INTRODUCTION
Are you an owner of a patent in Malaysia? Are you keen on actively protecting your rights? Are you aware of the different types of obstacles you may encounter in bringing an action for patent infringement pursuant to Section 59 of the Malaysian Patents Acts 1983? The case of Kingtime International Ltd and Petronas Carigali Sdn Bhd (2022), showcases some of these obstacles.
BACKGROUND
This case can be considered a sequel to the first case, Kingtime International Ltd and Petrofac Sdn Bhd (2018). Where Kingtime sued Petrofac for infringement of their two Malaysian Patents No. MY-144898-A and MY-1450040-A and Petrofac countersued for invalidation of the Malaysian Patents. In this case, the High Court found that the Malaysian Patents were valid and that Petrofac did indeed infringe on the Malaysian Patents.
Now, in this case Kingtime sued Petronas Carigali for infringement of the Malaysian Patents and Petronas Carigali countersued for invalidation of the Malaysian Patents. The subject matter of these two cases was the Mobile Offshore Production Unit (“MOPU Sepat”) which is an offshore oilfield situated miles off the coast of Kuala Terengganu, east coast of Peninsular Malaysia.
TIMELINE
In July 2010, Petronas Carigali entered a Sepat Engineering, Procurement, Construction, Installation and Commissioning for Sepat EPS Contract (“EPCIC Contract”) dates 20 April 2011 with Petrofac.
In or around September 2011, Petrofac constructed, installed, and commissioned the mobile offshore production unit with an attached wellhead structure as agreed in the EPCIC Contract, known as MOPU Sepat. The MOPU Sepat was then used by PCSB for production of hydrocarbon.
In or around June 2017, Petronas Carigali separated and removed the wellhead structure from the MOPU, after which the MOPU was towed away and stored, unused at the Kemaman Supply Base Anchorage, Terrengganu.
After removing the wellhead from the MOPU, Petronas Carigali installed a temporary jack-up rig to support the wellhead, this was used between June 2017 until May 2018.
For permanent use, Petronas Carligali subsequently replaced the jack-up right with a jacket to support the wellhead structure. This installation was completed in or around May 2018 and used from May 2018 till the date of the judgement.
While the above events were occurring, concurrently in 2012-2013 Kingtime had issued several letters to various parties alleging that its Malaysian Patents had been infringed. Kingtime first issued a letter to Petrofac, after which another letter was issued to Petrofac Carigali as Kingtime was aware of that the MOPU Sepat was commissioned by Petrofac for Petronas Carigali.
18 November 2015 – Kingtime filed the Petrofac Suit.
11 July 2018 – High Court held that Petrofac had infringed the Malaysian Patents dismissed Petrofac’s countersuit for invalidation.
December 2018 – Kingtime filed the infringement suit against Petronas Carigali suit.
21 January 2020 – Petrofac Judgement was upheld by the Court of Appeal.
19 May 2022 – Petronas Carigali filed the Invalidation suit against Kingtime.
19 August 2022 – Petrofac’s application for leave to appeal to the Federal Court was refused.
13 September 2022 – The infringement and invalidation suit were ordered to be consolidated and heard together.
FOUR KEY ISSUES AT HAND
The four main issues in contention are limitation, Res Judicata, invalidation of the Malaysian Patents and infringement of the Malaysian Patents. These four issues were addressed in order in the judgement of Azlan Sulaiman JC and is summarized as below.
LIMITATION – Section 59(3) Patent Acts 1983
As per Section 59(1) of the Malaysian Patents Act 1983, the owner of the patent has the rights to initiate court proceedings against anyone who has infringed or is infringing their patent. However, they must initiate court proceedings for patent infringement within five years from the act of infringement.
What was clarified in this case was the phrase ‘act of infringement’. In this case there were multiple alleged acts of infringement as mentioned above, over the course of multiple years. The question here is from which of these alleged acts of infringement one begins counting the five-year limitation period. The alleged act may have infringed or is currently an infringing the rights of the patent owner.
The alleged infringements were as follows: –
- Petronas Carigali infringed the Malaysian Patents by entering a contract with Petrofac for the MOPU Sepat.
