Occupational and Medical Innovations Limited (ACN 091 192 871) v Retractable Technologies Inc

ALLEGED THREATS 3 The applicant asserts that the respondent has threatened infringement proceedings and seeks relief pursuant to s 128. Those alleged threats appear in two letters from Messrs Locke, Liddell & Sapp, American attorneys acting for the respondent, addressed to officers of the applicant. It is necessary that I set out the content of those letters in full. The first is dated 5 October 2004 as follows: 'Re: Manufacture of Medical Devices Having Retractable Needles Our Ref: 75329.00037 Dear Mr. Taske: We represent Retractable Technologies, Inc. ("RTI") in matters relating to intellectual property and litigation, and are writing this letter on behalf of our client. We have recently learned that your company may be sourcing medical devices having retractable needles through a division or commonly owned or controlled affiliate of Double Dove, a Chinese company with which RTI has had an exclusive manufacturing agreement in effect for more than a year. Under the terms of the manufacturing agreement between RTI and Double Dove, Double Dove has expressly agreed not to manufacture any needle product that utilizes automated retraction technology of any type for any entity other than RTI without prior written consent from RTI. RTI has not given any such consent. Furthermore, you should be aware that Double Dove has possession of confidential and trade secret information of RTI, and Double Dove has expressly agreed not to use or disclose any such confidential information or trade secrets except for the benefit of RTI. Considering these facts, you can appreciate that RTI is prepared to take any legal action necessary to protect its patented and unpatented technology, its products and its proprietary position with respect to Double Dove and any company with which Double Dove or its affiliates may be dealing. Recently, for example, RTI successfully invalidated Double Dove's own Chinese patent rights for syringes having retractable needles. RTI has also recently achieved other great successes in protecting its intellectual property rights throughout the world. If our information regarding sourcing of OMI products through entitles related to Double Dove is incorrect, then we regret any unwarranted adverse inference that may be drawn from this letter. On the other hand, if future revelations indicate that Double Dove has violated any aspect of its obligations to RTI by impermissibly assisting others in the manufacture of prohibited devices, RTI intends to pursue all available remedies against both Double Dove and any entity with which Double Dove may be cooperating. Please provide us your written assurances at your earliest opportunity that OMI has had no contact with Double Dove or any of its affiliates, and is not sourcing medical devices having retractable needles through any Chinese entity related to any way to Double Dove.' 4 The applicant's solicitors responded to this letter, but the respondent may not have received the reply. The second letter, dated 24 March 2006, is as follows: 'Re: Violation of Rights of Retractable Technologies, Inc. Dear Mr. Fraser: We represent Retractable Technologies, Inc. ("RTI") and write on behalf of our client regarding the continuing and apparently wilful violation of its rights by Occupational & Medical Innovations Limited ("OMI"). By letter dated October 5, 2004, Kristen Paris of this firm previously wrote to Keith Taske, Managing Director of OMI, regarding concerns that OMI was interfering with the contractual relationship between RTI and a Chinese manufacturing entity operating under the name Double Dove, and that any dealings between OMI and Double Dove regarding the manufacture of syringes with retractable needles would breach that agreement and result in the wrongful disclosure by Double Dove to OMI of confidential information or trade secrets of RTI. Ms. Paris invited OMI to provide written assurances that OMI was not sourcing medical devices having retractable needles through Double Dove or any related entity. OMI did not reply to the letter, a copy of which is enclosed. Instead, having already received express written notice of Double Dove's preexisting contractual obligations to RTI from this firm, OMI has continued its cooperation with Double Dove for the manufacture of syringes having retractable needles, has instructed its personnel and representatives to tour the Double Dove factory in which RTI's syringes are manufactured, and has caused representatives from Terumo, another RTI competitor, to inspect and audit the equipment, manufacturing methods and quality control procedures that were first obtained by Double Dove from RTI. Your Continuous Disclosure-Market Update of July 4, 2005, to the Australian Stock Exchange reported details of the joint strategy developed