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An Empirical Investigation into Patent Enforcement in Australian Courts

Published online by Cambridge University Press:  24 January 2025

Kimberlee G Weatherall  and
Paul H Jensen
Kimberlee G Weatherall
Affiliation:
IPRIA, Lecturer in Law, University of Melbourne
Paul H Jensen
Affiliation:
IPRIA and Melbourne Institute of Applied Economic and Social Research, University of Melbourne
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Extract

Patents are growing in importance. Patenting rates worldwide have increased significantly in recent years: between 1992 and 2002, the number of patent applications in Europe, Japan and the US increased by more than 40 per cent. Patent coverage has also been extended to include new kinds of inventions, like genetic technologies, software, and business methods. A wider range of participants are also using patents, with universities being encouraged to increase their patenting activity. And there has been a dramatic increase in patent litigation, at least in the US. These facts have given rise to international debate on the costs and benefits of the patent system and how its effectiveness in encouraging innovation might be improved.

To inform these debates, policymakers have called for more hard data on how the system is actually working in practice. Enforcement forms an important part of how the patent system ‘works’. Patents are designed to encourage innovation by providing innovators with legal protection against expropriation of their innovative products and processes by third parties.

Type
Research Article
Information
Federal Law Review , Volume 33 , Issue 2 , June 2005 , pp. 239 - 286
Copyright
Copyright © 2005 The Australian National University

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Footnotes

‡

This paper presents results from the IP Enforcement Project at the Intellectual Property Research Institute of Australia (‘IPRIA’), at the University of Melbourne. This project was commenced in 2003 by Ms Glenys Fraser and both this paper, and the research which it reports, owe much to the work she did in establishing the project. It also owes much to Mr Paul Bernath, formerly a researcher at IPRIA and now a solicitor at Allens Arthur Robinson, who set up the Database. We thank them both - this project would not have happened without them. Thanks also to our researchers: Ms Nitsa Karahalios, Ms Sarah Moritz, Ms Sally Pryor and Mr Edward Sexton. Reading hundreds of cases and coding them is highly skilled and not easy work. More general thanks to the many from the bar and profession who were consulted in setting up the project and to the Federal Court for its assistance on various matters. We also thank those who attended seminars at ANU and at IP Australia, where presentations on this research were given, for their feedback. Two anonymous referees also provided extensive and useful suggestions. All errors remain the authors’ own.

References

1 Organisation for Economic Co-operation and Development (‘OECD’), Patents and Innovation: Trends and Policy Challenges (2004)Google Scholar.

2 Diamond v Chakrabarty, 447 US 303 (1980); IP Australia, Australian Patents for Biological Inventions (2005) <http://www.ipaustralia.gov.au/pdfs/patents/specific/biotech.pdf> at 29 May 2005; Kiren-Amgen Incorporated v Board of Regents of University of Washington (1995) 33 IPR 557.

3 Diamond v Diehr, 450 US 175 (1981); CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260.

4 State Street Bank & Trust Co v Signature Financial Group, 149 F 3d 1368 (Fed Cir, 1998); see also Welcome Real-Time SA v Catuity Inc (2001) 113 FCR 110; Application by Grant (2004) 62 IPR 143.

5 See, eg, Bayh-Dole Act of 1980, 35 USC § 200 (1980) et seq.

6 James Bessen and Michael J Meurer, ‘The Patent Litigation Explosion’ (Unpublished mimeograph, Boston University School of Law, 2005). At this stage, there is little evidence to suggest that a similar trend has occurred in other countries.

7 In Australia, the Advisory Council on Industrial Property — now renamed the Advisory Council on Intellectual Property (‘ACIP’) — which is a specialist independent body constituted to advise the federal government on IP matters, has conducted three recent reviews of IP enforcement: ACIP, Review of Enforcement of Industrial Property Rights (1999); ACIP, Review of Trade Mark Enforcement (2004); ACIP, Should the Jurisdiction of the Federal Magistrates Service be Extended to Include Patent, Trade Mark and Design Matters? (2003)Google Scholar. See also House of Representatives Standing Committee on Legal and Constitutional Affairs, Parliament of Australia, Cracking Down on Copycats: Enforcement of Copyright in Australia (2000). At the international level, the World Intellectual Property Organization (‘WIPO’) has also developed cooperative mechanisms to address enforcement issues: see WIPO, Respecting Intellectual Property Rights <http://www.wipo.int/enforcement/en/index.html> at 29 May 2005. The OECD has also become interested in the issue: OECD, above n 1. In the US, the Federal Trade Commission (‘FTC’) and the National Research Council are both evaluating the patent system: see FTC, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (2003) <http://www.ftc.gov/opa/2003/10/cpreport.htm> at 29 May 2005; National Research Council Committee on Intellectual Property Rights in the Knowledge-Based Economy, A Patent System for the 21st Century (2004) <http://books.nap.edu/catalog/10976.html> at 29 May 2005.

8 OECD, above n 1, 26; National Research Council, above n 7, 1–2.

9 See further below Part II(d).

10 That is, judgments rather than court filings (or other measures of litigation) which occur earlier in the dispute resolution process.

11 Working Group on Managing Intellectual Property, ‘Framework Paper’ (National Innovation Summit, 1999) <http://www1.industry.gov.au/archive/summit/scwg/IP/mipwgFullReport.pdf> at 29 May 2005.

12 One exception is the work of Ian Ramsay in relation to litigation in corporate law: see, eg, Paul James, Ian Ramsay and Polat Siva, Insolvent Trading: An Empirical Report (Clayton Utz and the Centre for Corporate Law and Securities Regulation, 2004) <http://www.claytonutz.com/downloads/InsolventTradingReport.pdf> at 29 May 2005.

13 Justice Drummond’s paper also addresses this issue: see JusticeDouglas, Drummond, ‘Are the Courts Down Under Properly Handling Patent Disputes?’ (2000) 42 Intellectual Property Forum 10Google Scholar. Since Justice Drummond’s article, there have been considerable advances in the literature, especially in the US. An update on the debate is therefore timely.

14 In this paper, we are only presenting analysis on the outcomes of patent litigation disputes, but the database also includes data on the resolution of all copyright, trade mark and design disputes over the same period. This includes: 108 copyright judgments; 87 trade mark judgments; and 15 design judgments. In the near future, we will be publishing further papers on outcomes in both copyright and trade mark litigation.

15 Although it is conceivable that the costs of providing monopoly rights may outweigh the benefits, the issue of the desirability of having a patent system is beyond the scope of this study. Given that we already have a patent system, we simply consider issues regarding the effective operation of the system.

16 The focus of this paper is on the economic justifications for the patent system. It should be noted that other rationales are also used to justify the patent system. Machlup and Penrose identify four general justifications: the (1) ‘natural property right argument’ (a person has a natural property right in his or her own ideas), (2) the ‘just reward’ argument (justice requires that a person receive reward for his or her services in proportion as those services are useful to society); (3) the incentive argument; and (4) the disclosure argument: Fritz, Machlup and Edith, Penrose, ‘The Patent Controversy in the Nineteenth Century’ (1950) 10 Journal of Economic History 1Google Scholar, 10–11. (3) and (4), being the more ‘economic’ (or instrumentalist) are considered further here; (1) and (2) are beyond the scope of this paper. As Drahos has noted, patents have a long association with an instrumentalist approach, being conceived of, from the start, as economic tools: Peter, Drahos, A Philosophy of Intellectual Property (1996) 32Google Scholar; but see Patricia, Loughlan, ‘Patents: Breaking the Loop’ (1998) 20 Sydney Law Review 553Google Scholar (criticising the tendency to discuss patents in only economic terms).

