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23 September 2019
What should a company (Company A) do when its distributor terminates their supply and distribution contract stating that it is more economical for it to acquire the products from another company (Company B)? If Company A has a registered patent for the products that Company B manufactures, it can institute infringement proceedings. However, the question then becomes against whom should it institute these proceedings: the distributor or Company B?
Under South African law, Company B would be considered to be infringing Company A's patent by manufacturing its products and would therefore be liable for direct infringement. By acquiring the products from Company B, the distributor is securing a benefit from Company A's patented invention and therefore its conduct amounts to contributory or indirect infringement. This is because while the distributor is infringing the patent, it is only as a result of having been induced by Company B, which is selling Company A's patented product to the distributor.
To establish that there has been contributory infringement under South African law, a patentee must show that the defendant:
Therefore, in the case above, Company A must provide its distributor with written notice of its patent's existence by providing it with the patent specification and alerting it to Company B's infringement. If the distributor continues to acquire its products from Company B, intent and knowledge can be established.
Another form of contributory infringement involves acquiring one component from one seller (Seller A) and another component from another seller (Seller B) and then combining the two components to assemble the patented invention, thereby forming an infringing article. In this scenario, both sellers are intentionally aiding and abetting infringement of the patented invention. Here, it would be more appropriate to institute contributory infringement proceedings against the distributors (ie, Seller A and Seller B), since suing each user would be an impossible exercise.
Contributory infringement can be actioned under South African law and an interdict can be obtained under the law of delict due to an incitement to infringe, rather than under the Patents Act. To succeed, the plaintiff must show that there has been both intention and knowledge of unlawfulness.
In short, infringement is twofold; both direct and contributory infringement can be actioned under South African law. The goal is not to contribute to infringement, but rather to have non-infringing acts contribute to a company's profits. In light of this, patentees should seek advice from their patent attorney before they act.
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