Director's Cut - Director Found Personally Liable In Patent Infringement

(Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Limited [2010] FCA 108)

The Federal Court of Australia recently found a company director personally liable for patent infringement. The facts of the case and the salient points considered by the Court in reaching this finding are discussed below.

Inverness Medical is the patentee of four patents relating to (among other things) pregnancy tests. Inverness sought orders against five respondents for infringement of its patents. Only the first three respondents appeared. The first respondent (MDS Aus) is the Australian "sponsor" of, and the second respondent (MDS NZ) is the New Zealand and Australian distributor of, QuickStream and QuickCard (i.e. the pregnancy tests that were the subject of the proceedings). The third respondent, Dr Appanna, is a director of both MDS Aus and MDS NZ.

Inverness alleged that Dr Appanna, a family physician in Auckland, New Zealand, was personally liable as a joint tortfeasor for the infringement by the MDS companies and also for authorising the same infringement - the latter allegation relates to s13(1) of the Australian Patents Act that defines the exclusive rights given by a patent and states: Subject to the Act, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention.

The following three tests were considered in determining whether a director is liable as a joint tortfeasor for acts committed by the company of which s/he is a director:

The test propounded by Lindgren J in Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231 at 246, namely whether the director...