17 Wendy, Gordon, ‘Intellectual Property’, in Peter, Cane and Mark, Tushnet (eds), The Oxford Handbook of Legal Studies (2003) 617, 632Google Scholar. For a recent article challenging the incentive theory of patent protection, see Jonathan, Barnett, ‘Private Protection of Patentable Goods’ (2004) 25 Cardozo Law Review 1251Google Scholar.

18 Survey evidence of Australian firms in the late 1970s suggested that loss of patent protection would cause a decline in research and development expenditure by 7–12 per cent and that the patent system represented a stimulus to private innovation equivalent to a 10–30 per cent research and development cash subsidy: Mark Rogers, ‘The Economic Value of the Intellectual Property System: A Review of Empirical Studies on the Costs and Benefits of the Intellectual Property System’ (Paper for IP Australia, May 1999) 3–4.

19 See Rebecca, Eisenberg, ‘Patents and the Progress of Science: Exclusive Rights and Experimental Use’ (1989) 56 University of Chicago Law Review 1017, 1045Google Scholar; Vincenzo, Denicolo and Luigi, Franzoni, ‘The Contract Theory of Patents’ (2004) 23 International Review of Law and Economics 365Google Scholar.

20 William, Landes and Richard, Posner, The Economic Structure of Intellectual Property Law (2003) 295Google Scholar.

21 It is arguable people do this anyway: the importance of other means of appropriating the economic rent generated by innovation has been repeatedly shown in the literature; see, eg, Wesley Cohen, Richard Nelson and John Walsh, ‘Protecting Their Intellectual Assets: Appropriability Conditions and Why US Manufacturing Firms Patent (or Not)’ (Working Paper No 7552, National Bureau of Economic Research, 2000). In this study, the authors found that: (a) firms typically protect profits due to invention using a range of mechanisms including patents, secrecy, lead time advantages, marketing and manufacturing capabilities; and (b) patents were the least effective of these mechanisms — secrecy and lead time were consistently rated as more effective, although the effect varied across industries. The point is that less enforceable patents may increase the tendency to rely on other means of protection.

22 On the crucial role that diffusion plays in promoting further innovation, see Bronwyn Hall, ‘Innovation and Diffusion’ (Working Paper No 10212, National Bureau of Economic Research, 2003) 2–3.

23 Edmund, Kitch, ‘The Nature and Function of the Patent System’ (1977) 20 Journal of Law and Economics 265Google Scholar.

24 Joshua, Gans, David, Hsu and Scott, Stern, ‘When Does Start-up Innovation Spur the Gale of Creative Destruction?’ (2002) 33 RAND Journal of Economics 571Google Scholar.

25 Submission by McDonald & Associates to the ACIP Working Group on Managing Intellectual Property National Innovation Summit, 1, 3.

26 Miranda, Duigan and Michael, Dowling, ‘Threshold Test of Manner of Manufacture in Australia — What Next?’ (1999) 110 Patent World 26Google Scholar; Drummond, above n 13; Dimitri, Eliades, ‘Intellectual Property — What Went Wrong?’ (2001) 14 Australian Intellectual Property Law Bulletin 49Google Scholar.

27 At a symposium of Federal and Supreme Court judges in 2000, Professor Adrienne Clarke, the former Chairman of CSIRO, expressed concern on behalf of Australia’s scientific community at the low rate at which Australian courts upheld the validity of patents compared to their overseas counterparts: see Adrienne Clarke, ‘Commercialisation of Science and Technology’ (Paper presented at the Supreme and Federal Court Judges’ Conference, Canberra, January 2000).

28 See ACIP, Review of Enforcement of Industrial Property Rights, above n 7. The Australian Law Reform Commission also noted criticisms concerning the narrowness of the courts’ interpretation of what constitutes design infringement and the rarity of successful design infringement actions: Australian Law Reform Commission, Designs, Report No 74 (1995).

29 Working Group on Managing Intellectual Property, above n 11, 5.

30 ACIP, Review of Enforcement of Industrial Property Rights, above n 7, 2.

31 See Duigan and Dowling, above n 26.

32 It is not clear, for example, whether the authors were looking at results on individual patents or overall results of each case, whether validity and infringement determinations were counted separately or how appeal judgments were counted.

33 The Working Group on Managing Intellectual Property acknowledged there was little hard data to support the popular perception of weakness in IP enforcement by the courts and that an investigation of all reported patent validity and infringement decisions of the courts may be desirable: above n 11, 65–6.

34 At one level it does not make much sense to say that an ‘invalid’ patent may be infringed. However, it is possible for a court to find that a patent is not valid, say, as being anticipated, but that if the patent were valid, it would be infringed. This combination is sometimes found by a trial court seeking to make findings on all issues for the purpose of future appeals: see, eg, in the Losec litigation, where Lehane J found that the patent was invalid as lacking an inventive step (Aktiebolaget Hässle v Alphapharm Pty Ltd (1999) 44 IPR 593) but that had it been valid, it would have been infringed (Aktiebolaget Hässle v Alphapharm Pty Ltd [1999] FCA 1394).

35 Jonathan, Barney, ‘A Study of Patent Mortality Rates: Using Statistical Survival Analysis to Rate and Value Patent Assets’ (2002) 30 American Intellectual Property Law Association Quarterly Journal 317Google Scholar, 328 n 30; see also Kimberley Moore, ‘Worthless Patents’ (George Mason Law and Economics Research Paper No 04–29, George Mason University School of Law, 2004) 2 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=566941> at 29 May 2005.

36 See Patents Act 1990 (Cth) s 20(1), which specifically provides that ‘[n]othing done under this Act or the PCT [Patent Cooperation Treaty] guarantees … that a patent is valid, in Australia or anywhere else.’ ACIP, in its 1999 review of patent enforcement, recommended a change of the ‘settings’ of the patent system: it recommended that the threshold at examination be raised by amending s 49 of the Act so that patent applicants would no longer get the ‘benefit of the doubt’ on questions of novelty and obviousness (Recommendation 2), and, as a corollary, that since patents granted would be more likely valid, a presumption of validity of granted patents in any subsequent challenge (Recommendation 3): ACIP, Review of Enforcement of Industrial Property Rights, above n 7. However, the Intellectual Property and Competition Review Committee (‘IPCRC’) in its Review of Intellectual Property Legislation under the Competition Principles Agreement (2000), while agreeing that the threshold at examination should be raised (at 167), recommended against a stronger presumption that granted patents were valid (at 176). In its response to the ACIP review, the federal government preferred the IPCRC’s view: Attorney-General’s Department, Government Response to the Advisory Council on Intellectual Property Recommendations (2001).

37 This characteristic of patents is well-established in the economics literature: see, eg, Carl, Shapiro, ‘Antitrust Limits to Patent Settlements’ (2003) 34 RAND Journal of Economics 391Google Scholar; Mark Lemley and Carl Shapiro, ‘Probabilistic Patents’ (Competition Policy Center Working Paper, University of California, Berkeley, 2004) but has made less impact in the legal literature.

38 See Paul, Jensen and Elizabeth, Webster, ‘Achieving the Optimal Power of Patent Rights’ (2004) 37 Australian Economic Review 417Google Scholar for more on the effects of these factors on the quality of patents.

39 That is, patents that are granted although they do not meet the requirements of the patent threshold, or patent with claims which are drafted more broadly than the requirements of patent law would allow.

40 John Allison et al, ‘Valuable Patents’ (George Mason Law & Economics Research Paper No 03–31, University of California; Berkeley Public Law Research Paper No 133, 2003) 3 <http://papers.ssrn.com/abstract=426020> at 29 May 2005. It is also arguably inefficient even to try to reach perfection at the stage of examination: see Mark, Lemley, ‘Rational Ignorance at the Patent Office’ (2001) 95 Northwestern University Law Review 1495Google Scholar.

