A person or company that has been unjustifiably threatened with patent infringement litigation may seek an injunction to prevent the threats from continuing, and the recovery of any damages sustained as a result of the threats.
However, the case of Australian Mud Company Pty Ltd v Coretell Pty Ltd [2017] FCAFC 44 has shown that a party is not entitled to compensation as a result of court proceedings about those threats, but only for damage sustained as a result of unjustified threat itself.
Australian Mud Company Pty Ltd (AMC) was the owner of an innovation patent relating to earth core sampling.
AMC's lawyers alleged that Coretell Pty Ltd infringed the innovation patent.
Coretell denied infringement, questioned the patent's validity and refused to give the undertakings demanded by AMC.
The primary judge held that the Coretell had not infringed AMC's innovation patent.
Coretell’s argued that it was entitled to compensation in the amount of $3,290,386 because AMC's threat stopped its development and commercialisation of a tool which allegedly infringed the patent.
The primary judge accepted that Coretell was entitled to compensation, but found the correct amount of compensation should be $1,506,859, plus interest.
The primary judge found that any losses sustained by Coretell were due to the initial threats and considered that the distinction between a loss of sales from the threats and a loss of sales during the infringement proceedings was semantics.
AMC appealed the decision of the primary judge.
The Full Court disagreed with the primary judge's approach. It found that the primary judge erred in making no distinction between the effect of the threats and the effect of the subsequent proceedings.
The Full Court overturned the ruling of the original judge and ordered that Coretell’s claim for damages should be dismissed with costs.