by OMI and Double Dove in blatant disregard of our earlier letter and the contractual and intellectual property rights of RTI. Your announcement even admitted the concerns of OMI's management and Directors about its actions, mentioning "safeguard" strategies to be implemented "should problems arise" when Double Dove moves to high volume production for OMI. Your August 16, 2005 Continuous Disclosure to the Australian Stock Exchange informed the Exchange of the "final granting" of a patent for a single use syringe, which patent in fact did not issue until February 7, 2006. Interestingly and significantly, the earliest possible priority date for that application (based upon an earlier Australian application) is February 22, 2000, almost three years after the issuance of U.S. 5,632,733 (Australian Patent No. 701878) by Thomas J. Shaw, CEO of RTI. U.S. 5,632,733 clearly discloses and anticipates features claimed by OMI to be inventive in U.S. 6,994,690. OMI did not inform the U.S. Patent Office of the relevance of U.S. 5,632,733, even though RTI's syringes being manufactured by Double Dove were marked with that patent number and were well known to OMI, and even though U.S. 5,632,733 is likely more material to the structure and operation of OMI's retractable syringe than any other single piece of prior art that was considered by the U.S. patent examiner who examined OMI's application. OMI's U.S. 6,994,690 is, therefore, likely invalid. OMI has not informed the Australian Stock Exchange of the possible invalidity of its U.S. 6,994,690. Your September 15, 2005 Continuous Disclosure to the Australian Stock Exchange reported receipt by OMI of 71,000 1 mm syringes from an automated assembly and packaging line in China, with 100% of the syringes passing the required quality standards-not surprising considering that Double Dove had already been manufacturing syringes with retractable needles for RTI for more than two years. You simultaneously reported the expected shipment of an additional 100,000 1 mm units to a U.S. distributor for evaluation and possible market trials. You did not, however, report that Ms. Paris had previously cautioned you on behalf of RTI that Double Dove had "expressly agreed not to manufacture any needle product that utilizes automated retraction technology of any type for any entity other than RTI" and that Double Dove had "expressly agreed not to use or disclose any such confidential information or trade secrets except for the benefit of RTI." Your November 25, 2005 letter to the Australian Stock Exchange announced the production by Double Dove of 10,000 each of 5 ml and 10 ml syringes, stating that the syringes were scheduled to be air freighted to Australia from China on November 29, 2005. Your December 23, 2005 letter to the Australian Stock Exchange stated the belief of your Board that commercial manufacture of OMI Retractable Safety Syringe will be achieved in March 2006, and that you personally will lead the negotiations with potential distributors for the syringe. Finally, your March 9, 2006 Continuous Disclosure to the Australian Stock Exchange reports that Terumo Corporation, another RTI competitor, has now audited and verified "that the production processes and quality systems that have been put in place" by Double Dove "will allow for the successful, consistent manufacture of high quality OMI safety syringes. Here again, by OMI's own admission, notwithstanding the October 2004 notice letter to OMI from Ms. Paris of this firm, OMI and Double Dove have also conspired to reveal to Terumo Corporation the same production processes and quality systems that were either originally disclosed to Double Dove by RTI, or developed by Double Dove while manufacturing retractable syringes for RTI and, therefore, owned by RTI pursuant to the preexisting manufacturing agreement between RTI and Double Dove. Summarizing, OMI has consistently and intentionally interfered with the contractual relationship between RTI and Double Dove, has knowingly conspired with Double Dove in contravention of RTI's legal rights in China, Australia and the United States, has misappropriated for its own purposes and benefited from the illegal and wrongful disclosure by Double Dove of confidential and proprietary technological and business information from RTI, and has repeatedly made representations to the Australian Stock Exchange and to the United States Patent Office that OMI knew or should have known were not factually correct. In so doing, OMI has caused great harm and damage to RTI and has defrauded its investors and the public. If OMI has a contrary view of any of these matters, it should immediately provide a complete explanation to the undersigned. Otherwise, RTI can only assume that OMI fully intends to continue its present course of action in total disregard of the rights of RTI and its shareholders.'