41 See Patents Act 1990 (Cth) s 40.

42 The principles of claim construction are set out by Sheppard J in Décor Corp Pty Ltd v Dart Industries Inc (1988) 13 IPR 385; see also Flexible Steel Lacing Co v Beltreco Ltd (2000) 49 IPR 331, 347–50; Minnesota Mining & Manufacturing Company v Tyco Electronics Pty Ltd (2001) 53 IPR 32, 57–9.

43 Data collected by ACIP in 1999 suggested that only 0.03–0.04 per cent of registered IP rights are the subject of a case filing in any given year. A small survey of patent attorneys done by ACIP for the same report also asked what percentage of patent disputes proceeded to litigation. Figures given by the patent attorneys ranged between 5 per cent and 40 per cent: see ACIP, Review of Enforcement of Industrial Property Rights, above n 7, 9. Even this figure seems likely to overstate the number of infringement disputes, since it appears to include all cases filed under the Patents Act 1990 (Cth) — thus including appeals from opposition proceedings, inter alia.

44 Jean Lanjouw and Mark Schankerman, ‘Enforcing Intellectual Property Rights’ (Working Paper No 8656, National Bureau of Economic Research, 2001).

45 See also Kimberley, Moore, ‘Judges, Juries and Patent Cases — An Empirical Peek Inside the Black Box’ (2000) 99 Michigan Law Review 365Google Scholar, 383, 384 (Table 1). Moore studied 1411 patent cases in the period 1983–99 and showed that 6.9 per cent of all patent suits filed in the period went to trial, with the vast majority the subject of summary disposal by the court or settlement by the parties.

46 See Robert, Cooter and Daniel, Rubinfeld, ‘Economic Analysis of Legal Disputes and Their Resolution’ (1989) 27 Journal of Economic Literature 1067Google Scholar.

47 This model of dispute resolution is known as the ‘divergent expectations’ model. Factors such as the value of the patent, the complexity (or age) of the technology and the size of the two parties may play a role in determining each party’s expectation about the likelihood of winning. See George, Priest and Benjamin, Klein, ‘The Selection of Disputes for Litigation’ (1984) 13 Journal of Legal Studies 17Google Scholar. See discussion by Jean, Lanjouw and Mark, Schankerman, ‘Enforcement of Patent Rights in the United States’ in Wesley, Cohen and Stephen, Merrill (eds), Patents in the Knowledge-Based Economy (2003) 149–50Google Scholar, 162 (Table 8), 162–3; Cooter and Rubinfeld, above n 46.

48 Priest and Klein, above n 47, 16.

49 The basic model set out by Priest and Klein uses automobile-pedestrian collisions, where the single issue in any potential dispute is the level of fault of the defendant-driver in the collision leading to the claim (ibid 7–8). In legal terms, while the claim against the defendant-driver is a negligence claim (where there are theoretically several issues — duty, breach and damage caused by the breach), in the set of disputes chosen in their basic model there is no doubt as to the existence of the duty and damage is assumed to be objectively ascertained, so that the only issue over which the estimations of the parties could differ is fault (in legal terms, breach of the duty).

50 See generally Moore, ‘Empirical Peek’, above n 45, 377–8; Claude, Crampes and Corinne, Langinier, ‘Litigation and Settlement in Patent Infringement Cases’ (2002) 33 RAND Journal of Economics 258, 261Google Scholar; Jean Lanjouw and Josh Lerner, ‘The Enforcement of Intellectual Property Rights: A Survey of the Empirical Literature’ (Working Paper No 6296, National Bureau of Economic Research, 1997) 10–11.

51 See Moore, ‘Empirical Peek’, above n 45, 377–8.

52 Joseph, Farrell and Robert, Merges, ‘Incentives to Challenge and Defend Patents: Why Litigation Won’t Reliably Fix Patent Office Errors and Why Administrative Patent Review Might Help’ (2004) 19 Berkeley Technology Law Journal 943Google Scholar, 948–51.

53 Moore, ‘Empirical Peek’, above n 45, 377–8 (arguing that a rate higher than 50% is appropriate).

54 Farrell and Merges, above n 52, 952–60.

55 Ibid.

56 National Research Council, above n 7, 32.

57 Jean, Lanjouw and Mark, Schankerman, ‘Protecting Intellectual Property Rights: Are Small Firms Handicapped?’ (2004) 47 Journal of Law and Economics 45Google Scholar.

58 Moore, ‘Worthless Patents’, above n 35.

59 Jean, Lanjouw and Mark, Schankermann, ‘Characteristics of Patent Litigation: A Window on Competition’, (2001) 32 RAND Journal of Economics 129Google Scholar; Lemley, above n 40.

60 Moore, ‘Empirical Peek’, above n 45.

61 Lanjouw and Schankerman, ‘Protecting Intellectual Property Rights’, above n 57.

62 According to Allison and Lemley, in the US, approximately 46 per cent of patents are held invalid at trial: John, Allison and Mark, Lemley, ‘Empirical Evidence on the Validity of Litigated Patents’ (1998) 26 American Intellectual Property Law Association Quarterly Journal 185, 204Google Scholar. Moore found a different result, with patents being held valid some 67 per cent of the time overall: Moore, ‘Empirical Peek’, above n 45.

63 Donald, Dunner, J, Michael Jakes and Jeffrey, Jarceski, ‘A Statistical Look at the Federal Circuit’s Patent Decisions: 1982-1994’ (1995) 5 Federal Circuit Bar Journal 151Google Scholar, 156 (finding 48 per cent); Moore, ‘Empirical Peek’, above n 45, 385 (finding 58 per cent).

64 Mark, Lemley and Kimberley, Moore, ‘Ending Abuse of Patent Continuations’ (2004) 84 Boston University Law Review 63, 101Google Scholar.

65 35 USC §282 (2002), requiring ‘clear and convincing evidence’ before a patent will be held invalid: Applied Materials, Inc v Advanced Semiconductor Materials America, Inc, 98 F 3d 1563, 1569 (Fed Cir, 1996). But note that the FTC and others have proposed to eliminate the presumption of validity in the US, in favour of a weaker presumption: FTC, above n 7, Recommendation 2; see also American Intellectual Property Law Association, Response to the October 2003 FTC Report (2004) <http://www.aipla.org/Content/ContentGroups/Issues_and_Advocacy/Comments2/Patent_and_Trademark_Office/2004/ResponseToFTC.pdf> at 29 May 2005.

66 See above n 36.

67 See Moore, ‘Empirical Peek’, above n 45.

68 Allison and Lemley, ‘Empirical Evidence on the Validity of Litigated Patents’, above n 62; Moore, ‘Empirical Peek’, above n 45. The right to a jury trial has been affirmed by the US Supreme Court: Markman v Westview Instruments, Inc, 517 US 370 (1996). Patent owners can request a jury or a ‘bench trial’ (determination by a judge). Moore has showed that requests for a jury have surged in the US, perhaps because they are seen as more favourable to patentees: Moore, ‘Empirical Peek’, above n 45.

69 As we noted in the thanks above, this is highly skilled, but sometimes tedious work, for which we are grateful to our researchers.

70 We define the population being studied as the population of all patent enforcement decisions and have used a variety of methods, detailed below, to ensure we captured every decision rendered by the relevant courts. As we acknowledge below, however, it is always possible that we have missed some decisions.

71 We use the word ‘decision’ to refer, in essence, to written judgments issued by a relevant court.

72 In this respect, our study differs from Justice Drummond’s (2000) study which only looked at cases reported in the Intellectual Property Reports: Drummond, above n 13. While the inclusion of unreported judgments is less likely to be significant in patents than, say, in copyright or trade mark (patent decisions being more likely to be reported), a surprising number of patent judgments are in fact not reported. Of the 61 patent decisions which we identified using our method, within the scope of this study in the relevant period, six (or nearly 10 per cent) were not reported.

