Carpark overstay detection system patent saga continues with award of additional damages for flagrant infringement

Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia (No 8) [2023] FCA 182

08 March 2023

Federal Court of Australia

Besanko J

Highlight 

In a recent development in an IP tug of war which started a decade ago, the patentee was awarded additional damages under s122 (1A) of the Patents Act (1990) Cth in light of an earlier finding of infringement in related proceedings.  

Background 

Vehicle Monitoring Systems (VMS) is the registered owner of two standard Australian patents, AU2005243110 and AU2011204924 (the standard patents), both entitled “Method, apparatus and system for parking overstay detection”.  The invention relates to monitoring the presence of a vehicle in a parking space over a specified time period via a detection apparatus located under the parking space in order to detect vehicles which overstay.  The main claim features relate to a method, apparatus and system incorporating the following steps or components for performing them: 

• detecting presence of a vehicle in said parking space; 
• processing and storing data relating to presence of said vehicle in the parking space;  
• determining whether the vehicle has overstayed in the parking space; and 
• wirelessly transmitting data relating to identified instances of vehicle overstay. 

In some claims, a wireless wake-up signal is transmitted to the detection apparatus in order for it to transmit the data.  

VMS is also the patentee of innovation patent No 2010101354 titled “Method, apparatus and system for parking overstay detection”, which expired on 9 May 2013 (the innovation patent), directed to a type of detection apparatus then known as a vehicle detection unit (VDU).   

Sarb Management Group (SARB) produced and sold various versions of PinForce, a vehicle detection sensor and system.  In earlier proceedings, VMS alleged that SARB’s supply of the PinForce Sentinel VDU infringed the claims of the innovation patent.  In 2013, Justice Yates found the innovation patent valid and infringed (see Vehicle Monitoring Systems Pty Limited v Sarb Management Group Pty Ltd (trading as Database Consultants Australia) (No 2) [2013] FCA 395 (2013 decision).  Following the 2013 decision, SARB appealed to the Full Federal Court.  In June 2014, before the Court delivered its judgement, the parties settled the dispute and entered into a Deed of Release.   

A dispute sparked when VMS pursued infringement of the standard patents (the innovation patent had since expired) in respect of several PinForce sensors and systems: version 1 (which was on sale at the time of the 2013 decision) and versions 2 and 3 (introduced after execution of the Deed of Release) in 2019.  As well as SARB, it added a first time respondent, SARB’s customer the City of Melbourne (CoM).  

Separately, an assignee of a SARB patent in the same field has commenced infringement proceedings against VMS, and these are currently also before the Federal Court.  We report on an interlocutory decision in those proceedings, Orikan Group Pty Ltd v Vehicle Monitoring Systems Pty Limited [2023] FCA 1031, here.  

Key Issues 

Construction  

Key to infringement was the wake-up signal, whether it was present in the various PinForce version, and in particular whether the detection apparatus or the apparatus that receives the data (data collection apparatus sends the wake-up signal.  The wake-up signal is described in the specifications as being transmitted by the data collection apparatus, which then listens for a response from the detection apparatus.   The construction of this term was also addressed by the Court in the 2013 decision.  Justice Besanko considered the reasoning in the 2013 decision to be correct and did not consider fresh evidence changed the previous findings.  

A further issue was whether the vehicle overstay detection was carried out solely by the detection apparatus in certain claims and in PinForce versions 1 and 2 (version 3 was modified to remove the vehicle overstay determination facility by the detection apparatus).  His Honour held that the specification included no requirement that this be the case, that it did not explicitly rule out determination of vehicle overstay by the data collection apparatus, and that to the extent there were any shortcomings in the specification as to how the data collection apparatus would make this determination the same applied to the detection apparatus. 

Liability, additional damages and limitations period 

SARB provided the PinForce sensors and systems to councils along with associated services, maintenance and upgrades under contract.  VMS alleged that SARB was liable for infringement by virtue of authorising infringing use by councils under s117 of the Patents Act 1990 (Cth) (Act).  The Court considered whether the statutory limitations period (6 years from the act of infringement) meant VMS could not recover damages or lost profits in respect of PinForce sensors and systems supplied to councils more than 6 years before proceedings commenced.   

VMS sought additional damages from both SARB and CoM claiming that SARB’s infringement of the standard patents was “flagrant” including because (since the 2013 decision) SARB had either known that its supply of the unit infringed the standard patents or been recklessly indifferent to that possibility or risk.  The Court noted that a reasonably arguable defence to infringement based on claim construction, or a reasonable invalidity argument, is a relevant factor.  Furthermore, an attempt to design around a patent could not itself be described as flagrant.   

Validity 

SARB cross-claimed for invalidity on numerous grounds.  Interestingly, lack of inventive step was alleged based on common general knowledge (CGK) alone, with SARB relying on several expert witnesses.  The CGK discussion focused on the degree of automation and increasing use of technology in parking enforcement.  SARB’s best method ground was based on VMS’s failure to describe in the specification the ‘ASTRX2 transceiver’ which the inventor acknowledged was the best transceiver known to him for the wake-up signal communications.   

Finally, SARB alleged that VMS, through its patent attorneys, engaged in false suggestion or misrepresentation during examination of one of the standard patents when responding to a prior art objection.  Justice Besanko referred to ICI Chemicals (ICI Chemicals & Polymers Ltd v Lubrizol Corporation Inc) 1 and noted that where good faith is not an issue it is inappropriate to assume that a misrepresentation actually misled.  

Outcome 

SARB’s PinForce Versions 1 and 2 were found to infringe the standard patents, with SARB liable for additional damages under s 122(A)(e) because even though the 2013 proceedings involved a different patent, “there were sufficient similarities for it to be inferred that SARB must have known that to continue to deal in PinForce Versions 1 and 2 involved a very substantial risk of infringement.”  No additional damages were awarded against CoM, particularly because it was not a respondent in the 2013 case, VMS’s allegations of infringement were largely directed to VMS rather than CoM, and CoM acted reasonably in relying on representations by SARB that mediation was on foot and a resolution appeared to be close.   

There was no liability for units supplied within the statutory limitations period pursuant to a contract executed before the beginning of the limitations period – his Honour held that once the service contracts were executed, SARB had no power to prevent CoM engaging in the infringing use.  

All grounds of validity were rejected.  In particular, with regard to inventive step, Justice Besanko noted that there were a range of solutions and options in the CGK, and was therefore not satisfied that the skilled addressee would have been led directly to the invention. Secondary considerations, such as long-felt need and the paradigm-shift resulting from the implementation of a subterranean detection apparatus played an important factor in the decision.   

Of particular interest to patent attorneys, the ground of false suggestion and misrepresentation by the patent attorneys before the Patent Office was dismissed as the Court found that SARB failed to meet the onus of establishing that the Commissioner of Patents was misled by the attorneys’ submission and that it materially contributed to the granting of the patent. 

SARB filed a notice of appeal on 23 June 2023, which was heard by the Full Court on 23 November 2023.  At the time of publication no decision has been issued.   

Implications 

The case develops several interesting aspects of liability, including the factors the court uses to weigh a finding of liability for additional damages for flagrant infringement under section 122(A)(e) of the Act, and consideration of “ongoing infringement” relevant to the application of the statutory limitations period. 

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards – Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.