Zhangzhou Renhe Moveable Travelling Lodge Manufacture Co Ltd v Habode IP Ltd

REASONS FOR JUDGMENT 1 The applicant on the motion is the applicant in the proceedings, Zhangzhou Renhe Moveable Travelling Lodge Manufacture Co Ltd ('Renhe'). Renhe brings an ex parte Application for an order that leave be granted pursuant to Order 8, rules 2 and 3 of the Federal Court Rules for leave to serve an Originating Application upon each respondent in New Zealand. The applicant proposes to serve each respondent with the Application filed on 5 September 2007, the affidavits of Kenneth Philp and Gary Brian Morgan each filed on 5 September 2007, a Statement of Claim filed in the proceeding on 5 September 2007, a copy of the Notice of Motion filed 5 September 2007 and a copy of any order the court might make in dealing with the Notice of Motion. 2 The applicant in the proceeding is a company incorporated in the People's Republic of China. That company is engaged in the business of manufacture within the People's Republic of China of a building product known as a 'portable building', the principal features of which include the capacity to fold the sides of the building structure to a form capable of being transported by a standard shipping container; a form of long box construction such that the top longitudinal sides can be folded out to form a roof and the bottom sides folded out to form a floor area, and other features. 3 The applicant has appointed a distributor in Western Australia, Transformable Homes Pty Ltd, to sell its portable buildings in that State and the Northern Territory and a distributor in Queensland, Transform Global Pty Ltd for the purpose of selling its portable buildings anywhere throughout Australia. 4 The applicant's only means of selling its portable buildings in Australia is by means of distributors it appoints in this country. 5 The applicant is represented in Australia by an agent, Mr Gary Brian Morgan, authorised to act on its behalf and on behalf of a related company incorporated in the People's Republic of China, Renhe Xiamen. 6 The first respondent, Habode IP Ltd ('Habode'), is a New Zealand company which on 16 March 2005 was issued with a Certificate of Registration of a New Zealand patent by the Intellectual Property Office of New Zealand. On or about 8 March 2005, Habode made an application for international registration of its New Zealand patent pursuant to the Patent Cooperation Treaty. On 8 March 2005, that international application entered the Australian phase and on 31 May 2007 the Australian Patent Application was sealed in Australia bearing Patent No. AU 2005220275 ('the Habode patent'). The Habode patent remains a registered patent in Australia. The registered particulars for the New Zealand and Habode patents describe the second respondent, Rodney Mark Gibson, as the inventor of the invention the subject of both patents. 7 Between June to August 2007, the respondents by their New Zealand patent and trade mark attorneys, A J Pietras & Co wrote letters to Transformable Homes Pty Ltd to the effect that Habode was the patentee of the Habode patent; that patent conferred exclusive rights upon Habode; and that attempts by Transformable Homes Pty Ltd to sell, offer for sale or import into Australia for sale transportable homes would constitute an infringement of the Habode patent resulting in suit. Those letters are: letter Janet Stead & Associates (patent attorneys for Transformable Homes) to Pietras - 28 June 2007; letter Pietras to Stead - 4 July 2007; letter Pietras to Stead - 26 July 2007; and letter Pietras to Stead - 28 August 2007. 8 On 8 August 2007, the applicant's solicitors, Bennett & Philp, wrote to A J Pietras & Co seeking an undertaking that the respondents would not make any claim upon the applicant or any assignee, distributor or end‑user of the applicant's products that the exploitation within Australia of the applicant's portable building product infringes the Habode patent. On 9 August 2007, A J Pietras & Co wrote to Bennett & Philp demanding that the applicant: (a) immediately cease all manufacture, promotion, sale and other use of the building in question, directly and via associated companies and agents, and provide a written undertaking as to such cessation within 7 days; (b) provide us with a list of all infringing buildings manufactured by your client and/or its associated entities/agents/distributors within 7 days; (c) provide us with details, within 7 days, of all buildings sent to Australia by your client or its associated entities/agents/distributors; (d) provide us with details, within 7 days, of all Renhe Moveable Travelling Lodge Co. Ltd's associated entities/agents/distributors worldwide. 9 The affidavit of Gary Brian Morgan deposes to his relationship with the applicant and Renhe Xiamen; details of Renhe's business and that of Renhe Xiamen; Renhe's Australian business arrangements with its distributors and importantly, the history of Mr Morgan's relationship with the second respondent and the dealings between the second respondent, Habode and Renhe Xiamen and the ultimate breakdown of commercial relations between those parties. The facts deposed to by Mr Morgan suggest that the working invention, conception, design and specification of the subject matter of Habode's New Zealand and Australian patents was the result of a collaborative engagement between Mr Morgan, Mr Gibson and engineers employed or engaged by Renhe Xiamen. 