Which product infringes? Kangatech ordered to file evidence consistent with pleadings despite later workaround

Date: 20 May 2021 / 18 October 2021
Court:  Federal Court of Australia
Judge: Greenwood J

Background

Australian Patent 2012388708 (Patent) relates to a device and its use in sports injury prevention and management, specifically by assessing a person’s knee flexor muscle strength while that person performs certain movements of the legs and torso.

Vald Performance Pty Ltd (Vald) issued proceedings in July 2019 asserting that Kangatech Pty Ltd (Kangatech) had, and continued to, import, sell and otherwise exploit an infringing device (Version 1).

Kangatech denied infringement in respect of Version 1, but also claimed that since around December 2018 it had made several changes to its device, launching a new product (Version 2). In an Amended Defence filed in February 2020 it pleaded that as of July 2019 it had permanently disabled all but two units of Version 1.  The basis for its denial of infringement (i.e. claimed features not present) in respect of Version 2 differed from that put forward in its original Defence in respect of Version 1.

In December 2020 Kangatech notified Vald that it had further modified Version 2 by installing controlling software that prevented it from performing certain functions (modified Version 2). It is unclear when these changes were made and how timely Kangatech’s communication was. Importantly though, the communication occurred after the Amended Defence was filed and after Vald had filed its evidence in chief on infringement. The communication purported to rely on new bases of non-infringement in respect of modified Version 2, in addition to those pleaded by Kangatech in respect of both Version 1 and Version 2.

Key Issues

Kangatech asserted that Vald had failed to identify in its pleadings how each integer of the relevant claims of the Patent was present in each of the various versions of the Kangatech products. However Kangatech’s Amended Defence had set out very specific bases for denying infringement on the basis of the absence of certain claim integers in Version 1 and Version 2, and Vald had filed its evidence on that basis. Vald also asserted that it did not have sufficient information to assess modified Version 2, and to determine whether the software modifications in modified Version 2 were permanent, or could be reversed.

At a directions hearing in May 2021, Greenwood J canvassed these issues and ordered that Kangatech provide further details of the software changes incorporated in modified Version 2, and make that product available for examination by Vald.

In October 2021 the matter returned before the Court, and Kangatech maintained its position that Vald should plead each integer of the claims said to be infringed, after which Kangatech would respond to this pleading. Vald argued that Kangatech had denied infringement in its pleadings on a very specific basis and Vald had filed its evidence on infringement on the basis of those pleadings, so it should not now be required to re-plead.

Notably the Amended Defence did not refer to the software changes in modified Version 2. As the pleadings stood therefore, the question of whether modified Version 2 infringed the Patent was not in issue. Kangatech’s position apparently sought to require Vald to put in issue infringement by modified Version 2.

Outcome

Greenwood J held that the proper course was for Kangatech to put on its evidence in the case in accordance with its Amended Defence, rather than the case being re-pleaded from scratch.

Implications

It appears that the likely effect of the orders made is that the case will be confined to Version 2 (pre-modification) and Version 1, and therefore no findings will be made as to whether modified Version 2 infringes the Patent. If Vald is successful in establishing infringement of the earlier versions, and a general injunction is granted as a consequence (i.e. an injunction prohibiting Kangatech in general terms from infringing the Patent), this will leave Kangatech in a difficult position: the Court will not decide in this case whether Kangatech’s modified Version 2 product infringes the Patent, and Kangatech will be at risk of a finding of contempt of Court for breach of the injunction if it continues to sell modified Version 2 and that product is later found to infringe.

This procedural decision therefore highlights the careful consideration required when implementing a ‘workaround’ to avoid patent infringement once infringement proceedings are brought. Here Kangatech may have been better to apply to the Court to further amend its defence, although such an application is at the discretion of the Court and delay in applying, and the impact on the Court schedule, will be relevant considerations in relation to such an application.