REQUIREMENTS OF S 128 5 At [208]-[211] of her reasons for judgment in JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 at [208]-[211] Crennan J identified various propositions emerging from s 128 as follows: '208. The aggrieved party, … must first establish the making of a threat … . The threat must be made in Australia, in that it must be received in Australia and relate to an Australian patent or design: … . 209. A threat arises where the language, by direct words or implication, conveys to a reasonable person that the author of the letter intends to bring infringement proceedings against the person said to be threatened … . A threat may arise without a direct reference to infringement proceedings … . However, a communication merely notifying a person of the existence of a patent or a patent application, together with a statement that any suggestion that the recipient is entitled to replicate the invention is not maintainable, or a communication seeking confirmation that no improper or wrongful use or infringement of the patent has come to the recipient's attention is not a threat … . 210. Once a threat has been established it is prima facie unjustifiable unless the person making the threat establishes that it was justified: … The court may grant the relief applied for unless the person threatening infringement proceedings establishes that the relevant conduct infringes or would infringe a valid claim of a patent … . Ultimately, the grant of relief is discretionary … . 211. A threat can be made by means of a letter from a legal representative … .' 6 At the end of these reasons I will deal with the question of whether relief pursuant to s 128 is discretionary in the sense suggested at [210]. 7 Pursuant to s 13 of the Patents Act a patent confers upon a patentee the exclusive right to exploit the invention. The term 'exploit' is defined in Sch 1 as follows: 'exploit , in relation to an invention, includes: (a) where the invention is a product--make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or (b) where the invention is a method or process--use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use.' 8 Thus infringement proceedings are proceedings designed to demonstrate that a party has infringed a patentee's monopoly right to exploit the relevant invention. 9 The conclusion as to whether a document amounts to a threat of infringement proceedings is essentially one of fact. See Brain v Ingledew Brown Bennison and Garrett (A Firm) [1996] FSR 341 at 349. The meaning of an alleged threat is to be decided in accordance with the understanding of an ordinary recipient in the position of the applicant, reading the letter in the normal course of business. See Brain v Ingledew Brown Bennison and Garrett (A Firm) (No 3) [1997] FSR 511 at 521. In that case at 523, and in Prince PLC v Prince Sports Group Inc (1997) 39 IPR 225 at 233, the court appears to have treated the recipient's understanding of the alleged threat as relevant to its interpretation. However the matter seems to have been, at best, marginally relevant. I turn to the letters.

THE FIRST LETTER 10 The letter of 5 October 2004 addresses a number of subjects without seeking to distinguish clearly between them. Thus, in para 1, the respondent's attorneys indicate that they represent it 'in matters relating to intellectual property and litigation …'. This reference, by itself, might be understood as indicating the possibility of litigation in defence of intellectual property rights. The term 'intellectual property' is appropriate to describe rights held pursuant to a patent. Thus it might be said that the first sentence itself contemplates the possibility of litigation to protect rights under a patent, the most likely type of litigation being infringement proceedings. However it is important to note that a solicitor who indicates an intention to advise a client to commence infringement proceedings does not threaten for the purposes of s 128. See Earles Utilities Ltd v Harrison (1935) 52 RPC 77 at 80. 11 The writer then asserts that the applicant may be 'sourcing' medical devices having retractable needles from a Chinese company called Double Dove, with which company the respondent claims to have 'an exclusive manufacturing agreement'. Clearly, the matter of concern is the acquisition of retractable needles. The second sentence in para 1 suggests breach of the exclusive manufacturing agreement between the respondent and Double Dove. To this point there has been no assertion of intellectual property or of patents held in connection with retractable needle technology. 12 The second paragraph asserts that the exclusive marketing agreement prohibits Double Dove from manufacturing any needle product utilizing automated retraction technology of any type, for any entity other than the respondent, without its prior consent, and that such consent has not been given. It is then asserted that Double Dove has possession of confidential and trade secret information belonging to the respondent which it has expressly agreed not to use or disclose, except for the benefit of the respondent. Confidential and trade secret information, by definition, cannot refer to the subject matter of a patent. 13 However the third paragraph commences with the assertion that the respondent 'is prepared to take any legal action necessary to protect its patented and unpatented technology, its products and its proprietary position with respect to Double Dove and any company with which Double Dove or its affiliates may be dealing.' The reference to protecting patented technology suggests infringement proceedings or, perhaps, an application to revoke a competing patent with the intention that infringement proceedings follow. Reinforcing the second of these possible meanings is the subsequent reference to the respondent's having 'successfully invalidated Double Dove's own Chinese patent rights'. There is also a reference to other 'great successes' in protecting intellectual property rights. 14 In the fourth paragraph the respondent expresses conditional regret if any 'unwarranted adverse inferences' may be drawn from the letter. However the writer then asserts that in the event that Double Dove has violated any aspect of its obligations to the respondent 'by impermissibly assisting others in the manufacture of prohibited devices' it intends to pursue all available remedies against Double Dove and any 'entity with which Double Dove may be co-operating'. 