Last week the Civil Court of Justice in the Hague awarded electronics company LG a preliminary injunction against rival manufacturer Sony, ordering the seizure of all new imports of PlayStation 3 (PS3) consoles into the Netherlands for a period of at least 10 days. LG claims that Sony’s popular home video console infringes several of its patents relating to the playback of Blu-ray disks. The ruling has resulted in tens of thousands of PS3 consoles being seized by Dutch customs authorities whilst the temporary injunction is in place.
The ruling has consequences not only for Sony but also for thousands of would-be European gamers intending to purchase a PS3 in the coming weeks. The Netherlands is understood to be a major import point for Sony, with European sales reported to be about 100,000 units per week. Should Sony fail to have the injunction lifted, LG could apply for an extension of up to another 10 days, by which time existing stocks across Europe may be depleted.
The prejudgment seizure order issued by the Dutch court was obtained without Sony being given an opportunity to defend itself. This aspect of the injunction makes it fundamentally different from the way in which any potential patent enforcement action in Australia would conventionally proceed.
In Australia, a party seeking a preliminary injunction must first satisfy the court of 3 things:
- that there is a serious question to be tried in that the plaintiff has established a prima facie case of patent infringement;
- that the plaintiff will suffer irreparable harm for which damages will not be an adequate remedy; and
- that the balance of convenience favours the granting of interlocutory relief.
See, for example the recent case of Interpharma Pty Ltd vs Aventis Pharma SA [2011] FCA 32.
Whilst ex parte injunctions can be obtained in Australia, they are usually confined to cases of extreme urgency, such as where the defendant is likely to destroy infringing goods (see for example the comments of the High Court in Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679). There are also mechanisms in Australia whereby Australian customs can seize counterfeit goods without the need for court proceedings. However, these mechanisms do not extend to cases of patent infringement.
The video game industry is fast becoming a major part of Australia’s entertainment scene. IBISWorld reports that the industry generated an estimated $3.6 billion in revenue in 2010 and grew at an annual rate of 16% over the five years to 2010-11. With the PS3 being commonly accepted as an institution in the gaming world, it is likely that any similar action in Australia would affect a substantial following of consumers. However the good news for Australian gamers is that the Dutch court’s decision has no impact on PS3 imports into Australia so that local supplies of the much-loved console seem safe, for now.