The Probably Invalid Patent – Is “Clearing the Way” a Necessary Strategy?

A question not infrequently arises around proposed exploitation of a patent that is considered invalid. Two strategies present themselves: invalidation as "attack is the best form of defence" and proceeding with exploitation waiting for a patentee to make the first move.

Both strategies have advantages and disadvantages and selection of the optimal option is highly situation specific. However, experience suggests that the most robust strategies involve control over the timetable of any dispute and awaiting uncertain timing of action by the patentee may often not be the safest or most predictable of moves.

The question for this short article though is whether Australian law imposes a legal duty for the "infringer", as no better term presents itself, to take action to revoke patent(s) blocking its strategy. In other words, will the patentee be assisted in an application for injunctive relief by non-action by the “infringer” to revoke the patent(s).

A recent decision of a Full Federal Court of Australia, suggests that such non-action will not be held against the "infringer".

The case, Smith and Nephew Pty Ltd v Wake Forest University Health Sciences [2009] FCAFC 142 (9 October 2009) concerned application for an injunction to restrain infringement of a patent for a wound treatment device. An injunction had been ordered, at first instance, because the relevant claim of the patent had been considered valid, for the purposes of granting relief, and infringement of that claim was also more probable than not.

Unusually, an appeal from the first instance decision was allowed on a basis, relating to claim construction, which is not relevant to this article.

The applicant for the injunction also argued that the law imposed an obligation on the respondent to ‘clear the way’ by taking patent revocation action (which could include re-examination) before proceeding to exploit the patented wound treatment device. Failure to take such revocation action was a factor to be weighed against the respondent "infringer".

The Full Court disagreed with this argument, observing that:

"We….accept that it would be an error in considering whether the grant of an interlocutory injunction, in the context of an infringement claim, where validity is in issue, to impose on a person who seeks to launch an alleged infringing product, an obligation to ‘clear the way’ by revoking the patent. Equally, the fact that a new entrant is prepared to take the risk of being restrained with its eyes wide open, should not be elevated beyond being a factor in the assessment of the many factors relevant to whether to grant an injunction."

So, if this non-precedential statement of the Federal Court is correct, an “infringer” may still select the option of waiting for a patentee to take action without risking breach of any legal duty. However, the factual matrix of any given case will remain decisive and specific legal advice as to the risks of such a strategy is always recommended to be taken.