15 As I have demonstrated, the letter must be considered from the point of view of a recipient in the position of the applicant, reading the letter in the normal course of business. The applicant has not led evidence of any particular circumstances which may have been relevant to its understanding of the letter, however the respondent has done so. The matters which may be relevant appear in the respondent's tender bundle (exhibit 6) and in exhibits to the affidavit of Elizabeth Janet Lawson filed on 11 May 2007. I infer that as early as December 2003 the applicant had entered into a distribution agreement with a Japanese company in connection with retractable syringes. See 'Review of Operations' dated 24 September 2004, being part of exhibit EJL 4. The same document discloses that regulatory approval had been obtained from the Therapeutic Goods Administration, clearing the way for sale of the syringe within Australia. The 'Chairman's Address' dated 29 November 2004 (also part of exhibit EJL 4) demonstrates that by that date, the applicant had, for at leat six months, expected that the syringes would be manufactured in China. 16 The respondent submits that a number of other factors are relevant to the construction of the letters. Firstly, at the relevant times, the applicant did not have a syringe which was commercially available. The respondent submits that it is therefore difficult to construe the letter as a threat. It is said that as the applicant did not have an infringing product, it would not have so construed it. That submission places a narrow construction upon s 128, effectively limiting its operation to cases in which there are already competing products in the market place. Nothing in the section suggests such a limitation. That approach overlooks the wide range of conduct included in the definition of the word 'exploit' which lies at the heart of the statutory monopoly conferred by a patent, and the correspondingly wide range of conduct which may constitute infringement of the patentee's rights, which conduct may be the subject of infringement proceedings. I am not persuaded that the absence of a commercially available product supplied by the applicant undermines the likelihood that the respondent may have made a relevant threat. It may be easier to dissuade a potential competitor from risking further financial involvement in a particular activity if a threat is made earlier, when investment may be minimal, rather than later, when investment may be more substantial. 17 The respondent also submits that there is no assertion in the letter of relevant infringing conduct in Australia, no mention of proceedings in Australia and no mention of an Australian patent. I will deal with those matters in construing the letter, to which task I now turn. 18 The respondent's primary argument is that the letter should be understood as focussing upon its exclusive manufacturing agreement with Double Dove. Whilst it is true that the letter is, to some considerable extent, concerned with that matter, it does not demonstrate how that relationship is of any significance as between the applicant and the respondent. If that were the only subject addressed in the letter, it would not have served the apparent purpose of deterring the applicant from dealing with its Chinese supplier. It is simply too vague and unparticularized to have done so. However there is also a clear assertion that the respondent's patent rights may be directly relevant in its attempts to prevent exploitation by the applicant of retractable needle technology. As I have already observed, a patented invention can hardly be described as being confidential or a trade secret. It is, by its nature, public. Thus the respondent, in the letter, refers to confidential matters, trade secret information and patent rights. 19 Although there is no attempt to identify any relevant patent, the letter demonstrates that the applicant and the respondent were operating in the same industry, with potentially competing products. As counsel for the respondent conceded in argument, it is not unlikely that the applicant was as aware of the respondent's presence in the market as the respondent was of the applicant's. In any event, receipt of the letter would certainly have prompted inquiries addressing patents and patent applications. Such information is readily available, unlike the content of private agreements. The letter is to an Australian company, in Australia, which company proposes to market a relevant product in Australia. The reference to the respondent's patent rights clearly raises the possibility of infringement, suggesting that it holds a relevant patent. One would infer that the letter was dealing with conduct or potential conduct by the applicant, at least some of which would occur in Australia. A further available (and probable) inference is that if, as it implied, the respondent had a relevant patent, it was enforceable in Australia, and therefore probably an Australian patent. 20 The respondent's submissions concerning the alleged lack of particularity in the letter are unconvincing. Firstly, as I have demonstrated, the necessary inferences are fairly available. Secondly, s 128 is, at least in part, designed to discourage allegations of infringement based on construction of a patent which is too wide. Over-generalization will often be an element of an unjustified threat. There can be little doubt that the letter was intended to influence the applicant's conduct in connection with its involvement in the market for retractable needles. That the letter addressed such a wide class of conduct does not mean that it was not a threat. It rather emphasizes the difficulty which the respondent would face in trying to prove that any threat was justified. 21 I infer that when the applicant received the letter dated 5 October 2004 it was contemplating the sourcing of retractable syringes from a manufacturer in China for sale in Australia. A recipient in the position of the applicant would probably have inferred that the reference to the sourcing of retractable needles from a company owned or controlled by Double Dove, a Chinese company, was meant to refer to its own arrangements with its Chinese supplier. The solicitor's letters of 8 and 11 October 2004 (at tabs 2 and 3 of the respondent's tender bundle) suggest that it so understood the letter. The reference in the third paragraph to protection of patented technology in the same sentence as the reference to Double Dove justifies the inference that the respondent held a relevant patent. Whilst the letter also deals with matters other than infringement proceedings, the reference to protection of patented technology implies that infringement proceedings would be taken if necessary. 