73 Our study is therefore more recent than either of the existing studies of patent litigation in Australia. We hope to extend this time period back, possibly to federation, in a future extension of the study.

74 State Courts of Appeal are not included, as they do not hear cases on the relevant intellectual property decisions. Single judges sitting in state Supreme Courts have jurisdiction to hear patent enforcement cases at first instance: Patents Act 1990 (Cth) s 120(1). The Federal Court of Australia also has jurisdiction to hear these cases at first instance: Patents Act 1990 (Cth) s 120(1). All appeals under the Patents Act 1990 (Cth) are heard by the Full Federal Court: Patents Act 1990 (Cth) s 158. Appeals from the Full Federal Court are of course heard by the High Court if special leave is granted: Patents Act 1990 (Cth) s 158.

75 Including summary judgment decisions, since these are just as ‘final’ as trial decisions. Interlocutory proceedings (where an interlocutory injunction is sought) are not included in the data presented in this paper.

76 Such cross-claims may arise in an action for unjustified threats (Patents Act 1990 (Cth) s 130), or in proceedings brought under s 138 which seek revocation of a patent.

77 Appeals may be brought to the Federal Court from decisions of the Patents Commissioner: Patents Act 1990 (Cth) s 81(4); s 100A(3) (refusal to grant a patent — re-examination before grant); s 101(4) (revocation of patent — re-examination after grant); s 101F(4) (revocation of innovation patents); s 101J(5) (revocation of innovation patent following re-examination); s 101N(7) (opposition to innovation patents); s 104(7) (applications for amendments by applicants and patentees); and s 109 (amendments directed by the Commissioner).

78 It may also be that questions of validity are approached differently when raised at the opposition stage, as opposed to being raised later in infringement proceedings. Infringement proceedings are likely to arise at a later stage, well after grant, and at a stage when future technologies are known – including the alleged infringement. Although courts are required by law to assess the validity of a patent at the time it was granted, it would be unrealistic to assume that there is no difference between assessing validity at the opposition stage, and the infringement stage, even where the legal tests are the same. We consider it preferable to compare only like cases with like cases for data comparability and hence have included only infringement proceedings.

79 ACIP, Review of Enforcement of Industrial Property Rights, above n 7, 29 (Attachment 1).

80 This approach was used by Justice Drummond in his Honour’s paper, above n 13.

81 The benefits of a more comprehensive approach are illustrated by the fact that, for the same period considered by Justice Drummond in his Honour’s paper (above n 13), our list of decisions includes all the decisions reviewed by his Honour, plus six more decisions. In the period of our study, there were six unreported judgments (as noted above n 72) and a further three judgments which while reported were not included in the Intellectual Property Reports used by Justice Drummond. In other words, adopting Justice Drummond’s method would have led to nine missed judgments — which is nearly 15 per cent of the judgments we identified as relevant within the period (61 judgments).

82 Australasian Legal Information Institute (‘AustLII’) <http://www.austlii.edu.au>.

83 Cases are generally placed in the Butterworths Unreported Judgments database at a stage when they are unreported — ie, immediately on being issued. However, once the case is reported, Butterworths employees do not remove the cases from the database: Email from Elizabeth Hodgson, Head Trainer for LexisNexis Butterworths, to Kimberlee Weatherall, 26 February 2004 (copy on file with Kimberlee Weatherall).

84 This was confirmed through correspondence with each of the relevant courts.

85 In the CaseBase search, we looked for references to the legislation in the ‘statute’ field — a field recorded by Butterworths employees from reading the decision. The danger of this search is that it means we have to rely on the decisions of Butterworths employees in entering the field and doing so accurately. This introduces some uncertainties into the search, which is probably reflected in the fact that searches of CaseBase did miss some relevant decisions. When querying the other two databases, we searched the full text of the decisions issued by the court.

86 The search for references to the legislation was adopted after trying a range of different searches. We found that searching for references to ‘patent’ close to either ‘validity’ or ‘infring*’ generated fewer results in a search of CaseBase — giving rise to concerns that we might be missing relevant cases. When it came to searching the full text judgment databases, references to ‘patent’ close to ‘validity’ or ‘infring*’ generated a very high number of irrelevant results. By searching for references to the legislation, we can be confident that we are capturing all the relevant decisions, owing to the invariable practice of the courts of referring to the legislation at least once in their judgment.

87 A CaseBase search generated a shorter list of cases (for the initial period, a list of 372, compared to 586 for the full text database search). Thus a CaseBase search is more efficiently reviewed. However, comparison with a full text search established that a CaseBase search alone led to missed cases: 19 cases within the scope of the study were missed using a CaseBase search: mostly copyright and trade mark enforcement decisions. The technology used in the AustLII database does not equip it to deal with larger or time-delimited searches, leading to missing results when we tried to use it particularly when looking in the important databases like the Federal Courts Judgments database. Butterworths had the advantage of being split by year, leading to easier searching of the same set of information that is held in AustLII.

88 While we have attempted to find every patent judgment, it is possible that some decisions have been missed, particularly prior to 1998, simply because electronic record-keeping was not as advanced in earlier years. Inevitably, further back in time, more judgments were simply not collected, or missed, in part due to the fact that, in the past, judgments had to be provided from chambers to the library by hand, and later on floppy disk, according to conversations with the various courts. Only more recently has the process of collection been more automated. The introduction of medium-neutral citations has assisted in tracking judgments and ensuring records are complete.

89 This belief is based on two facts. First, more patent decisions are likely to be of sufficient difficulty and hence of sufficient interest to be reported in specialised law reports like the Intellectual Property Reports (but see above n 72, noting unreported judgments still occur); the same is not necessarily true in relation to copyright and trade mark infringement actions, where there are a relatively large proportion of cases which involve fairly straightforward enforcement against an alleged infringer who may not even appear in court. We report on these ‘counterfeit’ cases in a forthcoming paper on trade mark enforcement. Second, while some judgments of the courts may be left out of unreported judgments databases by mistake or because they were not considered sufficiently ‘important’ by the courts, this is most likely to occur with ex parte and ex tempore judgments — such judgments are, we believe, least likely in the complex area of patent law.

90 The remainder fell mainly into two categories: (1) procedural decisions, for example decisions about pleadings or costs; and (2) appeals from decisions of the Patents Commissioner or Trade Marks Registrar.

91 The IPRIA researchers who undertook the reading of the cases, Nitsa Karahalios, Sarah Moritz, Sally Pryor and Edward Sexton, had all either completed law degrees, or were close to completion. We thank all the researchers again for their patience. The researchers undertook the initial reading of the cases and in all cases of doubt consulted with one of the authors, Kimberlee Weatherall, a lecturer in intellectual property law at the University of Melbourne, or Glenys Fraser, the originator of this project, who is an IP practitioner of many years’ experience and former partner of law firm Minter Ellison.

92 For example, one factor which we would have liked to measure was the success rates of given grounds for showing a patent was invalid. So, for example, we would have liked to consider how often obviousness succeeded as a ground for showing invalidity when pleaded or argued to the court. However, we cannot be sure that all grounds pleaded, or even argued to the court will be recorded in a judgment: it is quite possible for a court to consider only those limited grounds that it (rather than the parties) considers important or likely to succeed.

93 The result is that a majority of the judgments in the database have been read by two researchers.

94 As noted above, such issues were discussed between the legal researchers and Kimberlee Weatherall and/or Glenys Fraser, in order to ensure a maximum of consistency across the researchers and across cases.

95 See Allison and Lemley, ‘Empirical Evidence on the Validity of Litigated Patents’, above n 62, 204. For an empirical analysis of the impact of personality differences, legal complexity and ideological and socio-economic background on judicial voting patterns on the High Court of Australia, see Russell, Smyth, ‘Explaining Voting Patterns on the Latham High Court 1935–50’ (2002) 26 Melbourne University Law Review 88Google Scholar. Also see R, Polk Wagner and Lee, Petherbridge, ‘Is the Federal Circuit Succeeding? An Empirical Assessment of Judicial Performance’ (2004) 152 University of Pennsylvania Law Review 1105Google Scholar, 1148.

