Interlocutory injunction to restrain further threats of patent infringement granted in car park scrap

UbiPark Pty Ltd v TMA Capital Australia Pty Ltd [2022] FCA 111

14 February 2022

Federal Court of Australia

Mohinsky J

Background

UbiPark Pty Ltd (UbiPark) and TMA Capital Australia Pty Ltd (TMA) are rival providers of car park access systems.  TMA is the owner of a patent relating to a system, method and computer program for controlling access to a car park.  UbiPark provides car park operators with a digital platform that allows drivers to access operators’ car parks using a UbiPark smartphone application.  TMA sent letters of demand to UbiPark and its car park operator customers threatening patent infringement proceedings based on, respectively, their provision and use of the UbiPark platform. 

UbiPark sued TMA for unjustified threats of patent infringement proceedings, and sought a declaration that the threats (which TMA admitted were threats) were unjustified, and an interlocutory injunction and final injunction restraining TMA from making further threats.  TMA subsequently filed a cross-claim against UbiPark for patent infringement and UbiPark responded by alleging invalidity of the patent. 

For the purpose of the interlocutory injunction application only, the parties agreed to assume that that the patent was valid and that claim 1 alone was alleged to be infringed. 

Key Issues

Two-stage test

Moshinsky J observed that there only appeared to have been two cases, both from the 1980s, in which an interlocutory injunction had been sought to restrain unjustified threats of patent infringement proceedings.  His Honour went on to apply the usual two-stage test in interlocutory injunction applications:

• whether UbiPark had shown a prima facie case that TMA’s threats were unjustified; and
• whether the balance of convenience favoured the grant of an injunction.

This involved a reversal of the usual onus of proof in interlocutory injunction applications in patent cases, as it is usually the party alleging patent infringement that must meet the relatively low threshold of showing a prima facie case of infringement.

Prima facie case

His Honour found that the disputed issues were largely issues of claim construction, and that either party could succeed at trial.  UbiPark had therefore shown a prima facie case that TMA’s threats were unjustified.      

Interestingly, TMA did not appear to argue that its threats of patent infringement proceedings would have been justified even if the patent was subsequently found to be invalid and/or not infringed (on the basis that TMA had an arguable case of infringement and in that sense, did not make the threats in an ‘unjustifiable’ fashion).  Such an argument may have been open to TMA following Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2014] FCA 568 and Damorgold Pty Ltd v Blindware Pty Ltd [2017] FCA 1552, although there is authority to the contrary in the form of CQMS Pty Ltd v Bradken Resources Pty Ltd (2016) 120 IPR 44.

Balance of convenience

His Honour considered that the balance of convenience favoured granting an interlocutory injunction.  UbiPark would likely suffer harm if further threats were made pending judgment in the case, for example, the loss of existing and potential customers, and a damages award might not provide adequate compensation, for example, due to difficulties of proof and quantification. 

In contrast, TMA was less likely to suffer harm if it was unable to make further threats pending judgment, including because TMA would not be prevented from notifying UbiPark’s operator customers of the existence of the patent and the litigation.  Nor would it prevent TMA from suing for patent infringement.  The injunction would only prevent TMA from making further threats of patent infringement proceedings to UbiPark’s operator customers.  Granting an injunction would also preserve the status quo in a practical sense.

Outcome

As both parts of the test were satisfied, an interlocutory injunction was granted. 

Implications

The case suggests that it will be difficult for a maker of threats to avoid an interlocutory injunction pending judgment, raising questions as to how a patentee can seek to avoid unnecessary litigation by sending correspondence in advance.     

This gives rise to the further issue that in this case, if TMA wanted to sue any of UbiPark’s operator customers, it would ordinarily be required to specify the ‘genuine steps’ that had been taken to try to resolve the issues in dispute without resorting to litigation.  It is unclear how TMA could take genuine steps if it was enjoined from sending any communications that could constitute a threat of patent infringement proceedings.  His Honour did not address that question because he considered the prospects of TMA suing UbiPark’s operator customers (being potential customers of TMA) were remote.  However detailed consideration was given to this issue in CQMS v Bradken, in which Dowsett J characterised each of the patentee’s communications as either an actionable threat or a genuine attempt to resolve the dispute that did not amount to a threat.  The original letter of demand in that case was characterised as a threat, suggesting that taking genuine steps to resolve issues in dispute, while not making an unjustified threat of patent infringement proceedings, is a tightrope walk.        

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