New guidance on patent infringement

09 April 2013

Celia Worthington of Worthingtons Commercial Solicitors Belfast reviews a recent case in which the Supreme Court in England provide guidance on patent infringement.

In an important decision for manufacturers of patent products with replaceable parts, and for companies whose business involves the manufacture and supply of spare parts, the UK Supreme Court has made a significant ruling in the case of Schutz v Werit [2013] in which it was held that a company did not ‘make’ a product simply by replacing a part of that product.

This means companies will be able to manufacture spare parts for patented products, without exposing themselves to patent infringement claims. According to section 60(1)(a) of The Patents Act (1977) a person infringes a patent for invention if, without the consent of the proprietor of the patent he ‘makes, disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise;’

In this case intermediate bulk containers (IBCs) comprising a pallet, bottle and a cage were exclusively licensed by Schutz (UK) Limited. Often these IBCs are reusable and can be reconditioned by two means; ‘re-bottling’ i.e. replacing the bottle with a fresh bottle from the manufacturer, or ‘cross-bottling’ i.e. replacing with a bottle from a different source. The appellant, Werit UK Limited (Werit) sold its bottles to a re-conditioner, Delta Containers Limited (Delta).Delta reconditioned Schutz IBCs by replacing the Schutz used bottles with Werit bottles before re selling them. Schutz claimed that in so doing Delta was infringing Schutz patent by ‘making’ the product without consent.If Delta had been found to have infringed the patent, Werit would also be liable for ‘indirect infringement.’ The High Court found that replacing the inner container of a Schutz IBC did not amount to ‘making’ the patented product and replacing the bottle alone did not amount to infringement.

On appeal, in reliance on the case of United Wire Ltd v Screen repairs Services (Scotland) Ltd [2002] 4 All ER 353 (in which the House of Lords decided on the meaning of the word ‘makes’), the court concluded that the product ceased to exist when the bottle was removed and that Delta’s actions did amount to infringement.

The UK Supreme Court overturned this decision, unanimously allowing the appeal, and holding that Werit’s re-bottling activities did not constitute an infringement of the Patent.  In reaching its decision, it has listed a number of additional factors to be taken into consideration when interpreting the definition of the word ‘makes’ for the purposes of the Act.  Including the considerations that: 

  • it will inevitably be a matter of fact and degree as to whether particular conduct constitutes ‘making’;
  • the word will ultimately be applied to patents for products generally and therefore it should not be construed too narrowly;
  • the word must be afforded a practical interpretation in accordance with the specific facts of a case. 

 

The Supreme Court found the High Court approach to have been too simplistic, and the Court of Appeal to have taken too rigid an interpretation. When considering ‘fact and degree’ the Court commented it was legitimate to ask whether the purported infringement involved ‘repairing’ the original product. The Supreme Court held that it was legitimate to determine whether “the bottle is such a subsidiary part of the patented article that its replacement…does not involve ‘making’ a new article.”  It concluded that replacing a bottle in an IBC would not constitute infringement of the Patent.

In reaching a decision Lord Nuberger referred to various decisions of German courts.  As section 60 (1)(a) of the Patents Act (1977) is intended to conform with the European Patent Convention, such decisions have persuasive value in ensuring the convention is harmoniously applied across member states.

This case also provides useful commentary on how the UK Supreme Court views section 68 of the Patents Act (1977) i.e. the requirement for the proprietor, or exclusive licensee of a patent to register that transaction at the UK Intellectual Property Office in order to be in a position to recover costs and expenses in patent infringement claims. Schutz had been in delay in registering its exclusive licences, however the defendant did not state its intention to rely on the provisions of section 68 until after the Court of Appeal draft judgement had been issued.  The Supreme Court has remarked that section 68 should be pleaded in express at an early stage of proceedings in the defendant’s statement of case.  Lord Neuberger stated that the correct interpretation of section 68 was that a licensee who has successfully claimed damages or an account of profits for infringement of a patent, will only be precluded from recovering its costs in relation to infringements which pre-date registration of the licence.

Celia Worthington, Head of the Commercial department of Worthingtons Solicitor, specialises in commercial property, banking, telecoms and corporate and commercial law. She advises a number of UK wide corporate clients and well known local charities.

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