FEDERAL COURT OF AUSTRALIA Tramanco Pty Ltd v BPW Transpec Pty Ltd [2009] FCA 509 INTELLECTUAL PROPERTY – patents – interlocutory injunction – alleged infringement of patent – application to restrain respondent from marketing an Electronic Road Monitoring System – alleged infringement – whether serious question to be tried – factors relevant to the balance of convenience – respondent proposing to continue to market the allegedly infringing product in knowledge of the applicant's claim to be entitled to the patent – held serious question to be tried – had adverse impact on applicant's business not quantifiable in damages were interlocutory injunction not granted – interlocutory injunction granted Judiciary Act 1903 (Cth) Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 applied Bodkin C, Patent law in Australia (Law Book Company 2008) TRAMANCO PTY LTD v BPW TRANSPEC PTY LTD QUD114 of 2009 LOGAN J 13 MAY 2009 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD114 of 2009 BETWEEN: TRAMANCO PTY LTD Applicant AND: BPW TRANSPEC PTY LTD Respondent JUDGE: LOGAN J DATE OF ORDER: 13 MAY 2009 WHERE MADE: BRISBANE Upon the Applicant giving the usual understanding as to damages, THE COURT ORDERS THAT: 1. Until 5 p.m. on 22 May 2009 or further earlier order of the Court, the Respondent whether by itself, its directors or officers, or by its servants or the agents or otherwise howsoever, during the term of Australian Patent No 2004264997 ("the Patent"), or any extensions of it, be restrained from making, selling or otherwise disposing of, offering to make, sell or otherwise dispose of, using, importing or exporting into or from Australia or keeping for the purpose of doing any of those things, any method or device associated therewith and which is used by the Respondent to implement that method for logging the performance of a vehicle suspension system that contains an ability to test the performance of an individual axle or group of axles on a truck or trailer to an impact or impulsive load that incorporates any of the integers of any of claims 1, 12, 19, 20, 21, 22 or 23 of the Patent. 2. These proceedings, including any application for extension, variation, or dissolution of the relief granted in paragraph 1, and any application for "Fast-Track Directions" listing, be adjourned to 10:15 a.m. on 22 May 2009. 3. The Respondent file such affidavits, if any, upon which it proposes to rely, on the subject of interlocutory injunctive relief, on or before 4 p.m. on 19 May 2009. 4. The Applicant file and serve any affidavits in reply on or before 4 p.m. on 21 May 2009. 5. Liberty to apply. 6. Costs reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD114 of 2009 BETWEEN: TRAMANCO PTY LTD Applicant AND: BPW TRANSPEC PTY LTD Respondent JUDGE: LOGAN J DATE: 13 MAY 2009 PLACE: BRISBANE REASONS FOR JUDGMENT 1 Tramanco Pty Ltd (Tramanco), has today instituted proceedings against BPW Transpec Pty Ltd (BPW Transpec) for injunctive relief and ancillary orders, as well as either damages or an account of profits in respect of an alleged infringement of its patent, Australian Patent Number 2004264997 (the patent). It has made application today for interlocutory injunctive relief in the following terms: An order that, pending the trial of these proceedings or further earlier order, the Respondent whether by itself or by its directors or officers or by its servants or agents or otherwise howsoever be restrained from making, selling or otherwise disposing of, offering to make, sell, or otherwise dispose of, using, importing into or from Australia, or keeping, for the purpose of doing any of those things, any infringing method or infringing device. 2 In the abstract in the patent, the patented device is described in these terms: A method for logging the performance of a vehicle suspension system including the dynamic effect of an impulsive load with an electronic weighing system (17), wherein the electronic weighing system (17) is mounted onboard the vehicle, and determining one or more parameters selected from the group consisting of the dampening ratio of the suspension, the oscillation frequency of the suspension and the impact loading of the vehicle, as well as determining the condition of the road itself at any point and at any time. 3 A patent has been granted for a term of 20 years, with a priority date of 19 August 2003. BPW Transpec is the Australian wholly-owned subsidiary of a German company, BPW Bergische Achsen KG (the parent company). The parent company is, it seems a manufacturer of trailer axles and also makes electronic log-in systems for trailers. BPW Transpec conducts business as a subsidiary of the parent company throughout Australia, with offices in Victoria, New South Wales, Queensland and Western Australia. Through the medium of BPW Transpec, the parent company's products are marketed in this country. The categories of product marketed are more particularly described in BPW Transpec's website, www.bpwtranspec.com.au. 4 A director of Tramanco and one of the inventors of the patented method, Mr Sack, has deposed to the expenditure of considerable amounts of money as well as unquantified man hours, unquantified in terms of monetary worth, in its development. The fruits of that expenditure of money and labour, as they have become manifest, are deposed to by Mr Sack in his affidavit by reference to a financial report of Tramanco's sales of its patented system. One sees there that from initial sales figures of $174,171 in the 2004 financial year, the sales thus far in the as yet uncompleted 2009 financial year are $960,087. The latter figure does not take into account sales not yet invoiced for this financial year. Obviously enough, Tramanco's patented device has proved to be not just of significant commercial worth but of increasingly significant commercial worth. 