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Tuesday, 29 March 2011

"Making"? It's Open and Schütz...

There are days when it rains and, for a Kat at least, others when it paws… Today is definitely one of the latter. In an avalanche of activity, the Court of Appeal has handed down a trio of IP judgments this morning. First on this Kat’s platter for the day is the decision in Schütz v Werit [2011] EWCA Civ 303.

Schütz is the exclusive licensee of a European Patent (EP (UK) 0 734 947) belonging to Protechna. The patent is for an intermediate bulk container (IBC). As Jacob LJ explains: “An IBC is a large (about 1000 litres, so about a metric tonne or more) container used for the transport of liquids. They have to be able to withstand the tough conditions of transport – they must be leak proof, capable of being stacked in threes or fours (so the bottom one may have about 6 tonnes on it), capable of withstanding prolonged or violent vibration and withstanding the forces caused by the liquid within sloshing around.”

Prior to the patent, IBCs of a two-part construction (basically a plastic bottle within a metal cage) were well-known. Due to the generally tough conditions of transport and the inherent differences in durability between plastics and metals, the average lifespan of the cage is some five times that of the bottle that it holds. Consequently, an industry has developed to repair any damage to the cases and to refresh the containers themselves by “re-bottling” (i.e. replacing the old bottle with a new one from the same manufacturer) or “cross-bottling” (i.e. replacing the old bottle with one from a different source). Schütz objects to its cages being used by cross-bottlers, which, as you might expect, is the root of this dispute.

As the Court explains:

[10] “Werit sells bottles for IBCs to a company called Delta, a reconditioner. Delta buys discarded Schütz IBCs, removes and discards the original Schütz bottles, makes any necessary repairs to the cage, replaces them with Werit bottles and offers the resulting IBC to the market in competition with Schütz.”
Schütz originally brought an action for infringement against Werit, as is their right pursuant to s67 of the Patents Act 1977, it being common ground that if Delta infringed the Patent by their reconditioning then so also did Werit. Werit did as any alleged infringer would do and counterclaimed for invalidity. Protechna were formally parties to the proceedings, but took no active part therein – and so for the purposes of this note can conveniently be forgotten. At First instance ([2010] EWHC 660 (Pat)), Floyd J found the patent valid but not infringed. Both Schütz and Werit appealed against the findings that they did not agree with, and the case arrived before the Court of Appeal.

Before the Court, three issues remained live: (a) whether the patent was invalid for insufficiency or was so ambiguous that it could not be infringed; (b) whether the Patent was invalid for added subject matter; and (c) whether, if valid, what Delta does amounted to an infringement within the meaning of s60(1) PA 1977 – in other words, was Delta “making” the patented article?

The first two points are described by Jacob LJ as having “no general importance”, the real focus of the appeal being issue (c). To cut a long story short, the patent was found to be valid and so the Court turned to the main point of contention: “making”.

Making
The patent claimed an IBC consisting of three items: a pallet, a bottle, and a cage. The cage was considered to be the novel and inventive bit – to which the bottle and pallet add nothing of interest, save that the bottle is “exchangeable” and co-operates with the frame. This interaction between frame and bottle provided the IBC with its strength and stability. The question before the Court was therefore whether when Delta puts a Werit bottle into a Schütz cage it infringes the Patent.

(As a brief aside: the background to the drafting of the PA 1977 is well known, as is Jacob LJ’s wonderment at the lengths that were taken to turn the perfectly serviceable wording of the various International Conventions upon which certain provisions of the Act were based into anglicised shadows of their former selves. Fans of such comments will accordingly not be displeased with [36] to [39] of this judgment.)

However, back to making: the starting point for the discussion of “making” was considered to be Art 25 CPC, which, in turn, brought in Article 69 EPC, as the “extent of protection is determined by the claims.” The only question before the Court was therefore whether the act of putting a bottle into a Schütz cage constituted “making a product which is the subject-matter of a patent”.

With this point sorted, Jacob LJ then dived headlong into an analysis of United Wire v Screen Repair Services [2001] RPC 24, noting that this had been the main battleground of the parties in this case. The crux of the dispute was whether United Wire established (or indeed prohibited) a “whole inventive concept” test for the determination of whether there had been “making”. If such a test had been adopted, then it was argued that, as the cage embodied the whole of the inventive concept of the claimed invention, anyone putting a new bottle into an existing cage could not be said to be “making” the patented article.

