Intellectual Property law serves to deliver justice when it comes to patent threats. The party threatened with an “unfair” patent infringement is entitled to relief under section 128 of the Australian Patents Act 1990 (the Act) in certain circumstances.

How does this really work?

The underlying principle under section 128 is that the person initiating the threat or the party feeling threatened, bears the burden of proving the infringement. If the breach cannot be proved, the threat is dismissed as “unjust”. If successful, then no question of section 128’s relief provisions will arise.

How do you justify a threat?

1) According to section 131 of the Act, a mere notice warning the potential infringer of the existence of a patent does not tantamount to an unjustified threat.

2) This section further permits the patent owner to seek a declaration that the party posing a threat is ignorant of any inappropriate use or breach of the patent.

3) However, a delicate balance is required here – going beyond the privileges of section 131 can lead to a slippery slope of making an unjustified threat.

The court will examine the language that was used; was the message conveyed directly or indirectly; what the reasonable person interpret the claimant’s intention to be; did the person receiving the correspondence believe the initiator would take legal action, within the normal course of business?

If the threat is unjustified, and the threatened party withdraws the threatened product from the market, it may be eligible for substantial damages. All the recipient needs to prove in order to qualify for more than nominal damages is a mere reliance on the threat and a change in their position.

This was demonstrated in World of Technologies v Tempo [2007] FCA 114, where $213,059 in damages was awarded to the allegedly threatened party who upon reliance on the threat removed a product from sale.

What about the relief?

Section 128 provides the aggrieved party with relief ranging from a restriction or injunction on the continuation of such threats to the issuance of a statement that the threats are unfair. Relief may also include a recovery of any costs associated with the threat in question.

In summary, it is prudent to seek a registered patent attorney’s opinion before making a threat or even simply initiating communication with the other side, posing the alleged threat. Picking your battles carefully will prevent the threat from backfiring.