5 A truck show known as the Queensland Truck and Machinery Show is due to be held in Brisbane tomorrow. The material before me attests to that truck show being the fifth largest in the world and the largest of its kind in the southern hemisphere. It is a biennial event. It is also the major show that Tramanco attends for the purpose of promoting through that medium its patented device. The show is one at which all major truck and trailer companies from around the world have exhibits. Tramanco has expended money as well as labour in its preparation for the promotion of its patented system at this show. That promotion will include live demonstrations of how the system works. 6 The system has benefits not just for a truck operator but also for a Main Roads Authority in that it provides data concerning the condition of the road over which the truck or other vehicle to which the system is fitted travels. It also provides data in relation to the suspension system of the truck or other fitted vehicle. That data enables informed value judgments to be made as to when prudently a suspension system ought to be replaced. It also provides, in terms of the other application I have mentioned, data by reference to which a Main Roads Authority can make considered value judgments in relation to the repair or programming of the repair of roads. It is possible remotely to monitor the data that is recorded on the patented device. 7 Until about 7 May this year Mr Sack, whom I infer takes a close interest in the subject, was of the belief that Tramanco was the only company in the industry marketing and selling any product like the patented system. On or about that date he read a copy of the May/June edition of "Diesel Magazine". He noticed in that publication that BPW Transpec had a feature article which mentioned their EBS system with the function for "road roughness count". 8 Mr Sack was immediately concerned that this might amount to an infringement of the patent. He was aware – again I infer because of his industry knowledge – that BPW Transpec was selling an electronic braking system (EBS). What he was not aware of was that the system offered an ability to offer load sensing and a road roughness count. He considered that this was clearly part of what Tramanco's patented system provided. Seized with that belief he promptly made a copy of that article and sent it to Cullen's Patent Attorneys for advice. 9 Mr Sack also undertook some further investigatory work himself. That entailed his reviewing another industry publication, the "Trailer Magazine" of April 2009. In that he found an article about the same product of BPW Transpec and a reference to that product being shown at the upcoming truck show that I have mentioned. That article also made reference to BPW Transpec's product having as extra features "brake balance and road roughness monitoring and the ability to electronically store spare parts information". 10 Mr Sack also conducted some research over the Internet. This disclosed an article on a website of a company, Haldex Europe, which referred to the release of the product marketed in Australia by BPW Transpec at the 62nd IAA Commercial Vehicle Exhibition in Hanover, Germany, over the period 25 September 2008 to October 2008. Mr Sack deposes that while he has not yet seen the BPW Transpec system he believes from information he has found on its system, and from his extensive knowledge of truck and trailer mechanical engineering that Tramanco's patent has been infringed principally because of the incorporation into the BPW Transpec's system of road roughness monitoring features. 11 Claim 1 in the patent is a claim in respect of: a method for logging the performance of a vehicle suspension system including the steps of measuring the dynamic effect of an impulsive load with an electronic weighing system, wherein the electronic weighing system is mounted on board the vehicle, and determining one or more parameters selected from the grid consisting of the dampening ration of the suspension, the oscillation frequency of the suspension and the impact loading of the vehicle. 12 Claims 12, 19 and 20 of the patent follow on from claim 1. Claim 12 refers to: … logged over a standard road section at different times to test performance of an individual axle or group of axles to an impulsive load. 13 Claim 19 follows from claim 12 in its reference to including: … a test in which the variation in a mass signal is recorded … 14 Claim 20 follows from claim 19 in its reference to: … a location device is linked to the data collected to precisely locate the portion of the road upon which the test was conducted for future comparisons. 