Neil Sadler and Tony Conaghan

‘Markman’ type hearing comes to Australia

Neil Sadler and Tony Conaghan

13 March 2015

Designs Patents

Thomson Geer represented Konami Gaming Inc and Konami Australia Pty Ltd (Konami) at a preliminary patent claim construction hearing before Justice Bennett, in the Sydney Federal Court, in proceedings NSD 506/2013.


A preliminary claim construction hearing has not been common in Australia historically. The common term Markman hearing derives from Markman v Westview Instruments Inc, in the USA Supreme Court in 1996. In the USA, the process is different in that, in general, the Judge decides the law but juries decide the facts.


In the USA, a patent infringement case will move to a Markman hearing for the Judge to determine the legal construction and meaning of the claims, before the trial of the residual issues before a Judge and jury.


In Australia, we do not have the additional ‘complication’ or ‘benefit’, depending upon your point of view, of juries in patent cases.


Konami have sued Aristocrat Technologies Australia Pty Ltd (Aristocrat) for infringement, relevantly, of 3 patents relating to electronic games and gaming machine technology.


The proceedings have been closely case managed, with a view to avoiding lengthy affidavit material being filed. An aim has been to identify the critical issues between the parties for the purposes of identifying initially,  the meaning of and then infringement of the Konami patents alleged against Aristocrat.


A number of terms in particular claims of the patents in dispute were identified as amenable to early judicial construction in each of the patents. As construction issues ultimately are a matter for the Judge, (although expert evidence is often received about their meaning), it was anticipated that the need for expert evidence could be confined.


Schedules by each party contending meanings for the agreed terms were exchanged beforehand. There were no other written submissions in advance of the hearing.


The Federal Court ordered that expert evidence would only be received in relation to terms that could be regarded as having a ‘special meaning in the relevant field’ as at the priority date, or as being ‘terms of art’.


Konami filed short affidavit evidence by two experts to the effect that none of the chosen terms could be so regarded. Aristocrat, on the other hand, filed affidavit material in which an expert said that some of the terms had a special meaning in the context of the specification as a whole, when read by a person skilled in the art.


The hearing lasted 3 days and included a ‘hot tub’ of experts, which the Federal Court found useful in its considerations.


During the hearing, it was determined that one of the patents (the 906) involved more complicated issues, such as relating to sufficiency and fair basis, that would potentially require greater expert consideration. The 906 patent, as a result, was left for the later trial on liability. A number of the key issues were, however, refined in opening addresses.


Subsequent to the hearing and before judgment was delivered, the parties agreed not to proceed with one of the patents (the 370). In respect of the 837 patent, however, rulings were made.


It is likely that agreement will be reached as to how the Aristocrat games work electronically and mechanically. Infringement issues in respect of the 837 (and 2 related patents) are now likely to take reduced time in contention, at the final hearing.


The preliminary hearing was characterised by the Federal Court as the start of the liability hearing proper, rather than as a separate hearing and determination, with the result that any appeal on the construction rulings in respect of the 837 patent would await judgment, after the main liability hearing later this year.


It is reasonable to expect that the Federal Court may, in patent proceedings, take an increasingly active role in identifying critical issues in relation to both infringement and validity, and seeking to have the relevant claims and essential integers reviewed, without the often extensive series of substantial affidavits, covering every conceivable issue.


Clients should welcome this trend as it is aimed at reducing the costs incurred in litigation and the time spent.