Entitlement under “Raising the Bar” tested

thumb-denisehodgeThe Federal Court of Australia recently had the opportunity to review an  aspect of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (the Raising the Bar Act), which came into force on 15 April 2013.  An interlocutory injunction proceeding between Reckitt Benckiser Healthcare (US) Ltd (RB), the Applicant, and Glaxosmithkline Australia Pty Ltd (GSK), the Respondent, was considered by Justice Rares.  In particular, the decision provides insight into validity issues surrounding entitlement, and specifically considers the new entitlement provisions introduced as part of the Raising the Bar Act.

Reckitt Benckiser Healthcare (UK) Ltd is the registered owner of Australian Patent 2003283537, entitled “Improvements in and relating to liquid dispensing”, and its Australian related body corporate Reckitt Benckiser (Australia) Pty Ltd is the exclusive licensee of the patent.  The patent claims a monopoly for a liquid dispensing apparatus comprising three key parts: a bottle, a bottle neck liner and a flat-nosed syringe, which RB has marketed as a dosing system for the administration of pain relief for children under the brand name “Nurofen for Children”.

GSK recently began selling a new range of liquid Panadol for children, including a dosing system that RB alleged infringed its patent. In view of this, RB sought an interlocutory injunction to restrain GSK from launching a planned marketing campaign for GSK’s new product.

GSK denied that its dosing system infringed RB’s patent, and counter-claimed for revocation of the patent, alleging that the RB patent was invalid on at least two grounds, lack of novelty and lack of entitlement.

Justice Rares dealt with GSK’s argument with regard to novelty relatively quickly, stating that GSK had not established a sufficiently strong case to suggest that it would succeed at trial on the material available.

However, GSK’s argument with respect to entitlement required a more detailed assessment. The patent in question named two inventors, Anne Dallison and Shaun Harrison, who were employed by Boots Healthcare International Ltd (Boots) in their research and development department.  In March 2006, Boots assigned the patent to the Reckitt Benckiser Group. GSK, however, alleged that RB was not entitled to the patent in suit as, allegedly, two employees of Hubert De Backer NV (HDB), Jan De Backer Senior and Jan De Backer junior, were involved in the design of the patented product and as such were the true inventors.

Invalidity on the basis of lack of entitlement is an issue which was addressed in the recent amendments to the Patents Act 1990 (the Act) made by the Raising the Bar Act.  In particular, the relevant sections of the Act considered in these proceedings were as follows:

Section 15 subsection (1) of the Act, states that:

a patent for an invention may only be granted to a person who:

(a) is the inventor; or
(b) would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
(c) derives title to the invention from the inventor or a person mentioned in  paragraph (b); or
(d)  is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).

Of importance, however, new section 22A provides that:

A patent is not invalid merely because:

(a) the patent, or a share in the patent, was granted to a person who was not entitled to it; or
(b) the patent, or a share in the patent, was not granted to a person who was entitled to it.

Furthermore, newly introduced subsection (4) of section 138 provides further validation that a patent is not necessarily invalid merely because it was granted to a person who was not entitled to it. Section 138(4) provides that:

(4) A court must not make an order under subsection (3) on the ground that the patentee is not entitled to the patent unless the court is satisfied that, in all the circumstances, it is just and equitable to do so.

Prior to the Raising the Bar Act amendments there were concerns surrounding the provisions of section 15 and section 138(3) of the Act with respect to entitlement.  A number of cases have addressed the entitlement issue, including the decision in Conor Medsystems, Inc. v The University of British Columbia (No 2) [2006] FCA 32.  In that case, although there was no dispute between the patentees concerning joint ownership, Conor Medsystems alleged that the patent should be revoked as there was a question as to whether the university inventors named on the patent had made an inventive contribution.  The court indicated that it was possible that the patent could be rendered invalid due to a defect of this kind. Therefore, before the Raising the Bar Act came into force, the fact that there was an understanding of joint ownership between the patentees was irrelevant.

Accordingly, the new provisions to the Act provide that a patent is not invalid merely because it was granted to a person who is not entitled to it, and as noted above a court must not make an order revoking a patent on the ground that the patentee is not entitled to the patent unless the court is satisfied that, in all the circumstances, it is just and equitable to do so.

Turning now to the evidence provided by GSK to support its lack of entitlement claim, GSK submitted an agreement entered into by Boots and HDB in March 2006.  Boots collaborated with HDB, with the aim of designing an appropriate bottle insert for its dispensing apparatus and executed an agreement with HDB that further defined the terms of the collaboration (the Boots agreement). GSK argued that the Boots agreement was signed by two of the three personnel whom GSK alleged were actual inventors, but who were not the named  inventors.  As such GSK argued that these alleged inventors were entitled to assert their rights to patent the invention.  However, the Boots agreement provided that Boots may progress the patent application provided that the application’s claims were limited to the specific invention made by employees of Boots. The agreement further provided that HDB would not contest the ownership, validity, inventorship or any other issues relating to the patent in suit or any patents granted therefrom.

Justice Rares considered that even if GSK were able to establish sufficient doubt concerning whether all the named inventors were actual inventors, new sections 22A and 138(4) of the Act apply and those requirements must be construed in the context of the circumstances here.

With this in mind, Justice Rares stated that:

 “…the two parties who, on Glaxo’s argument, have an interest in asserting rights to patent the invention, Reckitt, as successor in title to Boots, and HBD, agreed in 2006, when the issue of ownership of the intellectual property rights was squarely an issue between them that, first, Reckitt could proceed with an amended patent application that is now reflected in claim 1 and secondly, HDB would not contest that amended patent…”

Justice Rares followed on with:

“There can be little doubt, on the present evidence, that justice and equity would regard the position that the two parties with an interest in the invention had arrived at in their agreement in 2006 should not be disturbed at the suit of a third party (Glaxo).  Glaxo’s only interest is to displace the property right that, if nothing else, the Boots agreement appears to have conferred on Boots and now Reckitt, as its assignee. In my opinion, Glaxo’s defence of lack of entitlement, on a prima facie level, appears to be weak.

In conclusion, Justice Rares found that based on the evidence presented, GSK’s defence of lack of novelty and lack of entitlement appeared weak and there would be a strong case that the GSK dosing system, in particular the bottle neck liner, would likely be found at trial to infringe the patent.  As such, Justice Rares granted RB interlocutory relief to restrain GSK from using the bottle neck liner in its current dosing system.

In view of this recent decision, it appears that the court adopts a clear and plain English meaning of the entitlement related amendments in the Raising the Bar Act and, therefore, claiming invalidity based on entitlement may become a ground that is less relied upon in patent infringement proceedings.

Dr Denise Hodge – dhodge@fak.com.au