96 This information is not usually recorded in the written decision of the Court. We obtained issue dates directly from the Federal Court case management database (‘FEDCAMS’) and from the Registries of the other courts. FEDCAMS was replaced by a new system, CaseTrack, in 2004. CaseTrack records most, but not all, the information we have used here.

97 This information is not recorded in the written decision of the Court. FEDCAMS, however, records each Federal Court ‘event’ and how much court time was taken up and gives a total number of hours and minutes spent in court. It includes every directions hearing, notice of motion hearing and events after the rendering of any relevant decision — eg, costs hearings. This information was not available for State Supreme Court decisions. In relation to High Court proceedings, the time in court was calculated using the times recorded on the High Court transcripts, which are available online at AustLII. For those High Court proceedings we have calculated the aggregate of the time spent in the special leave application and in the hearing, as well as time spent in any procedural hearings (relevant for one case that was reviewed).

98 This information is not reported in this paper. The numbers of cases are simply too small to draw any conclusions: cf John, Allison and Mark, Lemley, ‘How Federal Circuit Judges Vote in Patent Validity Cases’ (2001) 10 Federal Circuit Bar Journal 435Google Scholar (concluding, however, that the votes of Federal Circuit judges during this period defied easy description. Judges do not fit easily into pro-patent or anti-patent categories, nor can they be easily categorised as affirmers or reversers).

99 It is not straightforward to determine whether a case, particularly a recent case, is the final decision, or whether it has been appealed. The absence of an appeal judgment, particularly in recent cases, is not a guarantee that the trial decision is final, at least until several years have passed. This is why we have only asked whether we have the ultimate decision in the study period, when we can be sure to have identified all appeal judgments.

100 Note also that while usually the ultimate determination on an issue is the decision by the last appeal court, this is not always the case — if the determination on validity is not appealed, then the original validity determination is also the ultimate validity determination. So, for example, in Bedford Industries Rehabilitation Association Inc v Pinefair Pty Ltd (1998) 40 IPR 438, von Doussa J at first instance held the patent both valid and infringed. Only the determination on infringement was appealed. The appeal court upheld the finding of the trial court on infringement and did not consider validity: Pinefair Pty Ltd v Bedford Industries Rehabilitation Association Inc (1998) 87 FCR 458. In this case, the ultimate determination on validity was the finding of the trial court (a win on validity). The ultimate determination on infringement was the determination of the appeal court (a win on infringement).

101 For further information on this database see IP Australia, Patent Mainframe Databases <http://www.ipaustralia.gov.au/patents/search_mainframe.shtml> at 29 May 2005.

102 We differ in this respect from earlier Australian studies, which are not explicit on whether they are considering ‘patents’ or ‘proceedings’ as the unit of analysis.

103 Sometimes, a court deals only with one or other of these issues. This may occur because it is unnecessary to decide the other issue: if a patent is invalid, the court may not go on to make findings on infringement. Alternatively, a case may deal with only one issue because the hearing has been split, for example under O 29 of the Federal Court Rules 1979 (Cth), which allows the Court to make an order for the determination of any question separately from any other question. It is not uncommon for such orders to be made in patent cases, whereby a determination is made on validity prior to the determination of infringement — or the other way around.

104 It will be noted that ‘not determined’ is a very heterogeneous category. It includes situations where the matter was not raised in argument before the court, was conceded during the course of the hearing, or where the court chose not to make a determination on the issue in light of its other findings. Very little can be inferred, as a result, from a ‘not determined’ outcome. These various situations were ‘lumped together’ because of the concern about reliability, detailed above. It is not always possible to tell, simply from reading a decision, whether a matter has been argued before the court, conceded, or is unnecessary to determine.

105 We have also recorded the ‘grounds’ for a loss or partial loss by the patent owner on the question of infringement. However, we found that in the relevant period, there were really only two grounds relevant in patent law: either the alleged infringement was not within the scope of the claims as construed, or the case involved the supply of parts not amounting to authorising, procuring, etc. These results are not separately reported.

106 For example, we have not sought to analyse the data on the counsel or judges involved in the cases. Overseas studies working with larger datasets have found that ‘the votes of Federal Circuit judges … do not fit easily into “pro-patent” or “anti-patent” categories, or into “affirmers” and “reversers“’: Allison and Lemley, ‘How Federal Circuit Judges Vote’, above n 98. While such analysis is interesting, the present dataset is too small to conduct any such analysis here. Similarly, we do not seek to analyse here factors that might impact on litigation such as the size of the litigating firms: while we hope to conduct some such analysis in the future, once again the dataset here is too small and data on firm size not readily available. Again, overseas studies have found that firm size can be important particularly to whether firms become involved in litigation: see, eg, Lanjouw and Schankerman, ‘Protecting Intellectual Property Rights’, above n 57.

107 Original proceedings involve extensive processes for the gathering and presentation of evidence to the court and are therefore expected to take considerably longer than appeals. Note that we are not presenting information on how long any given dispute takes from the date of filing of the original proceedings through to the final appeal judgment in relation to the same dispute. This information is difficult to calculate.

108 If there are two decisions — validity and infringement — we take the period up until the later decision.

109 See the description of the Stack v Brisbane City Council litigation, below nn 120–3 and accompanying text.

110 The ‘number of observations’ represents the number of proceedings where we have data. In the case of the original proceedings, readers will observe that we have 25 observations in relation to court hours, but 29 for the case length. This is because in relation to court hours, there are four missing observations — proceedings for which we were not able to obtain data on how many hours were spent in court in those cases. This data was only available for Federal Court and High Court cases and not for the small number of cases in the State Supreme Courts: see above n 97.

111 The Annual Report of the Federal Court of Australia does give averages of how long cases filed in the court take to resolve. During the five-year period 1 July 1998 – 30 June 2003, 89.2 per cent of cases were completed in less than 18 months: see Federal Court of Australia, Annual Report 2002–2003 (2003) ch 3. However, those figures include all the cases which are filed but which do not proceed to judgment and so are not comparable to our dataset.

112 Which has exclusive appellate jurisdiction in intellectual property matters: see above n 74.

113 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354, 368–70.

114 Ibid; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424, 435–7 (Allsop J).

115 In fact, the only ‘outlier’ case here, which took just under 30 hours of appeal time, is a case where the matter was twice heard and determined by the Full Federal Court, having been remitted to the Full Court (Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 44 IPR 481) after a successful appeal to the High Court of Australia (Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171).

116 General Tire & Rubber Co Ltd v Firestone Tyre & Rubber Co Ltd [1972] RPC 457, 485.

117 (2003) 59 IPR 402.

118 ACIP, Review of Enforcement of Industrial Property Rights, above n 7, 11.

119 In Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd (2001) 53 IPR 359 (total court hours: 15.27), validity was not in issue and the technology was simple (a method of installing roof insulation). In General Clutch Corporation v Sbriggs Pty Ltd (1997) 38 IPR 359 (total court hours: 15.40), validity was not considered because infringement was not established. Once again, the case concerns relatively simple technology (a clutch mechanism on window blinds). It should be noted, however, that in some cases, even a full challenge to validity can be dealt with briefly. In Hutt v Enig Pty Ltd (1998) 41 IPR 559 (total court hours: 16.25), both validity and infringement were dealt with, although in that case, the technology was not particularly complex (air released into a hopper to agitate the contents) and the parties were able to agree on the essential integers of the claim, differing on construction.

