Prototype demonstrations invalidate competitor’s patent

Rakman International Pty Ltd v Boss Fire & Safety Pty Ltd [2022] FCA 464

29 April 2022

Federal Court of Australia

Yates J

Background

This judgment deals with three separate proceedings involving common parties which were heard concurrently.  Two of the proceedings related to appeals from decisions of the Registrar of Trade Marks concerning trade mark applications.  The third proceeding was brought by Rakman International Pty Ltd and its claimed exclusive licensee, Trafalgar Group Pty Ltd (together Trafalgar) against Boss Fire & Safety Pty Ltd (Boss) and its director, Mr Prior, for patent infringement.  In this summary we deal only with the patent aspect of the case.

Trafalgar alleged that Boss had infringed Rakman’s innovation patent directed to a device known in the field as a ‘fire transit’, which directs services such as electrical cables and water pipes through a wall.  The fire transit contains material which expands in response to heat (such as in a fire), filling the fire transit completely and so preventing the spread of fire through it.  The patent claimed a new method of constructing such an arrangement, whereby the fire transit device was fastened to an external object and the wall built around it.  This was said to have advantages of allowing multiple services to extend together through a wall and to have efficiency advantages over prior art systems.

Key Issues

In response to the infringement claims brought by Trafalgar, Boss alleged that the patent was invalid for lack of novelty, innovative step, support and utility.  In particular, Boss relied on evidence concerning various disclosures made about a fire transit developed by another manufacturer, FSi Limited, and the showing of a prototype, at meetings which Mr Prior attended as early as three years before the Rakman patent priority date and six years before the hearing in these proceedings, and in other FSi promotional and supply activities before the priority date.   It alleged that these disclosures related to all integers of all claims of the Patent.  To the extent that the disclosures were not sufficient to disclose any features, it alleged that these features do not make a substantial contribution to the working of the invention as claimed.

Boss also sought relief for unjustified threats by Trafalgar and breach of s18 of the Australian Consumer Law (ACL) in connection with  letters sent by Trafalgar to participants in the building industry concerning its patents and Boss’ allegedly infringing product.

Outcome

The novelty case focussed on oral evidence from various witnesses, including Mr Prior of Boss,  present at the various meetings at which FSi fire transit devices were discussed or shown.  For one meeting, given the passage of time there was no clear evidence from the witnesses as to the precise version of the FSi device which had been shown.  Accordingly the judge was not satisfied that all integers of the claimed device, specifically external fasteners, were present in that prototype.   Furthermore, sales of the FSi devices before the priority date were not sufficient to invalidate, notwithstanding evidence as to the instructions that were given to customers for their installation, because there was not clear evidence as to the content of those instructions, some of which were oral.  Other drawings of the FSi devices did not disclose all the relevant features.

In relation to a separate meeting however, he was satisfied that the “version 2” prototype had been shown and that all integers of the claims, including fixings for screwing it to an upper part, had been disclosed, anticipating four of the five claims.  Claim 5, to a method including included the step of marking out a centre line on the external object to which the device is to be fixed in order to depict the proposed centre line of the barrier (wall), was not disclosed because this step was not disclosed with sufficient clarity and was not the  inevitable result of following the instructions given at the meeting.  However, the judge found that this step was a “trivial” addition that did not make a substantial contribution to the working of the invention, noting that nothing in any of the claims required the fire transit device to be centred within the wall.   Claim 5 therefore was invalid for lack of innovative step.

Although not necessary in light of the novelty finding, the judge however found that the feature of fastening formations was an innovative step since it facilitated the ease and efficiency with which the method could be performed.   Notwithstanding that other means could easily be used to fasten the device to the external object, the fastening formations obviated the need to do so.

The other grounds of invalidity were rejected.

Although not necessary in light of the validity findings, Yates J went on to consider the infringement position.

Trafalgar alleged firstly that Mr Prior had authorised infringement by Boss under s13(1) of the Patents Act 1990 (Cth) (Act).  Noting that s13(1) relates to an   authorisation of exploitation of the invention, not authorisation of infringement, Yates J concluded that this argument could not  succeed because the infringing act of Boss relied upon under s117 (that is, supply) was not an act of exploitation in itself.   Trafalgar argued a tortious common design in the alternative.  The fact that Mr Prior is and was the sole director and company secretary of Boss, and in a position to exercise control over Boss, was not  disputed, however Yates concluded that Mr Prior’s conduct did not amount to the “close personal involvement” by a director in the infringing conduct of the company to make the director personally liable1.  Mr Prior’s involvement went no further than his role as a director.

Yates J finally considered the issue of unjustified threats and breach of the ACL.  Trafalgar’s letters alleged that use of Boss’ fire transit device would constitute use of the method of the Rakman patent, that supply of the device was an infringement of  Trafalgar’s patent rights and that installation of the device in  accordance with the patent would infringe.

Yates J found these statements to be clearly misleading.  Firstly, they were couched in an unqualified fashion which made no reference to the fact that the Boss device would have to be installed in a particular way in order to infringe.   However the statements did not amount to unjustified threats under s128 of the Act, because the letters expressly stated that Trafalgar did not intend to assert its patent rights against the recipients of the letter, but rather were addressing the infringement by taking legal action against Boss.

Implications

Although ultimately successful in this case, the novelty and innovative step aspects of this case highlight the difficulties in relying on evidence of oral disclosures or acts, many years after the event.  As the judge noted at the outset, caution needs to be exercised in accepting evidence of recollection of events that occurred some years prior, and without contemporaneous documentary evidence there is a risk on relying on such evidence.  It clearly assisted in this case that more than one witness was called who attended the relevant meetings.

The other noteworthy aspect of this case is the finding of misleading and deceptive conduct through the sending of letters to prospective customers of Boss, even in circumstances where no threats were found to be made.  It is common that method claims will be enforced in practice through s117 against a supplier of a device to be used in the method, since those carrying out the method themselves may also be potential customers of the patentee.  In such circumstances, it is advisable to avoid communications with customers of the alleged infringer for the reasons illustrated by this case.  Ultimately the purpose of such a letter is to interfere with the commercial relationship between the supplier and the potential customer, and so a damages claim may result independent of the finding on validity/infringement.  In this case Yates J made findings that Boss had suffered loss and damage as a result of lost opportunities to supply products to parties receiving the letter.

Rakman and Trafalgar each appealed the decision with judgment currently reserved following a hearing before Justices Nicholas, Burley and Rofe in February 2023.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the pharmaceutical, biopharmaceutical and life sciences industries.  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.  Pearce IP leaders are well recognised as leading IP practitioners.

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, Women in Law Awards – Partner of the Year, Best Lawyers and Australasian Lawyer 5 Star Awards, Women in Business Law Awards – Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.