In a recent Federal Court case (Inverness Medical
Switzerland GmbH v MDS Diagnostics Pty Limited), it was held
that a director of two of the companies selling the infringing
product was also personally liable for the infringing acts.
Inverness Medical Switzerland GmbH (Inverness),
the owner of four Australian patents covering a range of
immunoassays, filed a patent infringement action against a number
of companies involved in the distribution of a home pregnancy
testing kit. The infringement action was also filed against Dr
Prakash Appanna, a director of two of the companies, MDS
Diagnostics Pty Limited and MDS Diagnostics Limited.
Deciding that the kits did indeed infringe the patents, Justice
Bennett turned her attention to the question of whether Dr Appanna
was also personally liable, on the basis of being a joint
tortfeasor, or on the basis that he "authorised" the
infringing acts of the MDS companies.
The mere fact that Dr Appanna controlled the MDS companies as
shareholder, or the fact that he was described as Managing
Director, alone, were not sufficient to establish that he was
personally liable for the infringing acts. Something more is
While it was argued that since there were other directors, Dr.
Appanna was just "part of a suite of appropriately skilled
personnel who managed and supervised the operations of MDS",
however, the evidence indicated that: Dr Appanna was the person to
whom the General Manager reported; that the Board minutes were
prepared by Dr Appanna and not distributed to the other Board
members for their approval; that while he was aware of competitive
products on the market, the issue of whether there were any
relevant patents was "something not considered at the
time"; and that he was the person directly involved in
obtaining the distribution rights for the products in Australia and
continued to be involved in the sourcing and distribution. As such,
Justice Bennett considered that Dr Appanna knowingly pursued a
course of conduct which led to infringement or was likely to
constitute infringement or reflected an indifference to the risk of
infringement, whether or not there was knowledge of infringement or
likelihood of infringement.
As a result, it was held that Dr Appanna was personally liable
for the acts of patent infringement, both on the basis of being a
joint tortfeasor, as well authorising the infringing acts.
While serving as a reminder to directors of companies that they
are not immune to personal liability in instances of infringement
of intellectual property (IP) rights, this
decision also reinforces the need for companies to conduct the
required due diligence and consider the possibilities of IP
infringement before undertaking a commercial venture.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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