120 Federal Court Proceedings QG28 of 1994; QG11 of 1996; QG21 of 1996; QG29 of 1996; VG39 of 1996; VG40 of 1996.

121 See the transcript of the application for special leave to appeal to the High Court: Transcript of Proceedings, Stack v Davies Shephard Pty Ltd (High Court of Australia, Gummow J, 26 June 2002).

122 See Stack v Davies Shephard Pty Ltd (2001) 108 FCR 422, 423–7.

123 There was a dispute in the case as to whether, in the case where the patented technology was invented by two co-inventors, one inventor alone was entitled to lodge an application: Stack v Davies Shephard Pty Ltd (2001) 108 FCR 422.

124 (2000) 51 IPR 43.

125 Old Digger Pty Ltd v Azuko Pty Ltd (2002) 123 FCR 1.

125 Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1996) 66 FCR 151.

126 Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 44 IPR 481.

127 (2000) 78 SASR 376. Note that we do not know how many hours this case spent in court (ie, it is one of the ‘missing observations’ noted above n 110 because this data is not recorded by the South Australian Supreme Court. It may, however, be that the hours were not so extensive as we might think: see below n 129.

128 7.7 years is a long time, but the case perhaps highlights the limitations of simply looking at numbers. The proceedings that led to Leonardis v Theta Developments Pty Ltd (2000) 78 SASR 376 were commenced in 1993. However, the standard patent at issue in the case was at the time being litigated in a separate set of Federal Court proceedings, heard by Gummow J (the judgment is reported as Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994) 30 IPR 479). The decision of Gummow J was appealed (Leonardis v Sartas No 1 Pty Ltd (1996) 67 FCR 126). The proceedings commenced in the South Australian Supreme Court were therefore stayed pending the outcome of the other proceedings, particularly on the validity of the patent. Williams J did not hear the case until late 1999 and issued judgment approximately 12 months later.

129 Note that ‘proceedings’ refer to proceedings filed in the court. Any given proceedings may have generated one or two decisions: see above n 108. For example, in Aktiebolaget Hässle v Alphapharm Pty Ltd, Lehane J first issued a judgment on validity (Aktiebolaget Hässle v Alphapharm Pty Ltd (1999) 44 IPR 593) and later an unreported decision on infringement (Aktiebolaget Hässle v Alphapharm Pty Ltd [1999] FCA 1394). One set of proceedings in our dataset generated three separate judgments at the single judge level (Federal Court proceedings NG190 of 1997; NG 552 of 1997 between Lubrizol Corporation Inc and ICI Chemicals & Polymers Ltd (and others) over Australian Patent 638710).

130 Namely, Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171; Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411; Firebelt Pty Ltd v Brambles Australia Ltd (2002) 188 ALR 280; and (outside the period of the study), Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274. A special leave application was filed in relation to another included judgment, Minnesota Mining & Manufacturing Co v Tyco Electronics Pty Ltd (2002) 56 IPR 248, but was discontinued in December 2002. Note that special leave was sought in relation to other Full Federal Court decisions: see below n 140.

131 Federal Court of Australia, Annual Report 2002–2003 (2003).

132 Ibid.

133 It should be noted, however, that the range of matters litigated in the Federal Court varies very significantly, from cases which are, in essence, a form of appeal from an administrative tribunal decision — as occurs in migration cases or social security cases — through to highly complex commercial and tax cases. Aggregation at this very high level may not, therefore, provide a very accurate picture. It would be more useful if we could compare the appeal rates of the complex commercial cases, rather than ‘all Federal Court proceedings’. This data is unfortunately not available.

134 See the discussion above Part II(c)(i).

135 ‘Party bringing appeal’ means only the party who files a notice of appeal (Federal Court Rules 1979 (Cth) O 52 r 12; High Court Rules 2004 (Cth) r 42.01) or cross-appeal (Federal Court Rules 1979 (Cth) O 52 r 22; High Court Rules 2004 (Cth) r 42.08). It does not include those cases where a party files a notice of contention seeking to contend that the judgment should be affirmed on grounds other than those relied on by the court below (Federal Court Rules 1979 (Cth) O 52 r 22(3); High Court Rules 2004 (Cth) r 42.08.5), since in these cases we assume that the arguments would not have been raised by the respondent but for the appeal by the other party. It is of course also possible that some cross-appeals would not have been brought had there not been an appeal already lodged, making the ‘both parties’ category somewhat heterogenous — it includes cases where both parties were sufficiently unhappy with the judgment below actively to seek a change, plus cross-appeals that happened because one party had already lodged an appeal.

136 ‘Success’ here also includes ‘partial success’ (the numbers being too small to distinguish between full and partial success in this context).

137 See Parts IV(c) and IV(d) respectively.

138 ‘Success’ here is defined as ‘successful in the appeal’ (ie, on the matters appealed). It includes partial success.

139 Appeal to the High Court does not lie of right, but requires a grant of special leave: Judiciary Act 1903 (Cth) ss 35, 35AA, 35A. In fact, the High Court has exhibited some reluctance to take patent appeals, considering that in general the Full Federal Court should be the final court of appeal (see, eg, Transcript of Proceedings, CCOM Pty Ltd v Jiejing Pty Ltd (High Court of Australia, 10 March 1995)). It would therefore not be appropriate to conclude, from the figures in Table 3 (ie, the lack of judgments) that alleged infringers did not appeal to the High Court in the relevant period. It could be the case that alleged infringers had sought, but been refused leave to appeal. In fact, a perusal of the transcripts of special leave applications published online by AustLII indicates that while special leave has been refused between 1995–2003 in at least four patent cases, in each case the application for special leave was made by the patentee: see Transcript of Proceedings, Stack v Davies Shephard Pty Ltd (High Court of Australia, 26 June 2002); Transcript of Proceedings, Speedy Gantry Hire Pty Ltd v Preston Erection Pty Ltd (High Court of Australia, 6 August 1999); Transcript of Proceedings, Patent Gesellschaft AG v Saudi Livestock Transport and Trading Company (High Court of Australia, 6 June 1997); Transcript of Proceedings, CCOM Pty Ltd v Jiejing Pty Ltd (High Court of Australia, 10 March 1995). In other words, no alleged infringer has even sought special leave during the period of this study or for two years prior.

140 Above n 11 and accompanying text.

141 Since our dataset has both original decisions and appeals, there is not a one-to-one relationship between the number of patents and the number of proceedings. Complicating this even further is that some of the judgments involved multiple patents.

142 Patents 526490 (Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd (2001) 53 IPR 359; Natural Fibre Pty Ltd v Natra-Cel Insulation Pty Ltd [2002] QSC 18) and 601974 (Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 and Aktiebolaget Hässle v Biochemie Australia Pty Ltd (2003) 57 IPR 1).

143 Data relating to the earliest priority date for the patent application and the International Patent Classification (‘IPC’) section was only available for 35 of the population of 41 patents.

144 ‘Others’ includes France, the UK and New Zealand.

145 In the IP Australia PatAdmin database the ‘Country of origin’ for non-PCT applications is the country listed in the address of the first applicant in the patent application. This usually correlates to the country of the receiving office where the application was initially lodged, although occasionally applicants may choose initially to lodge an application in a country other than their own. For PCT applications the country of origin is that indicated by the PCT country code, which correlates to the country in which the PCT application was first lodged. In general, the distinction of most interest to us is the distinction between ‘Australian’ and ‘foreign’ patents and here it would seem that country of first application will be quite reliable. Given that Australia is a minor market, only companies based in Australia are likely to choose Australia as their country of first application. It seems more likely, however, that Australian patent applicants for Australian patents could choose to file first overseas, if that is the major or priority market (for example, filing in the US first).