22 In the fourth paragraph of the letter the writer appears to contemplate primary conduct by Double Dove in violation of its obligations to the respondent 'in impermissibly assisting others in the manufacture of prohibited devices'. The term 'prohibited devices' is not defined but, given the earlier references to patents, it might well mean an article manufactured in breach of a patent held by the respondent. 23 Finally, the respondent put some weight upon the fact that the applicant seems not to have treated the letter as a threat of infringement proceedings. In this regard the respondent refers to the letters at tabs 2, 3 and 4 of its bundle, to two of which I have already referred. All three letters focus upon the relationship between Double Dove and China Medical Group and the alleged contractual relations between the respondent and Double Dove. The applicant has not sought to explain those letters, and so it would be inappropriate to speculate unduly about why there is no reference to threatened infringement proceedings. I am satisfied that a recipient in the position of the applicant would have understood the letter to threaten enforcement or similar proceedings in Australia, pursuant to an Australian patent held by the respondent, in connection with the import into Australia and/or other exploitation in Australia of retractable needles manufactured in China. I do not accept that the absence of any reference in the applicant's letters to such threats detracts significantly from that construction.

THE SECOND LETTER 24 The second letter must be read in the context of the first although, of course, a considerable period of time elapsed between the receipt of each of them. In the first paragraph the writer refers to the 'continuing and apparently wilful violation of its rights by' the applicant. In the second paragraph it refers to the letter of 5 October 2004, asserting that it related to concerns that the applicant was interfering in contractual relations between the respondent and Double Dove, and that 'any dealings between [the applicant] and Double Dove regarding the manufacture of syringes with retractable needles would breach that agreement and result in wrongful disclosure by Double Dove to [the applicant] of confidential information or trade secrets …'. 25 In the third paragraph it is asserted that the applicant had continued to cooperate with Double Dove in the manufacture of syringes with retractable needles. The writer refers, in para 5, to various patents, but the reference is to American patents, or applications for patents. There is only an incidental reference to the respondent's Australian Patent No 701878, identifying it with its American counterpart. Paragraphs 6, 7 and 8 are concerned entirely with alleged interference in the relationship between Double Dove. The penultimate paragraph of the letter is of primary importance in characterizing its overall nature. It reads as follows: 'Summarizing, [the applicant] has consistently and intentionally interfered with the contractual relationship between [the respondent] and Double Dove, has knowingly conspired with Double Dove in contravention of [the respondent's] legal rights in China, Australia and the United States, has misappropriated for its own purposes and benefited from the illegal and wrongful disclosure by Double Dove of confidential and proprietary technological and business information from [the respondent] and has repeatedly made representations to the Australian Stock Exchange and to the United States Patents Office that [the applicant] knew or should have known were not factually correct. In so doing, [the applicant] has caused great harm and damage to [the respondent] had has defrauded its investors and the public.' 26 The substance of this paragraph depends upon the meaning of the expressions 'legal rights' and 'confidential and proprietary technological and business information'. The expression 'legal rights' is quite open-ended. It might be argued that it is, to some extent, limited by the following words, 'in China, Australia and the United States', suggesting that such rights were 'located' in those jurisdictions. However the notion of rights being located in a particular jurisdiction is a little uncomfortable in the context of this letter. It is more likely that the geographical references relate to the places at which the alleged conspiracy occurred. As to the expression 'confidential and proprietary technological and business information', I have previously observed that a patent cannot be described as containing confidential information. If this expression is meant to describe information which is both confidential and proprietary, then it cannot include patent information. It is possible that the expression describes two categories, one confidential and the other, proprietary. However one would not usually speak of a patent as containing proprietary information. A patent confers a statutory monopoly upon the patent holder in connection with exploitation of the relevant invention. Further, one cannot misappropriate a patent or benefit from illegal and wrongful disclosure of its content. Any threat in this letter relates to confidential information rather than to an alleged patent infringement. The second letter should be so understood. 27 The applicant's solicitor responded to the second letter in a letter dated 5 April 2006 as follows: 'Your comments asserting invalidity of our client's US patent are, of course, rejected. However are we to understand those comments as an assertion that our client has infringed US 5,632,733 (Australian Patent No 701878) or some other intellectual property rights of [the respondent] and if so, in what manner? Would you please identify precisely what your client's assertions against our client are.' 28 This response focuses upon the allegation of misrepresentation to the Australian Stock Exchange and the United States Patent Office and the allegations concerning Double Dove, including the allegation of conspiracy. The applicant, in reading the second letter in the light of the first, was apparently uncertain as to whether there was a threat of infringement proceedings. For the reasons which I have given, I am of the view that the second letter does not constitute a threat of infringement proceedings.

