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Tuesday, 15 February 2011

An Epic Tale of ... erm, Patents and Trade Marks - DataCard v Eagle

Yesterday, while the rest of the country was locked in the grip of the commercial vortex that is St Valentine’s Day, Mr Justice Arnold was handing down a sonnet of his own in the form of an epic judgment in DataCard Corporation v Eagle Technologies Limited [2011] EWHC 244 (Pat). [The statistics junkies amongst you will be interested to hear that it contains a little over 46,000 words, split elegantly into 376 numbered paragraphs on 103 pages. The table of contents alone puts Wyler’s 1959 production of Ben Hur to shame...]


Like an excessively large box of chocolates, the judgment contains a vast selection of delights; pulled, on the one hand, from the sultry opulence of patent law and, on the other, from the milky delights of trade marks. Also like an excessively large box of chocolates, it takes a little while to digest (fur-balls acquired from chocolaty paws notwithstanding). [But, Merpel asks, are the consequences of overindulgence the same as well?]

The facts, stripped back to the bare bones, are as follows: DataCard is one of the world’s biggest suppliers of card printers and related products and services, including printer ribbons. It markets printers of various sizes, capable of printing a variety of cards and other articles such as passports, driving licences and other documents. The action mainly concerns DataCard’s desktop card printers and ribbons, which are marketed under a number of trade marks – the main house mark being DATACARD. DataCard brought actions for patent and trade mark infringement against Eagle, a relatively small company that sells card printers manufactured by a range of different manufacturers – including DataCard. Eagle also sells “compatible” printer ribbons i.e. third party ribbons that will work in a particular manufacturer’s printer. The compatible ribbons sold by Eagle are made in China by a company called Kanon, and form the crux of the dispute.

DataCard alleged that Eagle’s sale of compatible cartridges infringed its patents (one relating to the RFID chip that accompanied the cartridges and which communicated various important pieces of information to the printer (the RFID patent), and a second concerning modifications to facilitate loading of the ribbon into the printer in the proper orientation (the Error Loading Patent) and trade marks (DataCard complained about Eagle’s use of the trade mark DATACARD (i) on its website (including in emails generated by the website), (ii) on labels applied to Plus-Ribbon packaging and (iii) on the websites which Eagle manages for its resellers). Eagle, for its part, counterclaimed for invalidity of the patents and alleged it had a defence under Art 6(1)(c) of the TM Directive.

RFID Patent
To cut a long story short (or at least significantly shorter), the RFID patent was considered to be invalid as it was obvious in light of the prior art (Fargo). Fargo disclosed the use of a low frequency (LF) RFID tag, but stated this was only an example and noted that a more powerful (high frequency (HF)) tag could be used. The LF tag in Fargo had a circular antenna attached to the end of a supply cylinder but did not disclose that the antenna surrounds the aperture of the cylinder. However, the judge considered that, at the priority date of the RFID patent, the skilled person would consider a high frequency (HF) tag to be most suitable for use in a printer. As the HF tags were larger than LF tags. Their size was comparable to that of the end of a typical card printer cylinder. Accordingly, it would be obvious to position the antenna so that it ran around the outside of the flange.

Error Loading Patent – Infringement
Moving on to the Error Loading Patent ([128] to [236]), Eagle accepted that the supply of products complained of by DataCard fell within claims 1 (as proposed to be amended) 6 and 8, but counterclaimed that they were invalid. However, DataCard had also alleged infringement, under s60(2) PA 1977, of claims 16 and 19 of the Error Loading Patent (discussion of s60(2) can be found at [166] to [185]).

Readers will be aware that s60(2) provides:
“Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.”
While accepting that all other elements of this section had been made out, Eagle contended “that the end users of its products are licensees or otherwise entitled to work the invention. The basis for this contention is that, as is common ground, the purchasers will be purchasing the ribbons for loading into printers purchased from DataCard, and will use the carrier supplied by DataCard with the printers for that purpose. In those circumstances, Eagle contends that the purchasers have an implied licence to work the inventions …, alternatively that DataCard’s rights in respect of those claims are exhausted by sale of the printers.”

The judge noted that no conditions had been imposed on the sale of DataCard’s printers restricting the user to using only ribbons sold by DataCard.

