Re-evaluating innocent infringement in Australia: Patent numbers and virtual marking

If products sold in Australia are marked to indicate they are patented, such marking gives notice to third parties that the products are protected by patents. In the absence of such notice, infringers may not be aware of patent rights and patentees who are successful in providing infringement may not be eligible for monetary remedies. The reason for this is that those found liable for infringement can argue that their infringing actions were done innocently, as provided in s 123 of the Patents Act 1990 (Cth) – otherwise known as innocent infringement. In a market economy that generally relies on free competition for efficient allocation of resources, patent marking signals that at least one functional aspect of a product is not open to direct competition. Analysis in this article demonstrates that current Australian provisions on effecting notice of patent rights via patent marking are contrary to patent theory and result in notice being too easily discharged. This obviates protection that should be afforded to innocent infringers and causes inefficiencies in the patent regime – particularly in the form of additional transaction costs. On this basis, amendments to the innocent infringement provision are recommended. These recommendations are based on the mechanism by which UK law demands patent numbers be included to effect notice through patent marking, and the mechanism by which “virtual marking” is explicitly permitted in the US. Such amendments will harmonise Australia’s patent law with two major trading partners, simplify international trade of patent protected products, and increase the overall efficiency of the patent system.