present a special case.  I will focus on one particular application of the provision.

Take the case of a product that is not a staple commercial product.  Section 117(2)(b) proceeds on the basis that such a product may be capable of various uses.  Some of those uses might infringe the claim of a patent.  But other uses may not or will not. 

So, putting the matter broadly, the product can be put to infringing uses by the person to whom it is supplied; equally, it can be put to non-infringing uses by that person or, more generally, by other persons at large.  The supplier can be supplying a product to a person who acquires that product for perfectly legitimate use, involving no patent infringement whatsoever.  But the supplier can be supplying the very same product to another person who will use that product in a way that infringes the patent.

On one reading of s 117(2)(b) in conjunction with s 117(1), if a supplier has reason to believe that the product will be put to an infringing use by a person, then the supplier’s supply of that product, will be an infringement of the patent.

Two preliminary matters should be noted in order to fully set the scene.

First, the “reason to believe” requirement is one that is determined objectively: Generic Health Pty Ltd v Otsuka Pharmaceutical Co Ltd (2013) 296 ALR 50 at [192]-[197].  In other words, it does not matter whether the supplier actually holds that belief.  The question is whether there is evidence that would support a finding that a reasonable person in the position of the supplier would have reason to hold such a belief.

Secondly, it is not necessary for a patentee to succeed under s 117 to show that he or she can identify any particular person or persons who (the supplier has reason to believe will) use the product in question in an infringing manner: AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324 at [433].

You will appreciate, therefore, that a supplier caught in the jaws of s 117 may have no actual awareness that it is contributing to a potential infringement by supplying a product in what is, otherwise, legitimate trade. 

The Full Court in AstraZeneca v Apotex had occasion to refer to such a problem.  The patent (referred to as “the 015 or low dose patent”) claimed a pharmaceutical product administered at a dose of between 5 to 10 mg (rosuvastatin – a cholesterol lowering agent).  The respondent supplied a product as 5, 10, 20 and 40 mg tablets.  The trial judge found that the supply of the 5 and 10 mg tablets infringed the patent, but not the supply of the 20 and 40 mg tablets.  Plainly, a patient using the 20 and 40 mg tablets would not infringe the patent.  However, the patentee argued that the supplier had reason to believe that, in order to save money, patients would ask for higher doses of the pharmaceutical – that is, obtain the 20 and 40 mg tablets – with the purpose of splitting them into lower doses.  Of course when split into 5 to 10 mg doses, and ingested, the patient would then be infringing the patent.

On appeal, the Full Court concluded, contrary to the primary judge’s finding, that the supplier had reason to believe that tablet splitting in respect of the 20 and 40 mg products would occur.  However, there was a legitimate market for 20 and 40 mg tablets (that is, where tablet splitting would not occur).  In light of the Full Court’s conclusion on infringement, should the trade in the 20 and 40 mg tablets be stopped?  To do so would be to reward the patentee for something that was not its invention.  Further, there was no way of knowing in advance which patients would be engaging in tablet splitting and which patients would not.  Also, the infringing use might be real but very small compared to what could be overwhelming non-infringing use.  Who was to know?

This is where my earlier bookmark about “proportionality” comes into play.  In AstraZeneca v Apotex the plurality observed that it was not easy to apply ss 117(1) and (2)(b) literally in circumstances involving the supply of product in large quantities for use by a large number of consumers where the first supplier in the relevant supply chain has reason to believe that some, but not all, of the consumers to whom the product might ultimately be supplied will put it to an infringing use.  Thus, the plurality said, if s 117(1) is to be engaged in such circumstances, some consideration of proportionality between, on the one hand, the extent of the infringing use that is forecast and, on the other hand, the scope of any injunctive relief, is warranted: see at [443]:

The plurality said (at [444]):

It may be undesirable to impose a blanket restraint upon a supplier who has reason to believe that only some consumers, perhaps a very small minority, may put the product that is or may be supplied to them to an infringing use. This is because the effect of such an injunction may be to deny a supplier access to a market, and consumers’ access to a product, in circumstances where the supplier could have no reason to believe that the majority of consumers would put the product to an infringing use. It seems to us that, all other things being equal, the more difficult it is for the patentee to establish that there is a likelihood of widespread infringing use, the more difficult it should be for the patentee to obtain injunctive relief in the broad terms restraining any supply of the relevant product. In the present case, even if AstraZeneca established that the generic parties had reason to believe that some consumers would engage in infringing use, the likely scale of that activity, were it to occur, was not shown to be such as would justify the grant of the wide injunction that AstraZeneca sought …

The Full Court did not need to grapple with the ultimate form of the appropriate injunction because the relevant claims were, in fact, invalid.

Other examples abound.  A given pharmaceutical product might have therapeutic use in treating two or more different disease states or perhaps two or more related disease states, but only one form of treatment might be the subject of patent protection.  Or, a given pharmaceutical product might have therapeutic use in treating a particular disease state but only an aspect of that disease state might be subject to patent protection.  In these examples, there is a substantial area in which the product can be used legitimately without any infringement whatsoever.  And, of course, the problems arising under s 117 are not confined to pharmaceutical cases.

I do not profess to have any particular wisdom on how, in such circumstances, the injunction should be framed.  No doubt much will depend on the particular circumstances of the case.  But, even then, there may be very difficult challenges as to how, even in light of those facts, an injunction should be framed to reflect what would be proportionate in light of the scope of the infringement demonstrated on the evidence – in other words, to meet the justice of the case.


A Judge of the Federal Court of Australia.  This paper is an edited version of speaking notes used by his Honour in a presentation at the 30th Annual Conference of the Intellectual Property Society of Australia and New Zealand Inc held at Sydney on 9-11 September 2016.  The presentation was entitled “Recent Developments in IP Remedies”.