RELIEF 29 The applicant seeks a declaration as to unjustifiable threats and a permanent injunction restraining the respondent from continuing to make such threats. It also seeks a declaration of non-infringement pursuant to s 125. That matter has been adjourned for hearing at a later date. I will declare that threats of infringement proceedings pursuant to the Patents Act 1990 (Cth) made on behalf of the respondent in a letter dated 5 October 2004 are unjustifiable. 30 As to the question of injunctive relief, I seriously doubt whether such relief would serve any useful purpose. The only threats were made in October 2004. There is little evidence suggesting that any repetition is likely. The applicant submits to the contrary. It draws attention to the fact that until February of this year, the respondent alleged in its defence that if the statements in the two letters constituted relevant threats, such threats were not unjustifiable. Although that allegation has now been abandoned, the respondent has not admitted the allegation in para 3 of the further amended statement of claim that: 'Exploitation of the invention the subject of the patents referred to in sub-paragraphs 1(b) and 1(c) does not infringe the Respondent's patent rights.' 31 In effect the applicant alleges (and the respondent does not admit) that exploitation of the applicant's existing patent will not infringe the respondent's patent. That is, of course, not strictly the subject matter of these proceedings. I have not been concerned with the content of the applicant's patent, only with its proposed conduct. In any event, the mere fact that the respondent refuses to admit that particular conduct does not infringe its patent does not necessarily lead me to the conclusion that it proposes to make threats, let alone unjustified threats. 32 The applicant also submits that upon proof of unjustified threats, it is entitled, virtually as of right, to an injunction, although it concedes that there may be some residual discretionary basis upon which such relief might be declined. The applicant relies upon a decision of Fullagar J in Norbert Steinhardt & Son Ltd v Meth (1961-1961) 105 CLR 440. That case concerned an application for relief pursuant to s 121 of the Patents Act 1952 (Cth) (the "1952 Act"). That section was the analogue of s 128. At 448 his Honour said: 'The only remaining question (apart from costs) is, I think, whether the remedies given by s 121 are discretionary or as of right. This is, I think, a difficult question. The corresponding English section (s.65 of the Patents Act 1949) says that, unless the Act threatened would be an infringement, the person aggrieved "shall be entitled" to the remedies of declaration, injunction and damages (if any damages have been sustained), but the difference of language in our s.121 does not suggest to my mind that any different meaning was intended, and the "unless" clause strongly suggests that the only answer the defendant may make to the action for threats is by way of proof of infringement of a patent. On the whole, I am of opinion that, having reached the conclusion which I have reached, I am bound to make a declaration and grant an injunction. I can see no strong affirmative reason why I should not do so, but, if I had thought that these remedies under the section were discretionary in the sense in which they are discretionary in equity, I should have had to take into account my belief that an injunction is entirely unnecessary, and that the truth most probably is that it was merely per incuriam that the "threat" was expressed too widely.' 33 Section 121 of the 1952 Act provided: 'Where a person, by means of circulars, advertisements or otherwise, threatens a person with an action or proceeding for infringement of a patent, or some other like proceeding, then, whether the person making the threats is or is not entitled to or interested in a patent, or is or is not interested in an application for a patent, a person aggrieved may bring an action against the first-mentioned person and may obtain a declaration to the effect that the threats are unjustifiable, and an injunction against the continuance of the threats, and may recover such damages (if any) as he has sustained, unless the first-mentioned person satisfies the court that the acts in respect of which the proceedings were threatened constitute, or, if done, would constitute - (a) an infringement of a patent in respect of the claim in the specification which is not shown by the plaintiff to be invalid; or (b) an infringement of rights arising from the publication of the complete specification of a claim in the specification which is not shown to be one which would be invalid if a patent had been granted in respect of the complete specification.' 