Wearing thin: The "repair defence" to patent infringement in Australia

What you need to know

• There is an ongoing legal uncertainty regarding what "repairs" a miner or mining equipment, technology and services (METS) firm can make to original equipment manufacturer (OEM) equipment without infringing any relevant patents.
• In Calidad P/L v Seiko Epson Corp (2020) 272 CLR 351, the High Court of Australia established the doctrine of exhaustion (in place of the implied licence), and provided some guidance on this question. Five years on, those principles have only been applied in one decision.
• In MMD Design and Consultancy Ltd v Camco Engineering Pty Ltd (2023) 176 IPR 152, the "repair defence" was held not to apply to Camco Engineering's repair of mineral sizers by welding replacement wear covers onto the crusher teeth (although Camco established it did not infringe on a different basis).

What you need to do

• Miners and METS firms maintaining OEM equipment should ensure they have robust processes in place to assess and manage patent infringement risks.
• In particular, it is important that all members of the business are aware that repairs may give rise to a patent infringement risk, and there is a need to consider the issue based on the scope of the claims of the relevant patent(s).
• OEMs should carefully consider their patent portfolios and strategy and, where possible, seek separate patent protection for the component parts most likely to be replaced during the "repair" of broader systems.

What is the issue?

The purchaser of a patented product is free to use and dispose of that specific product. However, the patentee retains the exclusive right to make further patented products. As a result, a person may still infringe a patent where their use of their purchased product amounts to making a new product. Conversely, "repairs" or modifications that fall short of making a new product will not infringe. This is sometimes referred to as the "repair defence", although it is not actually a statutory defence under the Patents Act 1990 (Cth).

In the Energy & Resources sector, this tension can often arise where a miner or METS firm is conducting repairs or modifications to OEM equipment. This is because OEMs seek to retain the market for wear parts and/or post-sale services, and may use patents to protect this valuable market.

The law in this area was significantly changed in 2020, when a 4:3 majority of the High Court in Calidad P/L v Seiko Epson Corp (2020) 272 CLR 351 held that the doctrine of exhaustion applies in Australia (rather than an implied licence for purchasers). However, despite this shift in legal principle, the key question has remained largely the same. That is, whether a new product embodying the claimed invention has been "made", or whether an existing product has simply been repaired or modified. While the law on this more practical question remains under-developed, these principles were recently applied in the context of the Energy & Resources sector.

MMD v Camco – Wear teeth for ore crusher

In MMD Design and Consultancy Ltd v Camco Engineering Pty Ltd (2023) 176 IPR 152; [2023] FCA 827, MMD held a patent for wear teeth used in a crusher (mineral sizer). Camco had, until 2015, been MMD's authorised repairer for such crushers in Australia. Following the end of that relationship, Camco continued to provide after-market repair services, and specifically created its own design for the wear parts in an effort to avoid patent infringement risk. Nevertheless, MMD commenced proceedings alleging that Camco had infringed the patent by repairing mineral sizers at five sites, being one BHP site, one FMG site, and three South 32 sites.

The technology and claims

By way of background, mineral sizers are typically comprised of two shafts with projecting teeth that rotate in opposite directions. A drawing of a mineral sizer is included in paragraph [9] of the judgment here.

Minerals are drawn into the centre of the two shafts and crushed to a sufficiently small size to pass between the teeth. This places extreme forces on the teeth, which are typically designed with a support body (or "horn" or "core") and wear part (or "sacrificial cover" or "shell"). The relevant patent claimed a specific tooth construction, covering both the support body and wear part. By way of example, claim 1 was as follows (our formatting and emphasis added):

• A tooth construction for a mineral breaker, the tooth construction including a tooth shaped support body covered by a shell which defines the outer shape of the tooth construction,
  • the shell being composed of a plurality of covers which are fixedly secured to one another and/or to the support body by welding to define a unitary tooth construction
  • the support body having a front face and an opposed rear face and
  • the plurality of covers including at least
    • a front cover which is weldingly secured to and seated in face to face contact with the front face of the support body and
    • a separate rear cover which is weldingly secured to and seated in face to face
    • contact with the rear face of the support body.

At first instance, Justice Rofe held that Camco's repair services did not infringe the asserted claims, based on a proper construction of the claim wording. For example, in some instances Camco's covers incorporated gaps between the front cover and the front face of the support body, which was held not to satisfy the requirement that those elements be "seated in face to face contact". The finding of non-infringement was upheld on appeal: (2024) 181 IPR 184.

The "repair defence"

Helpfully, Justice Rofe also considered Camco's alternative argument that, even if it did infringe, it could rely on the "repair defence". Ultimately, Justice Rofe held that it could not, and that Camco's conduct would involve an impermissible "making" of a new article (if in fact its alternative designs did take all of the features of the claim). Her Honour's reasoning provides valuable guidance on the application of this important area of law.

Camco's repair process involved:

1. arc gouging the existing welding and removing the existing covers, such that the "naked" support body was accessible; and
2. welding new covers to the support body to form a new shell, in accordance with Camco's design for the shell.

Justice Rofe held that the first step amounted to an "unmaking" of the patented product. That is, after Camco had removed the existing covers, there was no longer a "shell" defining a "unitary tooth construction" as required by claim 1. In that sense, Justice Rofe considered this case was analogous to United Wire (discussed below), in that the existing patented product was stripped down to a component to be used in the making of a new product, and the existing product had ceased to exist.

When Camco welded on new covers, Justice Rofe held it was replicating the integers of the claim and "making" a new tooth construction. On that basis, Camco could not rely on the "repair defence" and would infringe the claims, if the Camco design was held to take the other elements of the claim.

Significance

This case provides a helpful demonstration of the principles from Calidad. In particular, for OEMs it demonstrates the importance of seeking patent protection over the specific wear part that is likely to be remade. Camco had argued that it does no more than "repair mineral sizers". Justice Rofe observed that the patented product was not the mineral sizer at large, but specifically each tooth construction, and that the tooth construction was the focus of consideration. Had MMD's patent claimed the overall mineral sizer, the replacement of the wear teeth may have been permitted repair. However, in the context of claims limited to the tooth construction, Camco's conduct amounted to a remaking. For OEMs, this underscores the importance of seeking separate patent protection for components likely to be replaced where available.

For miners and METS firms, it emphasises that maintenance will often fall on a continuum between repair and manufacture, and that placing a particular example on that continuum is a complex question of fact to be assessed in light of the specific claim language. Miners and METS firms should ensure they have robust processes in place to assess and manage this risk when dealing with patented products. At a minimum, your teams must be aware that this risk may exist, and seek to identify any relevant patents for assessment.

In addition to the example in MMD v Camco, helpful guidance is also provided through the UK and US cases discussed by the majority in Calidad, and which we summarise in Annexure A below. We will otherwise continue to monitor this space, and let you know if there are any key developments.

Annexure A: US and UK authorities discussed by the majority in Calidad

Other authors: Rebel O'Connor, lawyer; Charlie Crawford, lawyer and Ruby Bishop, lawyer.