To Mark and How to Mark? Virtual Marking in Australia and New Zealand

Executive Summary

  • There are no express provisions in the Australian and New Zealand Patent Acts permitting or authorising virtual marking

  • Virtual marking appears possible in Australia

  • There is some doubt as to whether virtual marking would be sufficient to comply with current marking requirements in New Zealand

Virtual marking

Most countries around the world have provisions relating to the marking of products that are protected by a patent with the relevant patent number.  However, these provisions are not uniform and it has increasingly become common practice for companies to mark products or documents relating to services with an internet address that directs the user to a webpage listing the relevant patent information for each country.  This practice is known as “virtual marking” and its primary advantage is that patent information can be readily updated for a company’s products without having to alter the labelling or packaging, saving costs.

Virtual marking has gained official recognition in the America Invents Act, which states that virtual marking will meet marking requirements in the US.  While this official recognition is welcome, what is the position in countries like Australia and New Zealand?

Marking in Australia

In Australia, marking of patented products is not mandatory, but there are significant benefits as it prevents a partial statutory defence of innocent infringement being used by an infringer.  Section 123 of the Patents Act 1990 states:

Innocent infringement

(1)  A court may refuse to award damages, or to make an order for an account of profits, in respect of an infringement of a patent if the defendant satisfies the court that, at the date of the infringement, the defendant was not aware, and had no reason to believe, that a patent for the invention existed.

(2)  If patented products, marked so as to indicate that they are patented in Australia, were sold or used in the patent area to a substantial extent before the date of the infringement, the defendant is to be taken to have been aware of the existence of the patent unless the contrary is established.

(3)  Nothing in this section affects a court’s power to grant relief by way of an injunction.

Subsections 123(1) and 123(3) effectively state that the court has a discretion to limit the relief for patent infringement to an injunction only (i.e. no damages or account of profits) where the defendant demonstrates that it was not aware and had no reason to believe that a patent existed.

Subsection 123(2) states that a defendant is deemed to be aware of the patent if products are marked to indicate that they are patented in Australia and are sold or used to a substantial extent in Australia.  The effect of subsection 123(2) is to make it difficult for a defendant to argue innocent infringement where the products have been marked in Australia.

While section 123 does not expressly mention virtual marking, the standard for patent marking is low – the product need only be marked to “indicate” that they have been patented in Australia.   The broad generality of subsection 123(2) means that so long as some “indication” is present on the product, this will be sufficient to meet marking requirements in Australia.

Hence, the position in Australia would seem to indicate that virtual marking may be used without any significant issues.  However, patentees should ensure that the relevant patent information for the product can be readily found on the webpage and not be lost in a “sea” of patent numbers. The product and its patent numbers protecting that product should be clearly identified, especially where more than one type of product is being virtually marked.  In the context of a product being marked for several countries, it may be preferable to list each country prominently with the relevant patent numbers underneath to ensure that the Australian patent information can be readily identified.

Marking in New Zealand

As with Australia, marking is not mandatory in New Zealand, but there are advantages with patent marking.  The relevant provision in the New Zealand Patents Act is section 53, which states:

Court must not award damages or account of profits if innocent infringement

(1) The court must not award damages or an account of profits for infringement of a patent if the defendant proves that at the date of the infringement the defendant did not know, and ought not reasonably to have known, that the patent existed or, in the case of a proceeding under section 81, that the complete specification had become open to public inspection.

(2) It is presumed that a person ought reasonably to have known that a patent existed if—

(a) a product is marked so as to indicate it is patented in New Zealand and with the New Zealand patent number; and

(b) the person knew, or ought reasonably to have known, of the product.

(3) But there is no presumption if the product is marked merely so as to indicate it is patented.

Section 53 in New Zealand is similar to section 123 in Australia in that if a product is marked to indicate the New Zealand patent number and the defendant ought to have known about the product, then there is a presumption of knowledge of the patent, thus making it very difficult to establish an innocent infringement defence.

However, there is a significant proviso in subsection 53(3) that there is no presumption if the product is simply marked to indicate that it is patented. There is no counterpart of this proviso in the Australian legislation.

Another notable and significant difference between the Australian and New Zealand marking provisions is that damages or an account of profits cannot be awarded if the defendant proves it is an innocent infringer; i.e. there is no court discretion once innocent infringement is established – the court must not award damages or an account of profits in New Zealand.  This stands in contrast to Australia, where the Court has a discretion not to award damages or an account of profits.

From this author’s reading of section 53, it would appear that there is a higher standard for patent marking in New Zealand.  Only marking the product with the New Zealand patent number will give rise to a presumption of knowledge that a defendant has to overturn to establish innocent infringement.  In the absence of marking or where marking is insufficient, the onus remains on the defendant but there is no presumption of knowledge, making it easier to establish innocent infringement.

Hence, the best method of marking in New Zealand is to mark the product with the New Zealand patent number.  This makes it difficult to implement virtual marking in New Zealand as only a website link or address is marked on the product directing the consumer to a webpage with the relevant patent information; there is no marking on the product to indicate the New Zealand patent number.  Accordingly, it is not clear whether virtual marking would be sufficient to meet this standard, especially as it could be argued that virtual marking only indicates that the product is patented, which is deemed to be insufficient under subsection 53(3) to create the presumption of knowledge.

In view of the uncertainty in how subsection 53(3) would be construed by a Court, the safer course for patentees may be to continue to physically mark their products with the New Zealand patent number as there is a risk that virtual marking may not be deemed sufficient to create the presumption of knowledge under the New Zealand Patents Act.

Conclusion

The different approaches to marking in the Australian and New Zealand Patents Act mean that patentees have to be careful in how they mark their products, if they choose to do so. While there are benefits in marking patented products in both countries, the legislative scheme in Australia is more amenable to implementing virtual marking whereas they may be a significant hurdle to use virtual marking in New Zealand.