Is it possible for you to be found liable for infringing a patent in Australia if you supply a product but don’t direct others to use it in the patented method?
In Australia, the short answer to this question may be “yes”. This is because Australian law has provisions for what is known as “contributory” or “indirect” infringement, which apply when a patented product is supplied by one person to another.
Let’s use the following scenario involving two fictional companies (MyoBio Solutions and Genomic Innovations) to illustrate how this might play out.
MyoBio Solutions and the use of their gene sequencing kit
MyoBio Solutions specialises in cutting-edge genetic sequencing technologies. They have developed a genetic sequencing kit designed for laboratories to analyse DNA sequences with high precision. The kit is packaged and sold with advanced software algorithms and hardware components that facilitate rapid and accurate sequencing of genetic material.
MyoBio Solutions’ sequencing kit is marketed as a versatile tool for a range of applications, including genetic research, disease diagnostics, and personalized medicine. However, the kit’s software algorithms for data analysis are very similar to a patented method developed by Genomic Innovations, a company specializing in patented genetic analysis techniques.
Unbeknownst to MyoBio Solutions, a portion of their customers are using their sequencing kit to conduct diagnostics in a way that directly utilises the patented method from Genomic Innovations. Specifically, scientists are integrating MyoBio Solutions’ kit into diagnostic workflows that replicate the patented data analysis techniques.
Genomic Innovations learns that their patented method is being used in conjunction with MyoBio Solutions’ kit. They find instances where the kit is being employed to perform the patented analysis, enabling the infringing diagnostics.
What recourse does Genomic Innovations have? And what can MyoBio Solutions do?
The legal backdrop
The relevant provisions[1] relating to contributory infringement under Australian law can be enlivened in a number of situations. If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier if it can be shown that:
- the product is used in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier, or contained in an advertisement published by, or with, the supplier’s authority; or
- the product is used in any way, if the supplier had reason to believe that the person the product is being supplied to would put it to that use.[2]
A finding of contributory infringement based on the situation in point 1 can be mitigated by taking care not to sell products with instructions that would induce a person to use them in an infringing way. In our scenario above, provided that MyoBio Solutions never provided any instructions for scientists (or other customers) to use the method patented by Genomic Innovations, MyoBio Solutions is unlikely to be found liable for contributory infringement under this provision.
However, despite taking the utmost care to avoid providing such instructions, MyoBio Solutions could still be found liable for contributory infringement in Australia because of point 2 i.e. that MyoBio Solutions has a “reason to believe” that the scientists would use the product in an infringing way.
The importance of “belief”
This “reason to believe” provision raises a few questions: what is needed to show that MyoBio Solutions (the supplier) had a reason to believe? Do there actually need to be scientists who would use the product in an infringing way? If so, how many scientists would suffice? And more generally, who are the relevant “people”?
To date, Australian courts have found that:
- it is irrelevant whether the supplier actually holds the belief that their product will be put to an infringing use;
- it is not necessary for the patentee to show that he or she can identify any particular person or persons who (the supplier has reason to believe will) use the product in an infringing manner;
- if specific persons are identified, the number of persons can be not an insignificant number (but in one case included a proportion of purchasers as low as 2.75%);
- despite sharing similar claim language, for different patents the relevant conduct has not always focused on the same group of induced infringers – in the case of pharmaceutical uses, the relevant conduct in some cases was that of the prescribing physician, and in others, the focus was on the conduct of the patient.
Therefore, provided that Genomic Innovations can show that there were some scientists who used the kit in an infringing way, MyoBio Solutions may be found liable for contributory infringement.
However, to date, no Australian court has granted relief based on a “reasonable belief” of infringement involving only a portion of users – in every instance, the patent was either declared invalid or, in a recent case, had expired (and the issue of financial relief has not yet been addressed). Although some courts have discussed tailoring injunctive relief to account for the fact that only a fraction of consumers might “misuse” the product, the practical implications of this approach to the type and quantum of relief that would be available remain uncertain. Therefore, in our scenario, even if Genomic Innovations was successful in its suit against MyoBio Solutions on the basis of “reason to believe”, if the portion of “mis-users” was small, the actual financial relief afforded to Genomic Innovations may be limited. Genomic Innovations may question the commercial value of an infringement suit in such a situation, particularly against the backdrop of high litigation costs.
This scenario underscores the importance of companies thinking about possible alternative uses for their products, closely monitoring the applications of their products, and being aware of the IP landscape. This can, however, be difficult, particularly when you are dealing with platform technologies, technologies that are evolving quickly, or complex supplier-customer chains and relationships.
[1] Section 117 Patents Act 1990 (Cth)
[2] There is also the issue of whether the product is a “staple commercial product”, but a discussion of that point is outside the scope of this article