34 I have set out s 128 above. However, in comparing s 121 of the 1952 Act with the current statutory regime, the combined operation of ss 128, 129 and 129A must be considered. Section 128 provides that an aggrieved person may apply for particular relief, including an injunction. Section 129 provides that in the case of a standard patent or a standard patent application the court may grant such relief 'unless the respondent satisfies the court' of certain matters. Section 129A relates to innovation patent applications and innovation patents and is in similar form. 35 Although the combined wording of ss 128, 129 and 129A differs from that in the 1952 Act the distinctions are not compelling. The so-called "unless" clause referred to by Fullagar J appears in ss 129 and 129A. Section 121 of the 1952 Act provided that an aggrieved person might bring an action for appropriate relief, as does s 128. Section 121 provided that such person might obtain or recover such relief unless the threatening person satisfied the court that the threats were justified. Sections 129 and 129A are in similar form. The question, then, is whether I should follow the decision of Fullagar J in Steinhardt or depart from it. Given that I am unable to identify any significant difference in the wording of the respective statutory provisions, I would normally follow the decision. However the difficulty in the present case is that there is one English decision and two decisions of single judges of this Court which appear to be inconsistent with it. 36 In Benmax v Austin Motor Coy Ltd (1953) 70 RPC 284 at 295-296, Evershed MR (Jenkins and Morris LLJJ concurring) said: 'There remains, however, the question whether the Defendants are right in suggesting that, if they are otherwise within the section (which for the purposes of the argument henceforth I will assume), they are entitled as of right to a declaration and an injunction. Now, it is quite true that the terms of the second subsection appear to be obligatory - "the plaintiff shall be entitled to the following relief". But it would be startling if these words really were obligatory. The remedy of an injunction is one that has always been regarded as essentially a matter for discretion. Indeed, Sec.45 of the Judicature Act itself states that the power of the Court to grant an injunction is limited by this consideration, that the Court should grant an injunction when it considers it just or convenient. If the Defendants are right, in a case of this kind, the Court would be bound to grant an injunction though the Court considered it, as I should consider it in this case, both unjust and inconvenient. Moreover, it has never been the practice of the Court to grant injunctions which are on the face of them futile or meaningless. What would be the point of granting an injunction to restrain the plaintiff from threatening to bring an infringement action in respect of Letters Patent when by the same order the Court had revoked the Letters Patent, save perhaps to cast some doubt upon whether it really had been revoked? This section has emerged in the 1949 Act after considerable amendments in previous Acts. One of the problems which the section had earlier presented was solved by the removal from the present section of the former proviso that it had no application when an action for infringement was brought within a reasonable time after the alleged threat. I can see a sensible ground for removing that limitation. In Sec.36 of the 1932 Act there was also this difference: after an opening passage which corresponds closely to the wording of the present Subsec.(1): "Where any person, by circulars, advertisements, etc, threatens any person" - the old subsection continued: - "any person aggrieved thereby may bring an action against him and may obtain a declaration" to the effect that such threats were justifiable and an injunction and may recover damages "for such". Then Subsec.(2) read: "The Defendant in any such action as aforesaid may apply, by way of counterclaim in the action, for any relief to which he would be entitled 'in a separate action in respect of any infringement' ." It has been assumed, as I have already said, that this section is available as a matter of counterclaim, though at first sight I would incline to think, as I think the learned Judge thought, that it only contemplates actions to restrain threats as distinct from counter-claims in infringement actions; but I think the use of the phrase "the plaintiff shall be 'entitled' " is explained in some degree by the passage I have just read from Subsec (2) of the Act of 1936. An instance was cited by Mr Whitford under the old Bankruptcy Act, namely, the case of In re Lord Furlough ([1895] 1 QB 724), where in this Court it was said that the word "shall", though it appears obligatory, is not always to be treated as more than directory. There is this further point: from Subsec.(1) it is plain that a person aggrieved may not seek more than one or other of the remedies set out in Subsec.