Explaining that the dispute as to section 60(2) only becomes relevant if claims 1, 6 and 8 to the supply item are invalid – otherwise the case simply proceeded under s60(1), ss(2) being rendered academic – the judge noted:
[182] “There can be no dispute that the purchaser of a DataCard printer has an implied licence to use the carrier which comes with it, and to that extent to perform the method of claim 19. Nor for the reasons explained above, is there any contractual restriction upon the purchaser acquiring supply items from elsewhere. If the supply item claims are invalid and the purchaser uses a supply item from Eagle, can it be said that the purchaser is performing the method of claim 19 in an unlicensed manner? In my judgment the answer to that question is no, since in those circumstances the key parts of the inventive concept of claim 19 relate to the carrier.”
Before continuing:
[184] “In my judgment the owner of a DataCard printer does not make a printer falling within claim 22 merely by loading a third party supply item onto the carrier that comes with the printer and then loading the carrier into the printer.”
Validity
Accordingly, the issue revolved around the validity of the Error Loading Patent.

Again, cutting to the chase, the prior art was found to reduce the unamended claims to a quivering mass of obviousness. Applications to amend some of the claims had been made, but none were successful.

Trade Mark Infringement
The trade mark side of things revolved around Eagle’s use of the trade mark DATACARD (i) on its website (including in emails generated by the website), (ii) on labels applied to Plus-Ribbon packaging and (iii) on the websites which Eagle manages for its resellers.

Diving into the law, Arnold J noted in respect of Art 5(1)(a) of the TM Directive that:

[271] “[I]t is not immediately clear why the Court considered that the advertising function was at least potentially affected in L’Oréal v Bellure, but not in Google France.
[272] “In trying to understand why this is so, it seems to me that the key point is that the advertising function of a trade mark is its function of conveying a particular image to the average consumer of the goods or services in question. The case law of the Court of Justice suggests that the advertising function is most likely to be affected when the trade mark has been used by the trade mark proprietor in relation to prestigious goods that have a luxurious image and the third party’s use of the signs complained of either takes unfair advantage of that image or adversely affects that image by associating it with down-market goods, marketing methods or advertising … On the other hand, it appears from Google France that the mere fact that use of the signs complained of in advertising competitive goods or services causes the trade mark proprietor’s advertising costs to be increased is not enough to affect the advertising function. As I have already observed, it is unclear where this leaves the relationship between Article 5(1)(a) and Article 5(2).
Moving on to Art 5(1)(b)

[277] “…What about “post-sale confusion”, that is to say, confusion on the part of part of the public as to the trade origin of goods or services in relation to which the impugned sign has been used which only arises after the goods or services have been purchased? … I expressly refrained from expressing any view on it in Och-Ziff, since it did not arise in that case. It does arise in the present case, however.”

[286] “On balance, it seems to me that the case law of the Court of Justice supports the proposition that post-sale confusion can be relied upon in support of a claim under Article 5(1)(b).”

[288] “Finally, as a matter of principle, I find it difficult to see why it should matter if confusion only arises after the goods have been sold. Suppose that a consumer orders goods from a third party’s website and, at the time of ordering, is not confused as the trade origin of the goods; but when the goods arrive some days later, the goods are labelled in a manner which wrongly leads the consumer to believe that the goods emanate from the trade mark proprietor. Why should such confusion not be actionable? It falls within the scope of a contextual assessment of the use of the sign. It is surely capable of being damaging to the trade mark proprietor. For example, it may cause the consumer to obtain the goods from the same website the next time he or she orders those goods under the same mistaken belief. And why should it make any difference for these purposes whether the goods are labelled with a sign identical to the trade mark or merely one that is similar to the trade mark i.e. whether the case falls within Article 5(1)(a) or 5(1)(b)?”
The judge also considered the scope of Art 5(2) before applying all of this to Eagle’s use of the mark, separated into three distinct time periods – (i) prior to 26 November 2009; (ii) from 26 November 2009 to February 2010; and (iii) after February 2010.

DataCard’s claim for infringement of the Trade Marks had limited success. Eagle's use was held to infringe under Article 5(1)(b) in relation to all the uses complained of prior to 26 November 2009 and in relation to the box labels used by Eagle from 26 November 2009 to February 2010. Eagle’s defence under Article 6(1)(c) failed during these periods on the basis that the manner of the use gave the impression that there is, or at least may be, a commercial connection between the supplier of the Plus-Ribbon products (i.e. Eagle) and DataCard. No infringement was found in respect of Eagle's activities after February 2010.

This Kat is now going to lie down – the answer to Merpel’s question is most definitely ‘yes’…

More epics here, here and here

3 comments:

Anonymous said...

... a quivering mass of obviousness ...

This phrase is not to be found in the judgment, but I like it and hope to be able to place it one of these days.

Anonymous said...

Interesting patent case. Is "a quivering mass of obviousness" a new standard?

David said...

quivering mass of obviousness made me lollers! :-)

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