Rakman International Pty Ltd v Trafalgar Group Pty Ltd [2022] FCA 464
This decision relates to three proceedings (heard concurrently) involving common parties concerning intellectual property rights relating to a device to inhibit the progression of fire through walls that have services (such as cables or pipes) routed through them.
The first proceeding concerned allegations by Rakman International Pty Ltd and Trafalgar Group Pty Ltd against Boss Fire & Safety Pty Ltd and its sole director, Mark Prior, for infringement of an innovation patent, and a cross-claim for revocation of the patent and relief for the making of unjustifiable threats and contraventions of the Australian Consumer Law (ACL). The claimed invention was, in essence, a method of constructing a barrier (typically a wall) and routing services (electrical cables, water pipes) through the wall deploying an element referred to as a “firestopping device” (also known as “fire transits”).
The second proceeding concerned an appeal by Boss from a decision of a delegate of the Registrar of Trade Marks dismissing Boss’s opposition to a trade mark for the word “FIREBOX” in the name of Trafalgar (748 application).
The third proceeding concerned an appeal by Trafalgar from a decision of a delegate of the Registrar of Trade Marks allowing Boss’s opposition to a trade mark application for the word “FYREBOX” in a stylised form also in the name of Trafalgar (214 application).
Validity of the patent
In the first proceeding, Justice Yates found that all claims of the patent were invalid – claims 1 to 4 for lack of novelty, and claim 5 for lack of innovative step – and that, therefore, Boss did not infringe the patent, as alleged to have occurred by operation of section 117(1) of the Patents Act 1990 (Cth).
Boss’s challenge on lack of novelty focused on fire transits manufactured by FSi Limited in the United Kingdom, and was based upon disclosures made at meetings and in the course of promoting certain devices, and on the basis of certain drawings prepared by FSi. Despite a sustained attack by Trafalgar, the Court ultimately accepted Boss’s evidence of a meeting in September 2015 between Mr Prior (director of Boss) and the CEO of a Norway-based construction company, Seltor Gruppen AS, during which Mr Prior disclosed all the features of the method claimed in claims 1 to 4 of the patent with reference to a fire transit manufactured by FSi – the Pass-It Version 2. Boss’s challenges to novelty based upon the other alleged disclosures were not made out.
While Justice Yates did not accept that claim 5 of the patent was anticipated by the disclosure at the Seltor meeting, his Honour found that claim to be invalid for lack of innovative step. His Honour described the only additional, but undisclosed, integer in claim 5 – “marking a line on the external object to depict the proposed centre line of the barrier” – as “truly, a trivial addition to the method that is otherwise described and claimed”, finding that the variance between the claim and the prior disclosure did not make a substantial contribution to the working of the invention.
Boss also challenged the patent for lack of innovative step on the basis of disclosures in a product datasheet (the Firestopit PDS), but Justice Yates found that, had it been necessary to determine the issue, that challenge would have failed. Boss’s other challenges to the validity of the patent – lack of support and lack of utility – while unnecessary to determine, would have also failed.
As to infringement, while unnecessary to determine given his Honour’s findings on validity, Justice Yates found that, had the patent been valid, Boss would have been liable for infringement pursuant to section 117(1) and section 117(2)(c) of the Patents Act, on the basis that it supplied a product (the Fyrebox device) with instructions to use the product in a method that infringes the patent. His Honour found, however, that, had the patent been valid, the infringement claim against Mr Prior would have failed, observing that Mr Prior’s conduct was consistent with him fulfilling his role, and functioning, as a director in the conduct of Boss’s business and affairs, and no further, such that Mr Prior would not have been liable as a joint tortfeasor.
Unjustified threats and misleading and deceptive conduct
As to the balance of the cross-claim, Justice Yates held that Trafalgar contravened section 18(1) of the ACL by sending letters to participants in the building industry, informing them of its claimed patent rights. His Honour did so on the basis that the letters contained unqualified statements to the effect that the use of the Fyrebox device would infringe the patent, in circumstances where those statements were not confined to the methods claimed in the patent and therefore incorrectly stated the extent of Trafalgar’s patent rights, and further, having regard to his Honour’s findings regarding validity, that such statements were false as Trafalgar in fact had no patent rights at all.
