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Monday, 27 October 2008

Thorn waxes lyrical and solders on ...

The IPKat hadn't forgotten the patent decision last week of the Court of Appeal (England and Wales) in Thorn Security Ltd v Siemens Schweiz AG [2008] EWCA Civ 1161 but there have been so many exciting distractions that he just hadn't got around to posting anything about it yet. In this case the Court, consisting of Lord Justice Mummery, Lady Justice Arden and Mr Justice Lewison, found themselves going back to basics, construing the meaning of the fundamental word "assignment" which appears in the apparently innocuous context of the Patents Act 1977 section 33(3) -- which deals with the relative entitlements of parties whose entitlement to a patent may or may not have been registered. Curiously enough this dispute almost slipped past the IPKat first time around (you can see his comment here).

Right: Siemens, in happier times before being licked by Thorn

In short, Thorn was appealing against the decision of Mr Justice Mann that its product infringed Siemens' patent and that Siemens was entitled to recover damages in respect of a period of infringement that actually pre-dated its registration as proprietor of the patent. Siemens become the owner of the patent by universal succession under Swiss law, following a series of mergers among Swiss companies. Siemens' patent was for a protective covering for printed circuit boards and method for their manufacture. The protective coating consisted of a plastic film to which wax was added. The wax was said to facilitate through-plating and soldering operations through the protective coating. The film was fused on to the printed circuit board by the action of heat.

Thorn's allegedly infringing product was a printed circuit board coated with a coating which contained wax installed in a smoke alarm. At trial Mann J held, as a matter of construction, that "facilitating" meant that there had to be practical benefits in making something easier in a way that could be appreciated by a practical user, and that the film had to be fused on to the circuit board by the action of heat alone. On that basis, he held, Thorn's product did indeed infringe. He then added that the mergers leading to Siemens' ownership of the patent did not involve any "assignment" within the Patents Act 1977 section 33(3) which had to be registered before a claim for damages (now, post-IP Enforcement Directive, costs and expenses: see link to earlier IPKat post for explanation) could be made under section 68 of the same Act.

Siemens argued that the judge was wrong in construing its patent as meaning that the notion of "facilitating" carried with it any element of practical benefit or that the practical benefits had to be capable of appreciation by a practical user, and that he also erred in holding that the fusion of the coating to the board had to be by heat alone. Thorn appealed against the finding of infringement, submitting that Mann J's findings were not supported by the evidence, and also and also maintaining that should have given a more purposive interpretation to the word "assignment" in section 33(3), so as to cover the mergers of the sort that had occurred here.

The Court of Appeal allowed the appeal. In its view

* The claim that the wax facilitated through-plating and soldering operations through the protective coating operated as a performance requirement of the claim. Mann J was right that "facilitating" required practical benefits and that, so far as the question of infringement was concerned, Siemens was entitled to rely on any means by which the wax in Thorn's product made through-plating and soldering through the coating easier in a practical sense.

* The specification stated that, in a "final process step" the coating was fused to the board by further heating. Accordingly it was not until that step, which consisted only of further heating, that the coating was fused to the board. Having regard to the way in which the process was described in the specification, the skilled reader would conclude that the fusion took place by the action of heat alone. Thus Mann J was right on that point too.

* The judge's findings that the nature of the waxed product (i) reduced the risk of charring, (ii) gave rise to a noticeable difference if a low temperature soldering iron were used and (iii) created a more easily-removable coating were not supported by the evidence.

* Mann J should not have inferred that Thorn's waxed coating would probably move aside more readily with less heat being applied. There were two characteristics of a coating with wax that pointed in opposite directions: (i) lower viscosity and (ii) increased wetting ability. The overall effect these competing factors had upon the coating was a question for direct expert evidence and was not a matter upon which an inference could safely be drawn. Nor should Mann J have found that Thorn's product was fused on to the printed circuit board by the action of heat. On the evidence, the adhesion of Thorn's product was produced by pressure. Accordingly, since Thorn's coating did not facilitate through-plating and soldering and was not fused by heat, its product did not infringe Siemens' patent.

* Finally, Mann J erred in holding that an "assignment" within section 33(3) had to be an express consensual bilateral document. Section 33(3) was wide enough to include an assignment by operation of law of the kind involved in universal succession following a merger.

The IPKat notes with awe that the Court of Appeal went all the way back to 1970, to the Report of the Committee to Examine the Patent System and Patent Law (1970 Cmnd 4407, the Bank Report) -- which led to the 1977 Act -- when deciding what was the mischief at which section 68 was directed. That report indicated that section 33(3) should be purposively construed. The moral of this story is, never throw away your old law reform reports: you never know when they might come in handy. The Report stated (with the IPKat's emphasis):
"The Patents Act should provide that where there has been a change of ownership of a patent, or where an exclusive licence has been granted on a patent, no damages for infringement should be recoverable by the new owner or the exclusive licensee in respect of infringing acts committed during the period in which the change of ownership or grant of exclusive licence was not registered, unless registration was effected within six months of the change of ownership or grant of exclusive licence.…".
Speaking for the entire court, Mummery LJ added:
"This recommendation applies to any acquisition of ownership, and is not limited to particular kinds of change of ownership".
Merpel's not happy about this highly principled and function-oriented approach. This is all very well, but it's not what the Patents Act says -- and who wants to rely on Banks at a time like this! I vote we seek leave to take this one to the House of Lords.

Famous Thorn here -- and here

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