15 It seems on the evidence that BPW Transpec's marketing campaign in respect of its product is of but recent origin, having commenced, as best one can tell on the material to hand, last month. 16 A very helpful summary of the principles to be applied in the determination of an application of this sort is offered by Mr Bodkin in his work, Patent law in Australia (Law Book Company 2008) where, commencing at page 359, para 9710, he offers what I consider to be a correct statement of principle. Where the plaintiff's entitlement to ultimate relief is uncertain (as it almost always is at the time of the hearing of an interlocutory matter) the court must consider and determine what course is best calculated to achieve justice between the parties in the circumstances of the particular case, bearing in mind the consequences to the parties that would flow from the court's decision. The broad principles applicable to this determination are well settled. In summary, the plaintiff must establish that: · there is a serious question to be tried on the alleged infringement of the patent; · unless the injunction sought is granted, the plaintiff will suffer irreparable harm for which damages cannot adequately compensate; and · the balance of convenience favours the granting of the injunction sought. These matters are not to be considered in isolation, however: the strength or weakness of each aspect of the case will influence the relative importance to be accorded to the other aspects. For example, a case in favour of infringement that appears weak or questionable will mean that the injunction will only be granted if the balance of convenience is strongly in the plaintiff's favour. 17 And then at para 9720: In relation to the first of the three matters listed in paragraph 9710 above, of relevance is not only whether the plaintiff has shown that there is a serious question of infringement to be tried, but also whether or not the defendant has established that there is a triable question as to the validity of the patent (or the relevant claim or claims) in question. Earlier cases in which it was suggested that the plaintiff carries a burden of proving a prima facie case of infringement and a likelihood of ultimate success at trial do not appear now to state the law, owing to the greater probability that a granted patent is valid and as a result of the modern system of patent examination and the possibility of opposition before grant. it has been accepted in Australia that the relevant criterion is as stated by Lord Diplock in American Cyanamid and as set out in the first of the matters listed in paragraph 9710 above, unless the public interest would be adversely affected by the grant of an injunction, in which case the plaintiff may need to show a probability, even a distinct probability of success. In considering whether there is a serious question to be tried on the alleged infringement, the court is not to attempt to resolve conflicts of evidence as to facts, but in some circumstances the court may attempt to resolve conflicts as to questions of law. 18 And then at para 9730: Considerations of the relevance to the second matter listed in paragraph 9710 above include the financial capacity of the defendant to compensate the plaintiff for the losses it could incur if the injunction were not granted; and the likelihood of the plaintiff losing customers and customer loyalty. Considerations in relation to the balance of convenience include whether the defendant commenced its allegedly infringing activities knowing that it would be infringing or knowing that it would face an application for an injunction, and in particular whether the defendant deliberately took the plaintiff's alleged invention or commenced its activities knowing of the patentee's intention to commence infringement proceedings; the difficulty or otherwise of calculating or quantifying the losses that the plaintiff could incur if the injunction were not granted; the risk of irreparable damage to the defendant if the injunction were granted; the length of any delay by the plaintiff in taking legal proceedings; whether the trade of the defendant is a well-established one or a new one; and any public interest considerations there may be. [footnote case references omitted] 19 I turn then to a consideration of these matters. 