Australia: Unjustified threats of patent infringement weakened by courts

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Australia: Unjustified threats of patent infringement weakened by courts

Australian courts have recently taken a dim view of competitors claiming that the patentee has made unjustified threats of patent infringement. It is now clear that, in relation to the assessment of damages, it is necessary for the defendant to show any threats made by the patentee were directly the cause of loss or damage to the defendant.

In Mizzi Family Holdings Pty Ltd v Morellini (No 3) [2017] FCA 870, damages relating to the unjustified threats were at issue. Mizzi held a patent for a sugar cane planting machine and sued Morellini for infringement. At first instance, it was found that Morellini's machine did not infringe the patent and that Mizzi had made unjustified threats of patent infringement. (It was later found on appeal that Mizzi's patent was invalid for false suggestion.) Mizzi had caused advertisements to be placed in trade journals, warning off potential customers of being in patent "infringement danger" if they were to buy competitive machinery to that disclosed in Mizzi's patent application.

In light of a recent precedent, Morellini needed to establish causation between the threats and the damages claimed. The judge refused to find any liability even though customers did not want to take up the defendant's machine, and "they were a bit cautious because they were waiting for all this to be over". Although the judge accepted a general reluctance to deal with the invention, there was no finding that the reluctance was attributable to any threats.

The net effect of this decision is that it establishes the need for evidence of actual causation between the threat of patent infringement and the resulting loss by the potential competitor. This is good news for patent holders but sets a high threshold for those wishing to invoke the unjustified threat ground in dealings with a patentee.

Peter Treloar

Shelston IP

Level 21, 60 Margaret Street

Sydney NSW 2000, Australia

Tel: +61 2 9777 1111

Fax: +61 2 9241 4666

email@shelstonip.com

www.shelstonip.com

more from across site and SHARED ros bottom lb

More from across our site

Frederick Lee has rejoined Boies Schiller Flexner, bolstering the firm’s capabilities across AI, media, and entertainment
Nirav Desai and Sasha S Rao at Sterne, Kessler, Goldstein & Fox explore how companies’ efforts to manage tariffs by altering corporate structures can undermine their ability to assert their patents and recover damages
Monika Żuraw, founder of Żuraw & Partners, discusses why IP should be part of the foundation of a business, and taking on projects that others walk away from
Lawyers say attention will turn to the UK government’s AI consultation after judgment fails to match pre-trial hype
Susan Keston and Rachel Fetches at HGF explain why the CoA’s decision to grant the UPC’s first permanent injunction demonstrates the court’s readiness to diverge from national court judgments
IP, M&A, life sciences and competition partners advised on deal that brings together brands such as ‘Huggies’ and ‘Kleenex’ with ‘Band-Aid’ and ‘Tylenol’
Stability AI, represented by Bird & Bird, is not liable for secondary copyright infringement, though Fieldfisher client Getty succeeds in some trademark claims
Plasseraud IP says it is eyeing AI and quantum computing expertise with new hire from Cabinet Netter
In the fifth episode of a podcast series celebrating the tenth anniversary of IP Inclusive, we discuss the ‘Careers in Ideas’ network and how to open access to the profession
McGuireWoods’ focussed experimentation and disciplined execution of AI tools is sharpening its IP practice
Gift this article