The probably invalid patent: is clearing the way a necessary strategy?

Occasionally a question arises regarding the proposed exploitation of a patent that is considered to be invalid. Two strategies present themselves:

• Initiating invalidation proceedings on the basis that attack is the best form of defence.
• Proceeding with exploitation and waiting for the patentee to make the first move.

Both strategies have advantages and disadvantages, and which is the best option will depend on the precise circumstances. However, experience suggests that the most robust strategies involve having control over the timetable of a dispute, so awaiting the uncertain timing of action by the patentee often may not be the safest move.

One key issue to consider is whether Australian law imposes a legal duty for the "infringer" (as no better term presents itself) to take action to revoke the patent(s) blocking its strategy. In other words, will the patentee be assisted in an application for injunctive relief if the infringer has taken no action to revoke the patent(s)?

A recent decision of the Full Federal Court of Australia suggests that such non-action will not be held against the infringer.

Smith and Nephew Pty Ltd v Wake Forest University Health Sciences ([2009] FCAFC 142 (9th October 2009)) concerned an application for an injunction to restrain infringement of a patent for a wound treatment device. The first-instance court had ordered an injunction because the relevant claim of the patent had been considered valid for the purposes of granting relief and infringement of that claim was more probable than not.

Unusually, an appeal from the first-instance decision was allowed on a basis relating to claim construction.

The applicant for the injunction also argued that the law imposed an obligation on the respondent to clear the way by taking patent revocation action (which could include re-examination) before exploiting the patented wound treatment device. Failure to take such revocation action was a factor to be weighed against the respondent infringer. 

The full court disagreed with this argument, observing that:

“We... accept that it would be an error in considering whether the grant of an interlocutory injunction, in the context of an infringement claim, where validity is in issue, to impose on a person who seeks to launch an alleged infringing product, an obligation to ‘clear the way’ by revoking the patent. Equally, the fact that a new entrant is prepared to take the risk of being restrained with its eyes wide open, should not be elevated beyond being a factor in the assessment of the many factors relevant to whether to grant an injunction.”

Thus, if this non-precedential statement of the Federal Court is correct, an infringer may still select the option of waiting for a patentee to take action without risking the breach of any legal duty. However, the factual matrix of any given case will remain decisive and specific legal advice as to the risks of such a strategy should always be taken.