10 The applicant says that Habode's Australian patent is invalid because it lacks novelty and fails to reflect an inventive step measured against considerable known prior art; secondly, Mr Gibson's claim to be the sole inventor of Habode's Australian patent is said to be untrue. Presumably, in any action for infringement brought by Habode, the applicant would cross claim for revocation of the patent. 11 The applicant says that the respondents have made unjustified threats of patent infringement proceedings against both the applicant's Western Australian distributor and against the applicant directly by force of the letter to Bennett & Philp dated 9 August 2007 in respect of the applicant's business activities, through its distributors, in Australia. The applicant, by its application, seeks a declaration pursuant to s 128 of the Patents Act 1990 (Cth) that the threats made by the respondents to the applicant and its distributor are unjustifiable threats; an injunction to restrain the respondents from making further threats; and an Order that the respondents pay damages in respect of the loss suffered by the applicant as a result of the threats. 12 The applicant by this motion seeks leave pursuant to Order 8, rules 2 and 3 to serve the Application and supporting documents on each respondent in New Zealand. The Court, in considering an Application for Leave, must be satisfied that the Court has jurisdiction in the proceedings; that the proceeding is of a kind mentioned in Order 8, rule 2; and that the person seeking leave has a prima facie case for the relief claimed; among other elements. The Federal Court has jurisdiction with respect to matters arising under the Patents Act (s 154) and s 128 confers standing upon 'a person aggrieved' to apply to the Court for a declaration, an injunction and the recovery of damages in respect of an unjustifiable threat. 13 In JMVB Enterprises v Camoflag (2006) 67 IPR 68 at [208] - [211], Crennan J identified the elements required to be satisfied in an Application made pursuant to s 128 of the Patents Act. 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 [208]. 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 threatened [209]. A communication merely notifying a person of the existence of a patent is not a threat [209]. Once a threat has been established, it is prima facie unjustifiable unless the person making the threat establishes that it was justified [210]. The Court may grant the relief sought unless the person threatening infringement proceedings establishes that the relevant conduct infringes or would infringe a valid claim of a patent [210]. Ultimately, the grant of the relief is discretionary [210]. A threat can be made by means of a letter from a legal representative [211] (see also the authorities mentioned by her Honour at [208] - [211]; see also Occupational and Medical Innovations Limited v Retractable Technologies Inc. [2007] FCA 1364 per Dowsett J at [5] - [9] and [29] - [40]. 14 I am satisfied that a threat of infringement has been made to the Western Australian distributor of the applicant and the applicant by letter received in Australia and that the applicant is a person aggrieved. I am satisfied that prima facie the threat is unjustifiable. I am satisfied that the proceeding is based upon a cause of action arising in Australia and thus Order 8, rule 2 is satisfied. I am also satisfied that the applicant's material demonstrates that the foreign country in which it is proposed to serve the first and second respondents is New Zealand. The affidavit of Mr Philp at paragraph 5 identifies the mode of service required in the country of New Zealand and the mode of service proposed to be adopted by the applicant in serving the material. I am satisfied that the mode of service proposed meets the requirements for service in New Zealand. 15 Having regard to all of the material, I am satisfied that the following Orders ought to be made. 1. The time for the hearing of the Applicant's Notice of Motion filed 5 September 2007 be abridged to 2.15pm on 6 September 2007. 2. The hearing of that Notice of Motion proceed ex parte. 3. The Applicant be given leave pursuant to Order 8, Rules 2 and 3 of the Federal Court Rules to serve a copy of each of the Applicant's Application, Statement of Claim, Affidavit of Gary Brian Morgan and Affidavit of Kenneth Philp (all filed herein on 5 September 2007) on each of the First and Second Respondents in New Zealand. 4. A copy of this Order is to be served on each of the First and Second Respondents when they are served with the documents referred to in Order 1. 5. The costs of the motion are to be reserved. 16 The return date for the hearing of the claim for interlocutory relief will be 10.15am on Tuesday, 25 September 2007. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood J.