The Balance Of Convenience In Applications For Interlocutory Injunctions: Embertec Pty Limited v Energy Efficient Technologies Pty Limited

by FPA Patent Attorneys

Embertec and Energy Efficient Technologies (EETECH) are competitors in the market for the sale and supply of standby power controllers (SPCs). On 14 August 2012 Embertec applied for an interlocutory injunction based on a number of factors, including claims of misleading and deceptive conduct, copyright and trade mark infringement, and passing off.

After Embertec’s innovation patent, AU2012100197 (the 197 patent) for an energy saving device was certified on 22 August 2012, their pleadings were amended to include alleged infringement of the 197 patent that describes an energy saving device that disconnects power when a device is not in use.

In deciding the case, two questions were considered. Firstly, whether a prima facie case had been established. Secondly, in assessing the balance of convenience and justice, whether the inconvenience or injustice that Embertec would be likely to suffer if an injunction were refused would outweigh the injury that EETECH would suffer if an injunction were granted.

In considering whether Embertec had established a prima facie case, Foster J found that Embertec has indeed established a prima facie case of infringement. In fact, subject to its section 163 and invalidity arguments, even EETECH accepted that it was infringing the 197 patent.

Section 163 of the Patents Act provides for the exploitation of inventions by the Commonwealth or a State. EETECH referred to the VEET scheme which is a scheme established by the Victorian State Government by legislation (Victorian Energy Efficiency Target Act 2007 (Vic)), and based its section 163 argument that it was not infringing on EETECH’s approval as an “Accredited Person” approved to install products for the VEET scheme. This argument was, however, dismissed because EETECH was never required, by any approval or contract, to infringe the 197 patent.

Regarding the validity of the 197 patent, Foster J saw “considerable force” in the submissions made on behalf of EETECH in a fair basis argument for invalidity of patent 197. In particular, the sensor means of claim 1 does not in turn control switching power off, which on the face of it would appear to be a requirement of the power board as described in the specification. Consequently the arguments for invalidity were considered to be “reasonably strong”. This is perhaps surprising as it is uncommon for invalidity to be established on the grounds of fair basis alone in Australia.

In considering the balance of convenience and justice, Embertec’s alleged damages were considered to be inevitable consequences of competition so that, for almost all of them, an award of damages would be adequate compensation. It was concluded that Embertec would not suffer any irreparable harm if its claim for an injunction were refused.

In contrast, if an injunction were granted, not only would EETECH be forced to cease trade with possibly catastrophic consequences for its business, it had not been established that Embertec could fully supply the market if EETECH were to cease trading. Hence the residents of Victoria may well be harmed if an injunction were granted resulting in a reduced supply of SPCs. Also, because EETECH established itself and its business before there was a relevant registered patent, it is clear that it had not proceeded with its “eyes wide open” to the potential consequences of patent infringement.

The case against restraining EETECH was strengthened because the specific market is very limited with a total life of perhaps 9-10 months with only a month or two left until saturation of market of products under the VEET scheme. Consequently the application for interlocutory injunctive relief was dismissed with the balance of convenience being a strong deciding factor in favour of EETECH.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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