Indirect Patent Infringement Down Under

The issue of contributory infringement of a patent under the Australian Patents Act 1990 (Act) does not often arise for consideration by the Australian judicial system. When it does arise, the question of whether or not the product supplied is a ‘staple commercial product’ under the relevant provisions of the Act is always of particular interest.

In only a few cases has the impugned product been held to be a staple commercial product, and so any case that expands upon that product class is a particularly valuable aid. It is therefore of interest that the Full Court of the Australian Federal Court has recently considered contributory infringement in Hood v Down Under Enterprises International Pty Limited [2022] FCAFC 69.

Legislative and Historical Context
The decision of the Australian High Court in Northern Territory v Collins [2008] HCA 49 (Collins) provides guidance as to the meaning of the contributory infringement provisions under the Act.

Under section 117 of the Act, if the use of a product by a person would infringe a patent, the supply of that product is an infringement by the supplier. However, ss 117(2)(b) qualifies ‘use’ to be any use of the product if the supplier had reason to believe that the person would put it to that use, but only when that product is not a ‘staple commercial product’. A staple commercial product is loosely defined as one which is supplied commercially for different uses – generally a commodity, or raw material.

In Collins, a grant of licences to harvest cypress pine timber did not amount to contributory infringement of a patent for methods to produce blue cypress oil. The High Court unanimously decided the timber was a staple commercial product as it was suitable for use in a variety of applications for which timber is generally used, and it was supplied commercially for those various uses.

AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99 (AstraZeneca) provides further guidance, noting the relevant considerations include how widely the product is used and for what range of purposes. AstraZeneca concerned the supply of generic rosuvastatin, a cholesterol-lowering drug. The Court concluded that rosuvastatin is not a staple commercial product, and evidence did establish that the generic parties had reason to believe that consumers would put the generic drug to an infringing use pursuant to s 117(2)(b). The patent in question was nevertheless found to be invalid for lacking inventive step (which was upheld on appeal to the High Court).

Supply of Oils for Therapy – ‘Oils are Oils’
John Hood knew that his slice of rural farmland in Tasmania was something special. The native shrubs growing on the property were largely overlooked until 1994, when a botanist identified one of the shrubs as Kunzea ambigua. Hood sent samples for testing in order to ascertain whether the shrub contained essential oils that might be suitable for commercial use. From the test results grew not only Standard Patent 721156 (Patent), but also extensive litigation involving questions of patent validity and contributory infringement.

In 2002, Hood registered oil derived from the Kunzea shrubs on the Australian Register of Therapeutic Goods (ARTG) for relief of the symptoms of influenza, relief of nervous tension, anxiety, muscle pain, and temporary relief for arthritic pain. In 2019, Hood commenced proceedings in the Australian Federal Court against five companies, alleging that selling the oil or products containing it constituted patent infringement and misleading or deceptive conduct.1

The primary judge had accepted that Kunzea oil is a raw material supplied commercially, with a wide variety of potential uses. By reference to Collins and AstraZeneca,2 the primary judge reiterated that the relevant considerations include how widely the product is used and for what range of purposes. For the purposes of s 117(2)(b), his Honour concluded:

  1. Kunzea oil is a raw material supplied commercially for use in either its raw form or as an ingredient. It belongs to a range of natural oils derived from native plants;3
  2. Kunzea oil may be used for a range of therapeutic purposes due to its anti-inflammatory and antimicrobial properties;4
  3. Kunzea oil has been registered on the ARTG for a wide range of indications, some of which are not within the scope of the claims;5 and
  4. The relevant inquiry is whether the product is commercial and has various uses. The fact that the oil is not widely available, or that it is expensive, is beside the point.6

On this basis, the primary judge held that only two respondents had infringed the patent, while Hood’s claims against the remaining three were dismissed.7 Dissatisfied, Hood appealed, with respondents Down Under Enterprises International and New Directions Australia (each sellers of Kunzea oil) cross-appealing seeking revocation of the Patent.

In the appeal, the Full Court was tasked with determining whether the primary judge had erred in concluding that the Kunzea oil was a ‘staple commercial product’ within the meaning of s 117(2)(b) of the Act.8 Hood’s contention, in part, was that any ‘therapeutic use’ of the oil was to be excluded from the ‘staple commercial product’ determination. This contention was flawed: the Full Court reiterating that the critical question is whether the relevant product is supplied commercially for various uses.

The evidence supporting the primary judge’s reasons showed the Kunzea oil has a variety of uses not limited to therapeutic uses or use for the treatment of one condition.9 The Full Court confirmed that it was indeed open on the evidence for the primary judge to conclude that the Kunzea oil was a staple commercial product. In failing to show otherwise, Hood’s allegations of infringement of the Patent by the respondents could not be made out irrespective of the Court finding the Patent to be valid.

Conclusion
The Full Court’s decision provides a timely reminder to product suppliers of the risk of contributory patent infringement in Australia, particularly those who supply an unpatented product for use in a patented method. As such, the decision has relevance for suppliers of generic pharmaceuticals, particularly given that Australian law permits method of treatment patent claims.

By Harlee Bolger, Chris Vindurampulle and Patrick Sands


Footnotes

1 Hood v Bush Pharmacy Pty Ltd [2020] FCA 1686.
2 Northern Territory v Collins (2008) 235 CLR 619; AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324.
3 Hood v Bush Pharmacy Pty Ltd [2020] FCA 1686at [185].
4 Ibid at [186].
5 Ibid at [187].
6 Ibid at [188].
7 Ibid at [391] – [399].
8 Hood v Down Under Enterprises International Pty Limited [2022] FCAFC 69 at [8].
9 Ibid at [87].


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