146 From 1979–2000, Australia had a system for the grant of petty patents, designed to provide protection for small-scale innovations with a short commercial life. Petty patents were cheaper to obtain and lasted for six years. Following an ACIP Report (Review of the Petty Patent System (1995)) which suggested that the standard for obtaining petty patents was too high (not dissimilar to the standard patent system), in 2000 the petty patent system was replaced by the Patents Amendment (Innovation Patents) Act 2000 (Cth). This Act established ‘innovation patents’, which differ from standard patents, inter alia, in that (a) they have a term of eight years, and (b) they require only an ‘innovative step’, not an ‘inventive step’ (Patents Act 1990 (Cth) s 18(1A)(b)(ii)).

147 Strictly speaking, to draw a comparison between this and the litigation rate we would need to build in a ‘lag’, looking at the application rates at the time when the patents being litigated in 1997–2003 were granted. Such a detailed analysis is beyond the scope of this paper. It is perhaps worth noting that in the preceding period (1990–96), an average of 8.5 per cent of patents granted had Australia as the country of origin. Statistics taken from the IP Australia website <http://www.ipaustralia.gov.au> at 29 May 2005.

148 We also acknowledge that we are engaging here in some elision between the country of origin of the technology and the nationality of the patent owner. We have not analysed the ownership of the patents, which would be a more complicated analysis. We are effectively using the country of origin of the technology as a ‘proxy’ for the ownership. Ideally we would analyse the nationality of the firms listed as owning the patents in IP Australia’s database; this is, however, a more complicated analysis and beyond the scope of this study.

149 Australian courts do sometimes become involved in multi-state patent litigation. For example, the validity of the patents covering the same technology involved in the Losec case (Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411) has also been litigated in the US (Astra Aktiebolag v Andrx Pharmaceuticals, Inc, 222 F Supp 2d 423 (SDNY, 2002)), in the UK (Cairnstores Limited v Aktiebolaget Hässle [2002] EWHC 309 (Ch)) and Canada (Genpharm Inc v AB Hässle (2004) 38 CPR (4th) 17)). Such situations are, however, the exception rather than the rule, on the figures above.

150 The international standard for classifying patented technologies is the IPC, which was established by the Strasbourg Agreement Concerning the International Patent Classification, opened for signature 24 March 1971, 1160 UNTS 483 (entered into force 7 October 1975) and is administered by WIPO. The IPC is used by patent offices world-wide. The IPC itself is not useful to categorise technologies as its classifications do not correspond to our common knowledge/common intuitions about technology types; nor does it correspond to common industry classifications. We have used the more useful categories, produced by the UK Office for Science and Technology (‘OST’), which are based on a mapping of common industry classifications against IPC sub-types. The table mapping the OST Classifications against the IPC subclasses is available from IP Australia at <http://www.ipaustralia.gov.au/pdfs/statistics/TechnologyGroups.doc> at 29 May 2005.

151 Allison and Lemley, ‘Empirical Evidence on the Validity of Litigated Patents’, above n 62. Allison and Lemley do not appear to have applied any particular standard set of classifications in determining the technology class of the patent: at 203–4.

152 As at 25 April 2005, there are several ongoing proceedings relating to pharmaceuticals. There is ongoing litigation relating to paroxetine hydrochloride, an anti-depressant drug, between patent-owning companies in the SmithKline Beecham group and various assorted alleged infringers (Federal Court Proceedings N398/03; V105/03; N539/02; V362/02; V741/01 and N229/01). There is also ongoing litigation concerning pharmaceutical injectable hydrosol compositions — drugs which can be used to help prevent tissue rejection (Federal Court Proceedings V1163/03). There is also ongoing litigation concerning a dosage regimen of alendronate, to treat or prevent osteoporosis (Federal Court Proceedings N1211/02). In addition, since the period of this study Heerey J has handed down his decision in the Viagra litigation: Eli Lilly & Co v Pfizer Overseas Pharmaceuticals [2005] FCA 67 (10 February 2005). The existence of a number of patent proceedings relating to pharmaceuticals in the courts at present does not necessarily indicate that pharmaceutical cases settle more often — rather, that the technologies litigated through to judgment can vary over time and we are only presenting a brief snapshot. Longer term data would be the only way to assess whether there was a trend. We have no way of telling, from available databases, how many cases are filed in relation to different technologies, which makes it impossible to tell whether certain cases settle more often.

153 The implications of our approach are that we will have a different number of ‘determinations’ than there were ‘proceedings’ (as reported above). The number of determinations is also not the same as the number of decisions issued by the courts in the period — one judgment may have up to six determinations, for example, where three patents were litigated and the court made a finding in relation to validity and infringement on each.

154 In addition, there were 16 instances where there was no determination on patent validity. The definition of ‘not determined’ is given above n 104. Reasons why validity might not be determined in any given judgment are explained above n 103.

155 For our discussion of ‘ultimate decisions’, see above nn 99-100.

156 So, for example, we classify Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 53 IPR 270, where the trial judge held that claims 1–32 were invalid and only claim 33 was valid as a partial win. This could seem anomalous to a patent owner, given that, in the Doric case, in fact it was not argued that Claim 33 was infringed — hence, the patent owner ‘lost’ on the validity of all the claims that mattered to the patentee in that litigation. Arguably, we could have tried to assess whether the patent owner succeeded in relation to the validity of the claims that were ‘important to them’, or those which were being litigated in the case. Retaining a category of ‘some claims upheld’, even if heterogenous, enables us to recognise the fact that in the Doric case, following a judgment upholding only one claim, a patent still exists as a public instrument which describes and defines continuing monopoly rights: Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588, 610.

157 Note, however, that it is possible the American courts are narrowing patents by other means. It has been argued that since the Federal Circuit was instituted in the 1980s, the courts in the US have been more willing to find a patent valid but less willing to find it infringed, a fact reflected in their adoption of narrow construction of patent claims: see Glynn, S Lunney Jr, ‘Patent Law, the Federal Circuit, and the Supreme Court: A Quiet Revolution’ (2004) 11 Supreme Court Economic Review 1Google Scholar. It is possible that in the US, just as here, patent owners post-litigation are ending up with narrower patents than what they thought they started with.

158 There are two proceedings, relating to five patents in our dataset, where an original win on validity does not appear to have been in issue at all on appeal: Pinefair Pty Ltd v Bedford Industries Rehabilitation Association Inc (1998) 87 FCR 458; Bartlem Pty Ltd v Cox Industries (Australia) Pty Ltd (2002) 55 IPR 449.

159 In fact, Justice Drummond counted both appeal and trial decisions cumulatively. If we did that, using our figures, we find that at least some claims were upheld in 29 out of 53 determinations (55 percent) and that patents were revoked in only 24 determinations (45 per cent).

160 This comparison must be qualified – although it is not entirely clear from the paper, it appears that Justice Drummond looked at ‘proceedings’ rather than separating out the patents and looking at how many patents were upheld, overall. On recalculation looking at the same proceedings his Honour looked at, it appears that patent owners may have done slightly better than the original figures indicated: of the 64 patent validity determinations, validity was upheld in 26 (or 41 per cent).

161 See above nn 64–8 and accompanying text.

162 Allison and Lemley, ‘Empirical Evidence on the Validity of Litigated Patents’, above n 62.

163 Landes and Posner, above n 20; Moore, ‘Empirical Peek’, above n 45.

164 See above nn 65-6.

165 A ‘win’ corresponds to all of the patent claims being upheld, a ‘partial win’ means that only some claims were upheld, while a ‘loss’ means that none of the patent claims was upheld. Data on judgments where infringement determinations were not made was also included since it was often the case that infringement was not determined if the patent was found to be invalid.

166 This is expected, given the standards of review being applied: see above nn 112–14 and accompanying text.

167 Minnesota Mining & Manufacturing Co v Tyco Electronics Pty Ltd (2002) 56 IPR 248.

168 Arico Trading International Pty Ltd v Kimberley-Clark Australia Pty Ltd (1999) 46 IPR 1, although note that this finding was overturned by the High Court of Australia, which remitted the case to the Full Federal Court: Kimberley-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1.