(2); yet, so far as I can see, if the Defendants are correct, once the action has been brought and the party who has made the threats has failed to justify, the Court is bound to grant all the relief, regardless of what the plaintiff may ask for. That cannot be right, and indeed I go further and say that I cannot believe that Parliament intended in regard to the grant of an injunction to make it obligatory in any sense for a Court, and particularly a Court of Equity, to grant an injunction. Unless the words are clear and beyond any possible doubt, I, for one, should absolutely decline to be so bound. In spite of the formula "the plaintiff shall be entitled", which in its context may not be quite happy, I am unable to construe and do not construe this section as compelling the Court, given the premises, to grant all or indeed any of the relief set out in Subs.(2). In my judgment the phrase "the plaintiff shall be 'entitled' " cannot mean more than this - that the plaintiff shall be entitled prima facie.' 37 Curiously, this case seems not to have been cited in Steinhardt. The reference to prima facie entitlement may suggest that there is little difference in the approach adopted by the Court of Appeal and that adopted by Fullagar J where his Honour referred to a 'strong affirmative reason why I should not' grant an injunction. However I doubt whether the cases can be reconciled on that basis. In each case the court appears to have been of the view that upon the considerations usually relevant to the grant of injunctive relief, such relief ought not to have been granted. Yet in Benmax the injunctive relief was declined whilst in Steinhardt, it was granted. I find the reasoning in Benmax to be persuasive. If I may say so, with respect, the reservation that Fullagar J had about his own conclusion would suggest that had his Honour's attention been drawn to Benmax, the outcome would have been different. 38 The matter has been further complicated by decisions of two members of this Court. In Townsend Controls Pty Ltd v Gilead (1989) 16 IPR 469 at 474-475, von Doussa J considered the availability of injunctive relief pursuant to s 121 of the 1952 Act. His Honour concluded that, in default of defence, a declaration or injunctive relief could not be granted 'without prior inquiry into the merits'. His Honour then observed (at 475): 'I consider the remedies of injunction and declaration should be treated as discretionary in the sense in which injunctions and declarations generally are discretionary in equity: See Benmax v Austin Motor Coy Ltd … . Such relief should not be granted by consent or in default of appearance or appearance at trial unless it is established to the satisfaction of the court that is proper to do so.' 39 Again curiously, although his Honour appears to have been referred to the decision in Steinhardt, he seems not to have been referred to the passage concerning discretionary relief to which I have referred. Finally, in JMVB, Crennan J observed at [210]: 'Once a threat has been established it is prima facie unjustifiable unless the person making the threat establishes that it was justified … . The court may grant the relief applied for unless the person threatening infringement proceedings establishes that the relevant conduct infringes or would infringe a valid claim of a patent … Ultimately, the grant of relief is discretionary: Townsend Controls at 475.' Her Honour's decision was pursuant to the Patents Act. I have not been referred to any cases to contrary effect under that legislation. Her Honour seems not to have been referred to the relevant passage in Steinhardt. 40 I would not readily depart from a view of a member of the High Court expressed at first instance, particularly a view expressed by Fullagar J. However his Honour would undoubtedly have given very considerable weight to the decision of the Court of Appeal in Benmax, had he been referred to it. That decision has, in effect, been followed by von Doussa and Crennan JJ, the decision of Crennan J being under the current legislation. I would normally follow the decision of another member of this Court unless satisfied that it was wrong. Far from being satisfied that her Honour's decision was wrong, I consider that it was correct. In those circumstances I conclude that the availability of declaratory and injunctive relief pursuant to s 128 is discretionary. 41 The applicant is entitled to be vindicated in having brought these proceedings, but the declaration will serve that purpose. I conclude that it is unlikely that there will be any further unjustifiable threats from the respondent. This view is based upon the passage of time since the threats were made and the apparent care with which any such threats were avoided in the second letter. I decline to exercise my discretion in favour of granting an injunction. 42 I will hear submissions as to costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Dated: 30 August 2007 Counsel for the Applicant: Mr DJS Jackson QC Mr JM Horton

Counsel for the Respondent: Mr R Macaw QC Mr D Logan

Solicitor for the Respondent: Davies Collison Cave Lawyers