- Accepting delivery of the MOPU Sepat.
- Using the MOPU Sepat.
- Storing the MOPU Sepat for use.
In this case it was held that the action was not time-barred. This is because the suit could be based on the last alleged act of infringement, which was still within the five-year limitation period, even though the first few alleged acts of infringement were held to be time-barred.
If a patent owner wishes to bring an action for patent infringement, it is of utmost importance to be aware of the timeline of infringing acts and to make sure the suit is based on the act of infringement that is within the limitation period.
RES JUDICATA
There were three main questions to be answered under this issue.
- Is the previous action between Kingtime and Petrofac binding on Petronas Carigali?
- Is an action of infringement against Petronas Carigali barred, as a similar action was brought against Petrofac and was decided on?
- Whether an invalidation suit can be brought against a patent owner that had already been through the same action with a different party? Referring to the Petrofac suit where the patent was held to be valid?
The first question was answered in the negative, a contract of employment does not make the one privy to a judgement that was enforced against the other party of the contract, especially when the judgement against that party was in personam. The judgement was made and directed towards the defendant in the previous case and not to the public at large. If a patent owner brings an action against a patent infringer and is aware of others connected to this infringement, the owner must bring the action against all of them, if the owner wants the judgement to be binding on all of them.
In this case Kingtime knew of the connection between Petrofac of the first case and the current defendant of the infringement action but decided not to add Petronas Carigali as defendant to the first case. One cannot bring claims by installment.
The second and third questions were also answered in the negative. This is because the infringement and invalidation actions brought in this case and that in the first case between Kingtime and Petrofac were based on a different set of facts, parties, and evidence.
INVALIDATION – Section 56 Patents Act 1983
A patent owner should be aware that invalidation suits come with the territory of owning a patent, it is a common countersuit brought by defendant(s) of an infringement suit as a defence. This is because there can be no infringement of a patent, if the patent was never valid to begin with. Therefore, in cases where there is an infringement action brought with a countersuit of invalidation, the invalidation suit is decided first.
It is important to note that the invalidation suit brought in Kingtime v Petrofac was on the grounds that the invention was not novel and thus the Malaysian Patents were invalid.
In this case the invalidation suit was based on the other two criterions of patentability, that being inventive step and industrial applicability.
Industrial Application – Section 16 Patents Act 1983
This criterion was not met due to an error in drafting the patents’ claims. A difference in the words “and” and “or” was the downfall of the Malaysian Patents. As the inventions described in the Malaysian Patents were meant to either float or be submerged, it is not possible to be floating and submerged at the same time, in turn the use of the word “and” made the Malaysian Patents industrially inapplicable.
Kingtime tried to justify this error as a clerical error. However, this argument was fruitless as the judge took into account the fact that the inventors of the patents did not have the relevant technical background to draft the patent claims combined with the fact that this error was made multiple times in the claims, and arriving at the conclusion that the error could not have been clerical and was intentional drafted as such.
This highlights the importance of naming inventors that have the relevant background pertaining to the invention for a patent and the importance of triple checking the patent specifications and claims before filing. In the event an error is spotted, the specification must be amended as soon as it is made known to the owner.
Inventive step – Section 15 Patents Act 1983
No inventive step was found as Petronas Carigali’s expert witness was able to display that mosaicking prior art easily led to the creation of the inventions at hand.
INFRINGEMENT OF THE MALAYSIAN PATENTS
As the court found that the Malaysian Patents were invalid, the infringement suit was automatically held to be obsolete. However, the judge in this case still considered the facts and applied the Essential Intergers test to determine whether the alleged acts were acts of infringement and did not find them to be so.
CONCLUSION
In the end, Kingtime lost its infringement suit and was ordered to pay MYR800,000.00 (approximately USD180,000.00) to Petronas Carigali.
However, this judgement is not the end of this matter as the case is now being appealed to the Court of Appeal by Kingtime. We eagerly await the decision of the Court of Appeal and will keep our readers posted with the latest development from this interesting case from time to time.