169 Preston Erection Pty Ltd v Speedy Gantry Hire Pty Ltd (1998) 43 IPR 74; Atlantis Corporation Pty Ltd v Schindler (1997) 39 IPR 29; Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 53 IPR 270.

170 Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257.

171 See above nn 136–41 and accompanying text.

172 The most ‘factual’ of the grounds is obviousness, which is often referred to as a ‘jury question’: Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411, 443 [79] (Gleeson CJ, Gaudron, Gummow and Hayne JJ), 444 [85] (McHugh J), 465 [151] (Kirby J). However, it is possible for judges even at the highest levels to disagree as to whether a given appeal raises questions of fact (upon which the trial judge’s decision should be respected) or questions of law. For example, in Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411, while the majority held that there had been errors of law by both the trial judge and the Full Federal Court, the dissenting judges (McHugh and Kirby JJ) both argued that the case ‘really concerned factual findings and reasoning’ (at 446 [89] (McHugh J)).

173 Azuko Pty Ltd v Old Digger Pty Ltd (2001) 52 IPR 75, 123 (Gyles J). Australian appeal courts have also frequently cited the dicta of Lord Hoffmann in Biogen Inc v Medeva plc [1997] RPC 1, 45, where his Lordship noted that appellate caution is required

because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance (as Renan said, la vérité est dans une nuance), of which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation.

174 General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1972] RPC 457, 485. See similarly in the US, where claim interpretation is a question of law for the court, not a question of fact for the jury: Markman v Westview Instruments, Inc, 517 US 370 (1996).

175 Note that the table does not list all grounds which a court could use to invalidate a patent claim. Grounds not listed here were not used by a court in the relevant period.

176 Note that individual patents can be found invalid on multiple grounds and, therefore, that the percentages presented in each column of Table 6 will not add to 100. Furthermore, not every partial win necessarily has a ground for invalidity. In one case, three claims were held valid and a further four were remitted to a lower court for further consideration. We have counted this as a partial win, however, because as no claim was actually held invalid, there were no grounds of invalidity. This occurred in only one case.

177 Source: Table 6, above (figure obtained by adding number of original determinations where some or all patent claims were held invalid, ie, 7+13).

178 Source: Table 6, above (figure obtained by adding number of appeal determinations where some or all patent claims were held invalid, ie, 3+11).

179 Source: Table 6, above (figure obtained by adding number of ultimate determinations where some or all patent claims were held invalid, ie, 3+14).

180 This does not include ‘external’ or ‘priority’ fair basing — meaning the requirement, under Patents Act 1990 (Cth) s 43(2) and Patents Regulations 1991 (Cth) reg 3.12(1)(b), that the complete specification be ‘fairly based’ on the provisional specification (see Amanda, McBratney, ‘The Problem Child in Australian Patent Law: “Fair” Basing’ (2001) 12 Australian Intellectual Property Journal 211, 212Google Scholar). The consequence of a finding that a complete specification is not fairly based on the provisional is that the earlier priority date is lost. The practical consequence of this may be that the patentee finds that novelty is lost as a result of its own conduct occurring between the date of filing the provisional specification and the date of filing of the complete specification.

181 We will have to see whether this changes following the High Court decision in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274 which considered internal fair basing as a ground of invalidity.

182 None of these being matters which will be examined under the Patents Act 1990 (Cth) s 45.

183 Inventive step is difficult to examine because the test under the Act requires an assessment of whether the invention would have been obvious to a ‘person skilled in the relevant art in light of the common general knowledge’: Patents Act 1990 (Cth) s 7(2). However examiners, unlike courts, do not have access to evidence from the person skilled in the art.

184 Patents Act 1990 (Cth) ss 7(1), 18(1)(b)(i); MJA Scientifics International Pty Ltd v SC Johnson & Son Pty Ltd (1998) 43 IPR 287, 303; Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228, 235 (the reverse infringement test).

185 Patent examiners do not look at anticipation through prior acts; they only look at the prior art base as it is embodied in documents: Patents Act 1990 (Cth) s 45(1A).

186 McBratney, above n 180.

187 Atlantis Corporation Pty Ltd v Schindler (1997) 39 IPR 29.

188 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2001) 53 IPR 270; Atlantis Corporation Pty Ltd v Schindler (1997) 39 IPR 29.

189 For example, one issue worth examining would be whether the prior art documentation was available to, or at least seen by, the Patent Office. If the document was seen by the examiner, it would be worth considering whether different results resulted from a different interpretation of the two documents, or whether the examiner did not appreciate the significance of the document. If the examiner did not have the document, this might raise questions about the quality of the search. We are grateful to an anonymous referee for this point.

190 In fact, according to the current manual, ‘[l]ack of fair basis is a significant issue under the Quality Standards for Patent Examination and therefore must be objected to if the examiner considers it to have occurred’: IP Australia, Australian Patent Office Manual of Practice and Procedure (1996) vol 2, [10.7.3.1].

191 McBratney, above n 180; see also ACIP, Review of Enforcement of Industrial Property Rights, above n 7, 17 (making recommendations about this ground).

192 See above n 174.

193 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274.

194 In addition, there were 21 instances were there was no determination on patent infringement and four instances where issues relating to patent infringement were not applicable. This number is higher than the number of non-determinations on validity (see above n 154), probably because in many cases where a patent is held invalid, the court does not go on to make a determination on infringement.

195 This has been rounded to 4 although it is in fact only 3.44 per cent, in order to ensure the percentages add up to 100.

196 In one case, however (Theta Developments Pty Ltd v Leonardis (2002) 59 IPR 368) there were three separate products which were alleged to infringe the patent. A majority of the Full Federal Court held that one of the three products infringed the patent. Dowsett J dissented, finding that two of the products were infringements.

197 In the one remaining case, Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171, there was no determination on infringement immediately below (in the Full Federal Court, which had held the patent invalid: Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1996) 66 FCR 151). At trial, Hill J held that the patent was not infringed by the conduct of the alleged infringer: Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1995) AIPC ¶91–129.

198 Note that, as with validity, infringement raises mixed questions of fact and law: construction of the claims is a question of law (see above n 174), but whether the alleged infringement falls within the scope of the claims is a question of fact: Clarke v Adie (1875) LR 10 Ch App 667, 675.

199 Noting that a ‘generous’ (ie, broader) construction of the claims which makes infringement more likely may also, in some cases, put in question the validity of the patent. In the US, commentators have noted that the Court of Appeals for the Federal Circuit has taken an approach of construing patents narrowly, where patents are more likely to be valid, but less likely to be infringed: see Lunney, above n 157.

200 See above Part II(c)(i).

201 A ‘win’ corresponds to all of the patent claims being upheld, a ‘partial win’ means that only some claims were upheld, while a ‘loss’ means that none of the patent claims was upheld. Data on judgments where infringement determinations were not made was also included since it was often the case that infringement was not determined if the patent was found to be invalid. ‘ND’, in relation to infringement, means there was ‘no determination’ on infringement. This often occurs where there is a loss on validity, where the court does not go on to consider whether the invalid patent (or claim) was infringed.

202 This result, of course, looks like a nonsense: an invalid patent cannot be infringed. However, trial courts will often make findings on infringement even where they find a patent invalid — because it is more efficient to make that finding while all the evidence is before them: for example, in the Losec litigation, discussed above n 34.

203 This includes both original and appeal decisions.

204 See, eg, Moore, ‘Empirical Peek’, above n 45.

205 Dietmar, Harhoff, Frederic, Scherer and Katrin, Vopel, ‘Citations, Family Size, Opposition and the Value of Patent Rights’ (2003) 32 Research Policy 1343Google Scholar.

206 This list only includes those decisions which were included within the scope of the study. In addition to these decisions, a further 18 patent decisions were read but were not within the scope of the study as defined in Part III(a).