Australian patent law is not unlike the law of other jurisdictions when it comes to remedies that are available to plaintiffs in a patent infringement action. These are an injunction and at the option of the plaintiff, damages or an account of profits. In determining account of profits, the defendant is treated as if he conducted his business and made profits on behalf of the plaintiff.
In this trial decision of the Australian Federal Court1, the defendant, GMCA had made a profit on its manufacture of product T1 and a loss on product T2, both products having been found in an earlier decision to infringe the plaintiff’s standard and innovation patents.
A key question was whether in light of the legal principle it is appropriate to look at the extent to which the defendant’s business as a whole engaged in infringing activities in circumstances where the defendant had argued that it was not possible to perform an analysis of total receipts and expenses for sales of each infringing product. Apportionment of profits was not at issue.
In finding that it was possible to determine the total receipts and expenses for sales of T1 and T2, the court held that ‘it would be ironic in the extreme if GMCA could take the benefit of its own infringing conduct in respect of T2 by setting off the losses made in such activity against the profits on the T1 infringements which it is required to disgorge to Black & Decker’. Hence, having made a profit on some machines and losses on others, GMCA was ordered to account for profits on all of the machines on which profit had been made.
On a related question the court held that it would be inconsistent with principle to amalgamate GMCA’s profits and losses across relevant years.
While the outcome is perhaps unsurprising, this decision seems to be the first occasion in which an Australian court has answered the question of the relevance of loss to account of profits in circumstances where apportionment of profits between infringing and non infringing activities is not at issue.
Endnotes
1. Black & Decker Inc v GMCA Pty Ltd (No5) [2008] FCA 1738
This article was written by Tom Gumley, Partner, Freehills Patent & Trade Mark Attorneys.
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