20 In Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405, which was a case in respect of an application for interlocutory injunctive relief in respect of the earlier intellectual property item known as a petty patent, Burchett J held that the fact that a respondent's product was capable of falling within the terms of the claim of the petty patent, as well as the fact that the Respondent's product was capable of use as an infringing device, meant that there was a serious question to be tried. On the material to hand, it seems to me that there is, in terms of use, an overlap as between the uses of the patented system of Tramanco and that which is marketed by BPW Transpec. It is necessary to sound a cautionary note in respect of that conclusion because of the very general nature of the information available at present in respect of BPW Transpec's system. The point was made on behalf of that company that the product concerned is, first and foremost, an electronic braking system with the feature that has excited Tramanco's interest, being something of an add-on. On the material to hand, that submission is well made, but it does not, in my opinion, affect the reaching of a conclusion that there is a serious question to be tried for the reason which I have given. 21 There then falls, for separate, but not unrelated, consideration, factors going to the balance of convenience. 22 Tramanco, by its managing director, Mr Sack, has, through its counsel, offered the usual undertaking as to damages. That undertaking, on the material to hand, is not one without substance. There is evidence in the material read today of the worth of Tramanco. Its assets, in total, amount to $2.3 million. It has no liabilities or encumbrances. It has a cash flow which is, on the material to hand, substantial and likely to increase. 23 There is an ephemeral quality to the assessing of the damage that Tramanco might suffer in the event that an interlocutory injunction did not go. The same consideration does apply, it must be said, and it was so submitted, in respect of the granting of an interlocutory injunction so far as BPW Transpec's interests are concerned. Precisely how much business either company might lose, either by virtue of the granting or not granting of an interlocutory injunction, is, as I have said, wont to raise ephemeral questions. I do note, though, that the patented system is at the heart of the worth of Tramanco, whereas the system of BPW Transpec, which is said to infringe, lies more at the periphery. That is not to say there is not substantial worth in being able to offer the feature. Plainly enough, a commercial value judgment has been made by BPW Transpec to make reference to it in its marketing. 24 There is nothing immediately to hand which would suggest that BPW Transpec has deliberately set out to infringe the patent. Nor, it must be said, has it sought to market its product at the truck show in the teeth of having prior notice at the time of making arrangements for its display. I infer that to be so, because it seems that the arrangements for the placement of a display at the show were made by BPW Transpec in April, whereas the alleged infringement did not come to Tramanco's attention until earlier this month. 25 There can be no question that Tramanco and its advisors have acted with anything other than due dispatch in bringing the application to the Court once the alleged infringement had come to Tramanco's attention. Further, Tramanco, by its solicitors on 11 May 2009, gave a detailed recitation to BPW Transpec of the basis upon which an infringement was said to arise, and foreshadowed the making today of an application for interlocutory injunctive relief in the even that satisfactory arrangements were not reached informally. 26 Madgwicks, a solicitor's firm practising in Melbourne, made a detailed response on behalf of BPW Transpec to Bennett & Philp, the solicitors for Tramanco. Some of the factors telling against an interlocutory injunction, which I have already mentioned, are highlighted in that letter. Another matter highlighted is the possibility of a defence on the basis that the patent was not validly granted because, it seems, of an allegation that the basis for the patent was nothing more than a reflection of common prior knowledge. I take that into account in weighing up whether or not an interlocutory injunction should go. 27 BPW Transpec's worth is moot, but it does not seem to be a company without any means, having regard to the spread of offices throughout Australia. Further, it seems to have the backing of the parent company, which, so far as one can tell from the material to hand, is a company of substantial worth in Germany, which conducts operations internationally. Thus, there is a basis for apprehending – and again, this submission was put – that BPW Transpec would be able to meet a claim for damages. I take that into account as well. 28 Of particular relevance also is that the marketing campaign of BPW Transpec is recent, whereas that of Tramanco is of long-standing. That factor, in my opinion, tells rather in favour of the grant of an interlocutory injunction, in the sense that whilst there will be some effect on BPW Transpec, it will not be an effect which interrupts a long-standing marketing campaign in which, one might infer, much money has been expended. 29 Tramanco, in the course of its submissions, made reference to a disposition on its part to be content, at least on an interim basis, with a restraint which would require the insertion onto the website of BPW Transpec and any printed material of a note in these terms in respect of the feature alleged to infringe the patent: Not presently available in Australia. That particular offer was not one in respect of which BPW Transpec's solicitor had instructions to accept or offer by way of an undertaking to the court. 