Due Diligence Failure Costs CSL

Case: CSL Limited v Novo Nordisk Pharmaceuticals Pty Ltd (No 2) [2010] 1251

CSL failed "promptly" to consider whether or not amendments to its Australian patent should be made in response to amendments recommended in respect of corresponding foreign patent applications.  CSL was "squarely on notice" that a claim was "problematic".  The absence of evidence of professional advice to the contrary prior to launching legal proceedings was key to the refusal to permit CSL to amend that claim.

Significant Cases Cited
ICI Chemicals & Polymers Ltd v Lubrizol Corp [1999] FCA 1417
Novartis AG v Bausch & Lomb (Australia) Pty Ltd [2004] FCA 835

  • From at least 2001, CSL was aware that certain documents were regarded as problematic to the novelty of their invention.
  • The view that those documents were problematic came from a number of examining jurisdictions.
  • There was no evidence of professional advice contrary to the opinions expressed by the various examiners.
  • CSL sought amendments in the foreign jurisdictions but not in Australia.
  • The refused amendments were sought after proceedings had been launched.
  • When a patentee is exposed to the view that prior art may be fatal to the validity of claims, the onus shifts to the patentee to provide a reasonable explanation of why inaction was preferred to amendment.
  • It is too categorical to restrict the circumstances in which amendment is refused to those in which the patentee knew the unamended patent was invalid.
  • The lack of evidence of professional advice (supra) counted heavily against CSL.
  • It was not a satisfactory response to assert that CSL did not need to take the initiative because the patent stood on the register.
  • It was not in the public interest that "serious and apparently legitimate issues" had been raised elsewhere not be confronted in the Australian text.
  • Leaving aside public interest, it is in the client's best interest that the very instrument that is to form the basis of a legal proceeding be reviewed and amended if necessary.  Failure to do so is simply bad practice.
  • It is to be noted that it was more important to the court that there was a coherent reason for failing to amend than not actually amending.
  • Multi-jurisdictional patent portfolios should be reviewed from time to time.  Setting a 6-month status check on matters is common practice where firms have large case loads per practitioner.  Part of that 6-month status check could be the consideration and proposal of amendments to clients.


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