Indirect Infringement: Australian and U.S. approaches compared

Dr. Victoria Longshaw and Dr. Elizabeth Houlihan

A recent decision handed down by the Federal Court of Australia, Blue Gentian LLC v Product Management Group Pty Ltd [2014] FCA 1331, illustrates the different way in which Australian Courts assess induced or indirect patent infringement when compared to Courts in the U.S.

Inducement of infringement in the U.S.

In terms of 35 U.S. Code § 271 (b), “whoever actively induces infringement of a patent shall be liable as an infringer.” A finding of indirect inducement infringement in the U.S. requires a plaintiff to successfully show that (a) another person actually infringed the Patent, (b) the defendant knew of the Patent, and, (c) knowingly induced the infringing acts of the other person with a specific intent to encourage infringement by that person (Vita-Mix Corp. v. Basic Holding, Inc. 581 F.3d 1317, 1328 (Fed. Cir. 2009)).

Inducement of infringement in Australia

In Australia, indirect infringement by inducement does not require any knowledge on the part of the defendant either of the Patent or of any direct infringement of the Patent. However, it does require that another person would directly infringe the Patent if using the product supplied, according to any instructions supplied with the product.

Indirect infringement is regulated by Section 117 of the Patents Act 1990 (Cth) which simply requires that “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 unless the supplier is the patentee or licensee of the Patent.” The use of the product includes, inter alia, “the use of the product 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 authority of the supplier.”

The Case

The recent decision in Blue Gentian LLC v Product Management Group Pty Ltd [2014] illustrates the typical way in which an Australian Court reaches a finding of indirect infringement by inducement.

The case involved infringement proceedings initiated by Blue Gentian LLC (“Blue Gentian”), the Patentee of Australian Innovation Patents 2012101797 and 2013100354 (“the Patents”) and its exclusive licensee, Brand Developers Aust Pty Ltd (“Brand Developers”) against Product Management Group Pty Ltd (“PMG”).

The Patents relate to an expandable and contractible hose having an elastic inner tube and an inelastic outer tube, attached at their respective ends. The hose had a water flow restrictor attached to one end and was designed to attach to a water faucet at the other. When the water faucet was turned on, the increased water pressure in the inner tube caused it to expand in length and diameter until constrained by the outer tube. When the water faucet was turned off, the water pressure decreased and the water drained from the inner tube causing it to contract. The outer tube then also contracted, gathering in folds along the length of the hose. This lightweight hose was described as easy and convenient to pack and store, as well as convenient to use because it does not “kink”.

Blue Gentian claimed that PMG’s importation and sale of a “Pocket Hose” directly infringed both of its Patents. Blue Gentian also claimed that PMG’s supply of instructions with the Pocket Hose which instruct a user to connect the one end of the hose to a tap and the other end to a spray nozzle, turn on the water supply and allow the hose to fully expand before use, constituted indirect infringement of the Patents.

PMG cross-claimed that the Patents were invalid on various grounds including that the Patents were anticipated by an earlier U. S. Patent describing a self-elongating oxygen hose for a stowable aviation crew oxygen mask.

The Court systematically construed each of the integers of the Patent Claims and concluded that the Claims were clear, fairly based and sufficiently described, and furthermore that the prior art provided by PMG did not anticipate the Patents.

After upholding the validity of the Patents, the Court turned to the question of infringement. PMG was held to have directly infringed several Claims of the Patents, as the Pocket Hose had all of the integers of the Claims based on the Courts construction. In addition, the Court found that the use of the Pocket Hose as instructed involved the use of a garden hose having all of the features of the pleaded Claims and, as such, constituted indirect infringement in terms of Section 117(2)(c).

Take Home Message

It is worth bearing in mind that a claim of indirect patent infringement by inducement in Australia has different requirements to an analogous claim in the U.S. It is not necessary for a plaintiff in Australia to prove that a defendant knew of the Patent or knew that use of an infringing product by another person either infringed, or would infringe, the Patent.

In order for a Patentee of an Australian Patent to successfully pursue a claim of indirect infringement by inducement, it must be shown that another person would directly infringe the Patent if using the product supplied by an infringer, according to any instructions supplied with the product.