What you need to know
- Quaker has successfully sued Fuchs for indirectly infringing two of Quaker's patents by supplying hydraulic fluid containing a fluorescent dye that could be used in the patented method.
- Suppliers may indirectly infringe a patent if they have reason to believe that the product supplied would be used in the patented method or if the supplier authorised or induced the customer to use the product in the patented method.
- Protection provided by a patent extends to where a product that could be used to infringe a patent is supplied, even if the product is not actually used to infringe the patent.
What you need to do
- If you are a supplier, take care when supplying products which could be used to infringe another person's patent.
- Customers should be informed that the supplied product cannot be used in the patented method. Such notice might not be sufficient to avoid infringement if, despite the notice, the supplier has reason to believe the product might be used in the claimed method.
- If you are a patent owner, consider whether it is possible to join suppliers to the proceedings on the basis of indirect infringement.
Background
Quaker Chemical (Australasia) Pty Ltd (Quaker) is the owner of a standard patent and an innovation patent (Patents) relating to a method of detecting high pressure fluid injection (HPFI) injuries. HPFI injuries occur when fluid kept under high pressure in particular machinery (for example, mining equipment) escape and inject into a person's body. These injuries can be difficult to detect and can be serious.
The Patents teach the addition of a fluorescent dye to the fluid in the relevant machinery. If it is suspected that a person has been accidentally injected with the fluid, a UV light can be used to determine if an injury has occurred.
Fuchs Lubricants (Australasia) Pty Ltd (Fuchs) was a supplier of hydraulic fluid containing fluorescent dye. Fuchs sourced and sold products containing dye manufactured by Quaker. Quaker did not object to this conduct as it accepted that there was an implied licence or authorisation to use the dye in this way.
However, Fuchs also sourced dye from a third party which it used in its hydraulic fluid that was subsequently provided to customers. Quaker alleged that this conduct amounted to infringement under section 117 of the Patents Act 1990 (Cth) (the Patents Act), authorisation of infringement and/or joint tortfeasance.
Fuchs also cross-claimed on the basis that the Patents were invalid but these claims were unsuccessful.
Infringement by supply
Section 117(1) of the Patents Act provides that if the use of a product by a person would infringe a patent, the unauthorised supply of that product to another person is an infringement by the supplier.
Relevantly, "use of a product" is demonstrated if the supplier:
- had reason to believe that the product (that is not a staple commercial product) supplied would be put to an infringing use (section 117(2)(b)); or
- instructed or induced the person to put the product to an infringing use (section 117(2)(c)).
Was the hydraulic fluid with dye a staple commercial product?
In order to fall within section 117(2)(b), the product supplied cannot be a staple commercial product. A staple commercial product is a product which is supplied commercially for various uses.
Fuchs submitted that it was the dye that should be considered the relevant "product" and the dye could be put to a wide-variety of uses. Justice Robertson rejected this contention. He concluded that the relevant product was the product which was supplied, in this case, the dyed hydraulic fluid.
Fuchs also argued that the dyed hydraulic fluid could be used for a number of purposes, for example, to detect leaks in machinery and enable identification as well as HPFI injury detection. However, his Honour found that the hydraulic fluids were highly specialised and formulated based on the needs of the customers, machinery and intended use. Accordingly, the dyed hydraulic fluid were not staple commercial products.
Reason to believe the dyed fluid would be put to infringing use
Quaker submitted that Fuchs had reason to believe that its dyed fluid would be used as part of the claimed method and infringe the Patents.
Fuchs contended that its low concentration products sold for leak detection were different to the high concentration products for HPFI detection. Therefore, Fuchs argued it had no reason to believe its low concentration products would be used for HPFI detection.
Justice Robertson concluded that each act of supply needed to be considered separately and based on its facts. Justice Robertson considered the dye concentration of the hydraulic fluid provided in each circumstance and determined that where there was a low concentration, Fuchs did not have reason to believe it would be used for HPFI detection.
However, Justice Robertson also concluded that Fuchs had reason to believe that the product supplied to BHP Mitsubishi Alliance (BMA) would be used for HPFI detection.
Fuchs supplied BMA a hydraulic fluid with a high concentration of dye. Fuchs knew that BMA wanted a dye for HPFI detection and formulated the hydraulic fluid at similar concentrations to Quakers product. Accordingly, Justice Robertson concluded that if a suspected HPFI injury occurred, Fuchs had reason to believe that the product would have been used in the claimed methods.
Justice Robertson did not accept Fuchs claim that there was no real or likely prospect that the patented method would be performed (that is, the method required that the person with the suspected injury be exposed to UV light) as HPFI injuries were rare. Justice Robertson considered that section 117(2)(b) applies where a supplier has reason to believe that if the occasion for a product to be put to a particular use arose (here a suspected HPFI injury), the product would be put to that use. It does not require the supplier to have reason to believe that the occasion to use the product would actually arise.
Inducement to infringe
Justice Robertson was also satisfied that Fuchs induced BMA to use Fuchs' product in the patented method.
Justice Robertson considered that Fuchs knew that BMA wanted a product to assist with HPFI detection and it offered Fuchs' product for a significantly cheaper price than Quaker's Products. Such conduct was sufficient for inducement to use the product in the claimed method. The fact that BMA was pressing for the supply of the product with HPFI detection did not negate this finding.
Joint authorisation and joint tortfeasorship
Quaker also claimed that Fuchs authorised infringement of the Patents and was liable as a joint tortfeasor. However, these claims failed as Quaker did not establish any use of the products in the claimed method (that is, use to detect a potential HPFI injury) and therefore, was unable to establish direct infringement.
This decision has now been overturned on appeal. For more information on the Full Federal Court's decision, click here.
Authors: Philippa Anstey, Lawyer; and Nina Fitzgerald, Partner.