In particular, the parties disputed the meaning to be attributed to the following excerpt from Aldous LJ’s judgment in United Wire in the Court of Appeal:
[25] “It is therefore better to consider whether the acts of a defendant amount to manufacture of the product rather than whether they can be called repair, particularly as what could be said to be repair can depend upon the perception of the person answering the question. Even so, when deciding whether there has been manufacture of the product of the invention, it will be necessary to take into account the nature of the invention as claimed and what was done by the defendant.”
Schütz argued that Aldous LJ was saying that what mattered was whether the defendant was making the patented article. Werit, on the other hand, considered that the final sentence was by implication bringing in the Judge’s “whole of the inventive concept” test. The distinction mattered as the House of Lords had explicitly endorsed Aldous LJ’s judgment in the case as correct.

Jacob LJ considered that Aldous LJ could not have been adopting a “whole inventive concept” test. To have done so would have rendered it impossible to subsequently hold (at [29] of United Wire) that it was an infringement for Screen Repair Services to recondition or repair a frame made by United Wire and re-use it to make an assembly as claimed in claim 1 of that patent. This was because (as explained at [54] of the Schütz decision) in the case of one of the patents alleged to be infringed in United Wire the inventive concept resided solely in the use of a flexible frame. Adopting a “whole inventive concept” test would have meant that when Screen Repair Services sandblasted and re-meshed this frame they would not have infringed, having not made the invention afresh.

Turning, then, to the House of Lords’ decision, Jacob LJ noted that Lord Hoffmann explicitly endorsed the Court of Appeal’s approach in the case. Moreover, his Lordship had explained that “whilst “repair” might as a matter of acontextual language overlap with “making” it could not do so for the purposes of s.60(1)(a) (i.e. Art. 25).” The important thing was to identify the patented product. In the instant case the product was the IBC. This ceased to exist when the bottle was removed. What remained at this stage was, according to Jacob LJ, “merely an important component from which a new IBC could be made.”

Accordingly, Jacob LJ considered that the House of Lords in United Wire had excluded the “whole inventive concept” test. The only question of importance was whether the alleged infringer had made the patented product. Here Delta had done just that when they replaced Schütz’s bottles with those manufactured by Werit.

The Court of Appeal also considered that there were additional reasons for rejecting the “whole inventive concept” test, notably that in practice it is likely to be fuzzy and uncertain:
[72] “…How precisely do you ascertain it? Take this very case. The cage co-operates with the bottle in the complete IBC. It is the combination of both which is claimed. So what is the whole inventive concept? Just the cage? Or the combination?

[76] “Another way in which the test is uncertain is that it would depend on what piece of prior art you took into account. For in a general sort of way the “inventive concept” is the difference between the patented idea and the old idea. That depends on what the old idea was.”
Furthermore, Canon v Green Cartridge [1997] AC 728 was considered to address one of the Judge at first instance’s concerns in the present case – the fact that if there was infringement Schütz would, as a commercial matter, have a monopoly in unpatented replacement bottles for their cages. Jacob LJ considered (at [79]) that this was “not really an apt matter for patent law”:
[80] “Does it really matter if Schütz has a monopoly in replacing bottles for its cages? One cannot really say whether there is any public interest in the nature of freedom of competition seriously involved. If anything it would seem not. Schütz’s actual customers would appear to be largely indifferent concerning the activities complained of. They simply want the used IBCs off their premises. They are not people who want their IBCs “repaired.””
The Judge at first instance had also considered (at [196] of that decision) a hypothetical patent on an inventive tennis racquet frame, with claims calling for a strung racquet coupled to the inventive frame. He asked: “Does this prevent re-stringing, even though the invention is said to lie in the features of the frame alone?”. Again, Jacob LJ considered that this was not an important consideration:
[90] "It is not necessary for us to provide any general answer to the “restringing problem”. It suffices to say that Delta, when it fits Werit bottles into Schütz cages, is making IBCs which fall within the Patent and are doing so without the licence of Schütz. That they themselves on their own website say they are “re-manufacturing” says it all."
Open and Schütz…

3 comments:

TJ said...

Nice summary.

While Jacob LJ was no doubt correct to say that a general answer to the "restringing problem" wasn't required, it's a shame he didn't try.

Anonymous said...

It's not a shame, it's a good job he didn't try. The only invariable rule that emerges from intellectual property judgments is that any judgment which is treated as propagating an invariable rule causes more problems than it solves. The road is littered with the carcasses of formulations that prove inadequate see Catnic, Biogen etc. Jacob LJ was rightly reluctant to add to the body count.

Tufty the Cat said...

Perhaps he has now learned his lesson from Aerotel/Macrossan. Shame it's too late to do him any good.

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