How Do IP Disputes Impact a Business?

What effect can an IP dispute have on business?

“At worst, an IP dispute has the potential to shut down a business entirely, or at least prevent it from continuing to sell an important product line”, explains Katrina Crooks, Principal of Shelston Lawyers. Below, she expands on this and how IP disputes play out in Australia.

Expanding on the aforementioned on how an IP dispute has the potential to shut down a business, this is because where infringement is found to have taken place, an injunction will usually be granted, which may prohibit the sale of a particular product.  In a number of situations, an IP rightsholder may also be able to obtain an interlocutory injunction, preventing the sale of a product until the dispute is heard by the Court (which in Australia could take at least 12 months).

The grant of an interlocutory injunction, while not permanent, may have the effect in practice of preventing further sale of a product, because once it has been withdrawn from the market, it may not be practical or commercially worthwhile to re-market it, even it is ultimately found not to be infringing.  For this reason, our experience is that prompt attention to an IP issue can be crucial. This is true for both the rightsholder and an accused infringer. If left without attention, contentious situations tend only to get worse and usually require greater effort and financial investment to resolve.

Our experience is that prompt attention to an IP issue can be crucial. This is true for both the rightsholder and an accused infringer. If left without attention, contentious situations tend only to get worse and usually require greater effort and financial investment to resolve.

How can a wider IP strategy impact on the course of an IP dispute?

A single piece of IP which may be in dispute at a particular time rarely stands alone. Either the applicant or respondent may hold other IP which can be marshalled to leverage a particular result. There may also be strategies for obtaining additional IP which can assist in protecting the client’s commercial interests and legal position.

At Shelston Lawyers, we are fortunate to work closely with our associated patent and trademark attorney firm. In many cases, they will already have a thorough understanding of a client’s IP portfolio or can ascertain this, which allows us to quickly assess any other IP which can be brought to bear on the dispute at hand and to consider strategies for strengthening the client’s IP position. For example, where the client has a suitable pending patent application it may be possible, at least for the time being, to make an application for a divisional innovation patent tailored to the infringing conduct. We also often find that an IP dispute or litigation is the catalyst for further review by a client of their IP portfolio more generally. We are ideally placed to assist clients with this process with our specialist attorneys.

How do international IP disputes play out in Australia?

There is no doubt that we operate in an international field. Many of our cases form the Australian arm of an international dispute. We have a wide network of overseas law firms who we work with regularly and we are well accustomed to working in a multi-jurisdictional team.  We appreciate that close coordination is key in such cases and have built up a sound appreciation of IP law in other jurisdictions, many of our lawyers having practised overseas during their careers.

In some circumstances, international patent disputes may play out in Australia before other countries. This is because Australia has a pre-grant opposition process, which usually involves the filing of independent expert evidence and an oral hearing, with potential appeal to the Federal Court. As a result of this early substantive opposition process, Australia may be the first jurisdiction where expert evidence is prepared and filed. Our firm has a strong track record in handling pre-grant oppositions and in a number of cases has gone on to deal with subsequent post-grant Court proceedings in the same matter.

How does the resolution of IP disputes differ in Australia from other parts of the world?

The Court process in Australia is broadly based on the English system of litigation, meaning that it is an adversarial model. While evidence in chief is generally given by way of affidavit, witnesses are required to be available for cross-examination and oral evidence is an important aspect of the case. Almost all patent cases, and many other IP cases, involve expert evidence. A peculiar Australian innovation is the expert ‘hot tub’, in which experts representing both parties give concurrent evidence in Court, having prepared a joint report prior to the trial without the input of the lawyers. IP cases are generally heard before a single judge of the Federal Court. While there is no separate IP Court, certain judges within the Federal Court are designated to hear IP cases, and these judges are well experienced in IP cases. Discovery is available and can be significant in many cases.

While there is no separate IP Court, certain judges within the Federal Court are designated to hear IP cases, and these judges are well experienced in IP cases. Discovery is available and can be significant in many cases.

How does your firm advise clients to prepare for IP litigation?

Through our association with Shelston IP, we are often consulted before any particular dispute is in contemplation – as far back as the prosecution of a patent or trademark -, to advise on how the client’s position can best be strengthened at that stage for any future litigation. Having input at that early stage from a purely litigation perspective can significantly improve prospects in litigation later.

When acting for a rightsholder in relation to a contentious issue that has already developed, we generally recommend that we evaluate the strength of the IP right before commencing proceedings, since validity will always be an issue up for grabs in Australia, and a revocation challenge will be heard together with an infringement action. This may range from a full search and validity assessment of a patent to a more limited analysis. In some cases, the validity analysis may identify issues that should be addressed before issuing of proceedings. Filing an amendment to a patent is generally much simpler in the Patents Office than in litigation in Australia and so it may be advisable to amend the patent before litigation kicks off. Given the level of potential discovery in Australia, the client should also ideally conduct an audit of relevant correspondence and documentation.

How does the resolution of IP disputes compare with resolution of other commercial disputes?

In Australia, there is no specific IP Court, however, particular practices are generally followed in IP litigation, which may differ from the practice in other commercial cases. It is important to be aware of these practices and plan the litigation accordingly. As our firm deals only with IP cases, we are very familiar with these peculiarities. It is a particular feature of IP litigation, and patent litigation especially, that there will usually be a counterclaim for invalidity. As a result, both parties are in the position of advancing their own case and simultaneously defending the other party’s case. Further, there is a substantial interplay between each side of the case – an argument for infringement can potentially have an impact on the invalidity case, and vice versa.  To successfully navigate these ‘squeezes’, familiarity with all aspects of patent law is key.

How does IP law keep pace with technological change, and how does your firm keep up with developments in both technology and the law in the IP space?

At Shelston Lawyers our entire focus is IP. Our lawyers join our team because they want to practice in IP and so it is not surprising that they have a natural inclination towards innovation and technology.  We also have the advantage of drawing on the depth of expertise of our associated attorney practice to support any particular litigation case, whether it be related to immunology or mining engineering. While technology is constantly changing, the law is sometimes slow to catch up.

In many instances, the law operates in a technology neutral way but there are certainly some aspects of the law that have struggled to adequately deal with technological reality. This can be seen, for example, in the copyright sphere, where the Internet has infinitely changed the way material can be copied. In Australia, there have been attempts to modernise legislation where necessary, although in some cases this has only come after changes in other countries. An example is the amendment of the copyright legislation in 2015 to introduce website blocking injunctions for overseas websites, requiring an ISP to disable access to a website, given that an Australian injunction may be ineffective against an offshore online infringer. The proper extent of safe harbour provisions in copyright law is another area of ongoing debate in Australia in efforts to balance the rights of rightsholders and users in an everchanging technological context.

Katrina Crooks

Principal

Shelston Lawyers

Level 9, 60 Margaret Street, Sydney NSW 2000 Australia

P: +61 2 9777 2450

E: KatrinaCrooks@ShelstonIP.com  |  www.ShelstonIP.com

Katrina Crooks is a Principal of Shelston Lawyers, one of Australia’s leading specialist IP law firms, based in Sydney.  She co-heads the firm’s litigation team, which acts for a variety of clients including large multinationals and leading Australian corporates in a range of IP disputes. Dual qualified as a lawyer and patent attorney, Katrina has a wealth of international IP litigation experience.

Shelston Lawyers works closely with its associated patent and trademark attorney firm, Shelston IP, leveraging the outstanding technical expertise of its attorneys.

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