Justice Yates was not, however, satisfied that Trafalgar made unjustifiable threats within the meaning of section 128(1) of the Patents Act. The letters sent by Trafalgar stated, inter alia:
“This letter is intended to provide you with information regarding the Trafalgar patent and we stress that Trafalgar is not intending to assert its patent rights against your use of the method protected by the Trafalgar patent. Rather we are addressing the infringement at the point of supply of infringing products by our Court action against BOSS.”
His Honour held that it was sufficiently clear from the letters that Boss was the object of Trafalgar’s complaint, not Boss’s customers, and that Trafalgar’s court proceedings were and would be against Boss.
Interestingly, Justice Yates observed that recipients may have been warned off by the letter, and that the letter was a clear and intended signal to likely purchasers and others that any dealings by them with Boss in respect of the Fyrebox device would be in jeopardy and at real risk of interruption by the action that Trafalgar was taking against Boss. His Honour also found that there was evidence the letter had its intended effect and has resulted in loss to Boss. Notwithstanding this, as the letter stopped short of threatening infringement proceedings, any loss suffered by Boss as a result of the letter could not be recovered under section 128 of the Patents Act.
His Honour’s finding that the letters did not constitute a threat for the purposes of section 128(1) of the Patents Act raises questions about the effectiveness of the unjustified threats provisions. In particular, if a patentee can avoid the characterisation of a “threat” in this manner, it may be able to avoid liability under the Patents Act for the making of unjustified threats – including, potentially, liability for additional damages pursuant to section 128(1A) – while still warning off a competitor’s customers and thereby causing harm to the competitor’s business.
Trade Mark validity
As to the second and third proceedings – the appeals from the Trade Marks Office – Justice Yates observed that the abiding question was who, as between Trafalgar and Boss, was the owner for the purposes of the Trade Marks Act 1995 (Cth) of the FIREBOX and FYREBOX marks (which the parties accepted were substantially identical) in respect of the relevant goods. The answer to that question involved a detailed analysis of evidence of historical use of the relevant marks, in particular whether there was any use by Boss in the period before the priority date of Trafalgar’s mark application (24 November 2015).
Justice Yates found that, having regard to evidence of certain aural uses and documentary uses in 2014 and 2015, Boss had used “FIREBOX” and/or “FYREBOX” as a trade mark in the period before the priority date of the 748 application. It followed from that conclusion that Trafalgar could not validly claim to be the owner of the FIREBOX trade mark, and that the 748 application should be refused.
The third proceeding, concerning the 214 application, gave rise to a peculiar issue arising from an appeal from the Australian Trade Marks Office. Although other grounds were raised in the opposition, the Delegate’s decision to uphold the opposition was based upon section 44 of the Trade Marks Act on the basis of a pending mark – the 702 application (which had been filed by Boss). The 702 application had been provisionally refused on the basis of the 748 application, and its examination had been deferred pending the outcome of the appeal from the opposition to that application (that is, the outcome of the second proceeding). Justice Yates remarked that the wisdom of determining the opposition to the 214 application was “open to question”, in circumstances where the outcome of the appeal relating to the 748 application and the ultimate fate of the 702 application were both unknown.
Justice Yates observed that, given his findings in relation to the 748 application, it would no longer be an impediment to the 702 application. However, his Honour also observed that that did not necessarily mean that the 702 application should, or would, proceed to registration, and, even if it did, questions regarding the application of section 44(1) to the 214 application would in any event be superfluous, having regard to the fact that Trafalgar could not, on his Honour’s earlier findings, claim to be the owner of “FYREBOX” as a trade mark.
In the circumstances, Justice Yates dismissed the appeal in the third proceeding, with the practical effect that the 214 application will be refused.