30 Some reference should also be made to a request which was made on behalf of BPW Transpec for an adjournment of the proceeding. The basis for that seemed to be that the application had come on at short notice, that its solicitors were in Melbourne, and that they had retained Victoria senior and junior counsel. The answer to that is that the making of the application in Brisbane, not Melbourne, had been well foreshadowed, as well foreshadowed as possible in the circumstances. It was a matter of BPW Transpec's Melbourne solicitor's forensic judgment, that he put his client in the position of having at short notice to engage a Brisbane agent to appear. 31 Whilst this is a national Court in respect of which rights of audience are granted to any person whose name appears on the roll maintained under the Judiciary Act 1903 (Cth) , and whilst there is, in some instances, a videolink possible, the logistics of organising such a link, as well as more particularly the forensic qualities of an interlocutory injunction application in respect of which, one might, with any experience of practice, apprehend that affidavits are likely to be tendered in court for filing and reading, is such that a videolink is not well-suited to such applications, save of a straightforward kind. Today was not of that kind, in my opinion. I was not, for those reasons, disposed to grant the adjournment application, particularly having regard to the imminence of the truck show's commencement. 32 There is an undefinable or at least unquantifiable impact that one might apprehend on customers and potential customers by the denial to Tramanco of an interlocutory injunction. As I say, the effect on it seems to be rather greater than the effect, given the early nature of the marketing, would be on BPW Transpec. 33 For these reasons then, I am disposed to grant interlocutory injunctive relief. Whilst the very particular impact of the granting of that relief will be on the ability to make particular statements at the truck show, I do not consider that in itself should prevent relief, nor do I consider that the injunction should be of any longer duration than Friday, 22 May. That is the day upon which the docket judge will be able to hear an application for the renewal or dissolving of the injunction, and to give directions in respect of the further conduct of the proceeding. 34 It seems to me that the wording of the interlocutory injunction claimed may go rather further than that which would strictly be necessary in order to achieve some justice between the parties on an interlocutory basis. By that I mean, in light of the overlap of the devices as opposed to an exact correspondence, to grant an injunction in the terms proposed may be to restrain a legitimate promotion of the product of BPW Transpec. I shall hear from the parties concerning that. [After further submissions] 35 Having had the benefit of considering submissions from counsel for Tramanco and the solicitor for BPW Transpec, and reflecting upon the nature of the cause of action pleaded, it seems to me that whatever merit there might have been in an informal agreement between the parties which would have seen the insertion of corrective advertising, to make an order limited just to those terms would be to deny effective interlocutory injunctive relief to an applicant who has truly made out a case for something wider than just corrective advertising by way of short term relief. 36 Equally, I am not persuaded that an injunction which would, even for the short term, require BPW Transpec to make a value judgment about whether it was infringing claims 1, 12, 19, 21, 22 and 23 in terms of para 1(b) of a draft provided to me ought to go. It further seems to me that para 2 of the draft[Note] is also wider than necessary in the short term in its seeking of a restraint in respect of the authorising, procuring or acting in a common design. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate: Dated: 20 May 2009 Counsel for the Applicant: Mr J O'Sullivan Solicitor for the Applicant: Bennett & Philp Solicitors Solicitor for the Respondent: MacDonnells Law as town agent for Madgwicks Lawyers (Melbourne) Date of Hearing: 13 May 2009 Date of Judgment: 13 May 2009 Note: Paragraphs 1(b) and 2 of the draft referred to were in these terms: 1(b) infringing any of claims 1, 12, 19, 21, 22 and 23 of the Patent by doing any of the things described in paragraph 1(a) of this Application or by doing any of those things in relation to the infringing method or infringing device or by otherwise infringing the Patent; 2 The Respondent itself, and by the Respondent's directors and officers, and its respective servants or agents or otherwise howsoever, be restrained from authorising or procuring or acting in a common design with any other person or entity to infringe the Patent by doing any of the acts described in paragraph 1 of this Application.